With the global coronavirus pandemic still going on, it seems as though the majority of people are more concerned about the virus’s detrimental effects on the world economy than actually contracting it. Enter bankruptcy statistics. In today’s world, it is of the utmost importance to learn everything there is to know about this process — hence why we present to you the most relevant stats on bankruptcy we could find on the web including the yearly bankruptcy rate in the US, the US states with the highest and lowest cases of bankruptcy, and more.
Read on and make sure to take some notes along the way!
Top 10 Key Bankruptcy Statistics for 2021
- 378,953 personal bankruptcies were filed in 2020.
- In the first half of 2020, chapter 11 business bankruptcies increased by 26%.
- In 2019, Alabama was the state with the highest rate of bankruptcy filings per 1,000 residents — 5.4.
- 106,958 bankruptcy filings (across all chapters) were registered in Q1 2021.
- Bankruptcy statistics disclose that 26% of U.S. citizens between the ages of 18–64 struggle with paying healthcare bills.
- In Japan, 1,100 business enterprises went bankrupt by March 2021 due to the pandemic.
- The insolvencies are expected to increase by 26% in 2021 on a global level.
- About one-third of lottery winners end in bankruptcy.
- Bankruptcy filings were the highest in 2005.
- The process of filing bankruptcy costs money — between $1,500 and $4,000
United States Bankruptcy Statistics
Which state has the highest rate of bankruptcy, and what is the main reason for insolvency?
1. During the Great Recession, over 60,000 businesses filed for bankruptcy in 2009.
Lehman Brothers had the largest case of bankruptcy in U.S. history. During the Great Recession, they lost $691.06 billion of assets in 2008. Washington Mutual followed with $327.91 billion.
Worldcom Inc. had the third biggest bankruptcy in history, reportedly losing $103.91 billion in 2002.
2. Bankruptcy filings were the highest in 2005, based on statistics dealing with U.S. personal bankruptcies by year.
Over 2 million bankruptcy filings happened in 2005. Similarly, 5.3 for every 1,000 individuals was the bankruptcy filing rate in 2004, which is over four times bigger than the one in 1980.
On the other hand, despite the record-high rates in 2005, the figure dropped to 597,965 in 2006.
3. How many bankruptcies were filed in 2018? 755,182 bankruptcy filings were completed that year in the States.
According to reports by the American Bankruptcy Institute, the bankruptcy filings in America were 2% higher in 2017 than in 2018. Furthermore, consumer cases, as well as commercial filings, were down by approximately 2%.
There was also a 5% drop in the number of cases concerning commercial Chapter 11 fillings (5,470), in contrast to 5,762 back in 2017.
4. How many bankruptcies were filed in 2019? 774,940 bankruptcies in total.
(US Courts) (Jones Day)
Of the total 774,940 bankruptcy filings in 2019, 22,780 belonged to businesses while 752,160 belonged to non-businesses.
Chapter 7 bankruptcies had the highest number (480,206 bankruptcies), followed by chapter 13 (286,979), chapter 11 (7,020), and chapter 12 (599).
The biggest bankruptcy in 2019 was filed by PG&E Corp., an electric utility from California. The company lost over $71 billion in assets. This was the sixth-largest case of bankruptcy in U.S. history.
5. How many personal bankruptcies were filed in 2020? 378,953 bankruptcy filings.
(US Courts) (Statista)
In 2020, 21,655 businesses and 522,808 non-businesses filed for bankruptcy. This was also the second-lowest amount of total filings in history. In fact, the lowest number of bankruptcies was noted in 1986, when a total of 530,438 bankruptcies were filed.
When it comes to total bankruptcy filings by chapter, the stats on U.S. personal bankruptcies from 2020 report there were 378,953 chapter 7 bankruptcies; 8,333 bankruptcies classified as chapter 11, 560 chapter 12 bankruptcies, and 156,377 chapter 13 bankruptcies.
California was the state with the highest number of chapter 7 bankruptcy filings in the one-year period till March 2020 — a total of 36,186.
6. In the first half of 2020, chapter 11 business bankruptcies increased by 26%.
In the first six months of 2020, 3,604 businesses filed for chapter 11 protection. In contrast, 2,855 companies did the identical thing in the same period of the previous year, as we can see from the U.S. bankruptcies 2019 statistics.
7. About 530,000 American households file for bankruptcy every year due to high medical expenses.
45% of people file for bankruptcy due to unaffordable mortgages or foreclosure, 44.4% due to spending too much money and living beyond their means.
Another 28.4% name providing help to their relatives or friends as the main reason for bankruptcy, 28.4% blame student loans, and 25.4% blame divorce costs.
8. Bankruptcy rates by state reveal that in 2019, Alabama was the state with the highest rate of bankruptcy filings per 1,000 residents — 5.4.
Statistics from 2019 also show that the number of bankruptcy filings in Alabama amounted to 26,483.
It’s important to mention that the overall rates for the chapter 13 filings were much higher in the southern states, according to bankruptcy court data.
On the flip side, Alaska had the lowest number of bankruptcy filings — 400, i.e., 0.55 filings per 1,000 residents.
9. Federal judicial caseload statistics from 2019 suggest the U.S. bankruptcy courts terminated 795,926 cases.
In addition to that, there were 772,646 filed cases and 1,013,259 pending cases.
The situation was similar in 2020. 764,282 cases were filed (-1.1%), followed by 788,373 terminated cases (-0.9%) and 989,129 pending cases (-2.4%).
10. Expensive medical problems cause 66.5% of bankruptcies in the US.
Diseases and injuries can result in high medical bills that often cause financial problems for many people. In reality, facts about bankruptcy reveal that over half of the insolvencies in the US happen due to medical debts and job losses on account of illness.
11. 26% of Americans between the ages of 18–64 struggle with paying healthcare bills.
This adds up to 52 million US adults. Additionally, the Kaiser Family Foundation claimed that, in 2015, 1 million adults were forced to declare bankruptcy due to expensive medical bills.
12. The number of business bankruptcies in 2020 declined by 4.9%.
The overall number of bankruptcy filings decreased by 29.7%, from 774,940 in 2019 to 544,463 in 2020. A decline of 4.9% was also noted in business bankruptcy filings (from 22,780 filings to 21,655). Moreover, non-business filings experienced a steep decline (by 30.5%).
It’s worth mentioning that Chapter 7 and Chapter 13 business bankruptcy filings went down by 14.2%, i.e., 37.9% respectively.
However, statistics on the U.S. bankruptcy filings from 2020 imply there was an increase in chapter 11 business bankruptcy filings by 24.9% (from 6,052 filings to 7,561).
13. 106,958 bankruptcy filings (across all chapters) were registered in Q1 2021.
The most significant increase occurred in March regarding Chapter 7 and Chapter 13 filings (30,802 new cases and 10,265 new cases, respectively).
Overall, this is a decrease compared to the same period in 2020.
14. Who files for bankruptcy the most and why? People with high medical bills.
As mentioned before, medical issues, linked to high care expenses, are the number one reason why people file for bankruptcy.
Other reasons why most people file for bankruptcy are mortgages or foreclosure, spending beyond means, helping relatives or friends, student loans, and divorce or separation.
15. 24 Hour Fitness, Dean & DeLuca, and Hertz had to file for bankruptcy due to the pandemic.
Bankruptcy and coronavirus came hand in hand for some of the major US companies. Dean & DeLuca, filed for bankruptcy on March 31 2020, while Apex Parks filed for chapter 11 bankruptcy on April 8.
Here’s a list of other companies that had to file for bankruptcy due to the pandemic: CMX Cinemas, Gold’s Gym, JCPenney, Hertz, California Pizza Kitchen, Lord & Taylor, etc.
In the meantime, some managed to recover, such as Dean & DeLuca.
Global Bankruptcy Statistics
What’s the situation on a global scale?
16. In Australia, the percentage of personal bankruptcies dropped by 18.8% in 2019-20, compared to the previous year.
Debt agreements dropped by 29.5%, personal insolvency agreements dropped by 15.9%. The overall amount of personal insolvencies dropped by 23.3%.
On the whole, there were 12,450 bankruptcies in Australia in 2019 and 2020.
17. In March 2019, there was an increase in the number of proposals and bankruptcies in Canada by 16% compared to February that year.
(Government of Canada)
Bankruptcy facts from Canada confirm that the rate of bankruptcies increased by 13.4%, whereas the rate of proposals increased by a whopping 17.9%.
In total, March 2019 displayed a 5.8% higher rate of insolvencies than it did in March 2018.
18. In 2018, 49% of all countries found in the Global Bankruptcy Report witnessed a drop in the number of business bankruptcies compared to 2017, according to data on bankruptcies in 2019.
(Dun & Bradstreet)
Interestingly, the economic unpredictability in America, Japan, China, and the Euro Area did not affect this percentage.
Nevertheless, frictions due to the US-Chinese trade war, Brexit, and the drop in consumer spending in China proved challenging for the economy. At the moment, it’s hard to tell what the long-lasting effects of these will be (especially with the ongoing coronavirus pandemic).
19. Based on the bankruptcy statistics for England and Wales, there were 12,625 bankruptcies in 2020.
This was a decrease of 25%, compared to 2019. In parallel, 111,424 individual insolvencies took place in 2020. Again, this was a 9% decrease compared to the previous year.
Other data shows there were 78,478 individual voluntary arrangements (a 1% increase) and 20,321 debt relief orders (a 25% decrease).
20. Bankruptcy and coronavirus stats about Japan denote that 1,100 business enterprises went bankrupt by March 2021 due to the pandemic.
The food-service industry was hit the most. 172 bars and restaurants filed for bankruptcy as of March 2021. Next in line were construction firms (92 cases) and hotels (79 cases).
When it comes to the cities, Tokyo reported 264 bankruptcies, Osaka 108, and Kanagawa 64.
21. Stats on bankruptcies from 2019 reveal that there was a 68.4% growth in bankruptcy court filings in China in 2018, compared to 2017.
Additionally, the National Enterprise Bankruptcy Information Disclosure Platform revealed that the overall number of in-progress bankruptcy cases was only 289 the same year.
Interestingly, only 10.5% were filed by state-owned enterprises, whereas the majority of these were filed by regional, smaller SOEs.
22. Bankruptcy during coronavirus: the insolvencies are expected to increase by 26% in 2021 on a global level.
Although the number of bankruptcies went down by 14% in 2020 globally, and many countries experienced declines, except Turkey and Ireland, where the number of bankruptcies increased in 2020, this massive growth is expected in all countries and regions.
Australia, France, Singapore, Spain, and the Netherlands are expected to have the largest increases.
Less Known Bankruptcy Statistics & Facts
How many lottery winners end up penniless, how much does it cost to file for bankruptcy, and who can file for chapter 7 and chapter 13 bankruptcy?
23. Only 17% of lottery winners use their winnings to dissolve debts, while 37% go on a vacation.
One would think that winning the lottery would help people pay off their debts, when in fact, it does the exact opposite.
24. Lottery winners’ bankrupt statistics reveal that about one-third of lottery winners end in bankruptcy.
A common false statistic on lottery winners is that 70% of them go bankrupt within the time frame of 5 years after hitting the jackpot.
In reality, these “lucky” individuals have a higher chance of declaring bankruptcy within a time frame of 3–5 years than the typical American.
25. In order to lose $10,000,000 won on a lottery, you’d have to spend $285 per hour for five years.
(Making of a Millionaire) (Love Money)
Bankruptcy facts show us that many lottery winners lose all their money in a short amount of time? Why? In short, due to overspending.
To be more precise, let’s say you win $10,000,000 on a lottery. You can splurge it all in five years if you spend $285 per 24 hours, $6,853 per day, i.e., $47,974 per week.
Lottery winners’ bankrupt statistics have proven that time after time. For example, Callie Rogers, Britain’s youngest lottery winner (she was 16), who won $3 million in 2003, managed to spend all her money within ten years. How?
First, she quit her job, and then she went on spending all of her money on gifts, night outs, vacations, and cosmetic surgery. By 2013, she was left with only $2,580 in her bank account.
26. Restaurant bankruptcy statistics reveal that in 2019 and 2018, Subway closed around 8% of its restaurants.
Subway struggled with regaining a solid footing in marketing and the rising costs and declining rates, which took a toll on the restaurant chain.
In fact, at the beginning of February 2020, Subway had to let go of some 300 workers, while in 2019, it closed a whopping 1,100 restaurants.
27. Facts about filing bankruptcy reveal that the process costs money — between $1,500 and $4,000.
(National Bankruptcy Forum)
For some reason, many people believe that bankruptcy is free. Yet, in reality, one needs to hire an attorney first. The average attorney fee is $1,250 for Chapter 7 and $3,000 for Chapter 13.
There are also filing fees, $335 for Chapter 7 and $310 for Chapter 13.
In other words, the total cost of Chapter 7 filing (with an attorney) amounts to $1,500–$3,000, i.e., $3,000–$4,000 for Chapter 13 filing.
What is the number one cause of bankruptcies in America?
The main reason why people in the US go bankrupt are medical expenses. Other common reasons for bankruptcy include layoffs or resignation, followed by unskilled use of credit, separation or divorce, and unexpected expenses such as loss of homes due to floods, earthquakes, or tornados.
In addition to that, unaffordable mortgages or foreclosure, spending or living beyond one’s means, providing help to friends or relatives, and student loans can also be noted as the main reasons for bankruptcy.
The negative financial impact of serious illnesses highlights the importance of disability insurance too.
How long does bankruptcy stay on your credit report?
Bankruptcies will remain on a credit report for a total of 7 years (for Chapter 13 bankruptcies) and a total of 10 years (for Chapter 7 bankruptcies).
In comparison, late payments, foreclosures, a public record, and collections will typically stay on a credit report for a total of 7 years.
Nevertheless, it is important to remember that the older the negative item on the credit report, the less likely it will impact the overall FICO score.
How to remove bankruptcy from your credit report early?
Removing bankruptcy from your credit report early is not impossible, but it is difficult. In general, there are five steps one must take to do this.
The first step is to check the credit report for bankruptcy errors and make sure you have a credit monitoring service.
Next is to dispute faulty entries with a credit dispute letter, after which you will need to send a letter to the credit bureaus concerning a procedural request.
After completing this step, ask the court to verify the bankruptcy. Lastly, remove the bankruptcy with the help of a professional.
How many personal bankruptcies were there in 2020?
In 2020, there were 544,463 bankruptcy filings, which is 29.7% less than in 2019 (774,940 cases). 21,655 businesses filed for bankruptcy, followed by 522,808 non-businesses.
Total bankruptcy filings by chapter amounted to 378,953 (for Chapter 7), 8,333 (for Chapter 11), 560 (for Chapter 12), and 156,377 (for Chapter 13).
The increase in filings was noted only in Chapter 11. Compared to 2019, the filings were 18.7% higher. Out of 8,333 Chapter 11 filings, 7,786 were related to business reorganizations.
Do bankruptcies ever get denied?
Yes, bankruptcies can get denied. Bankruptcies can be denied for several legitimate reasons:
- If you deliberately hide your property
- If you destroyed your financial books or records
- If you make false statements about your earnings, debts, and assets (orally or in written form)
- If you don’t explain the reasons for the loss of money or property
- If you don’t complete a credit counseling or financial management course that’s required
- If you violate a court order
- If you don’t disclose a prior bankruptcy case
- If you receive a Chapter 7 bankruptcy discharge (within the past 8 years)
- If you receive a Chapter 13 bankruptcy discharge (within the past 6 years)
How often do people file for bankruptcy?
Can you file bankruptcy twice? In short, yes.
Still, individuals who have filed a Chapter 7 bankruptcy and want to file another bankruptcy of the same type need to wait 8 years to do so.
On the other hand, individuals who have previously filed Chapter 7 and wish to file Chapter 13 must wait a total of 4 years.
What percentage of people declare bankruptcy?
While approximately 14% of US households have debts, fewer than 1% file for bankruptcy.
In such a circumstance, many people postpone filing because they are afraid they will lose all of their property.
Although bankruptcy can seem like the ultimate embarrassment, in reality, this is not the case. In fact, bankruptcy exists for a reason — to provide a new beginning for those individuals or companies who need to start over, like 24 Hour Fitness. They recovered right at the end of 2020.
Overall, these bankruptcy statistics may be frightening and upsetting (at first), but as you can see, they’re not the end of the world. Just remember, there’s always a rainbow after the rain.
- Bloomberg Law
- Dun & Bradstreet
- Globe Newswire
- Government of Canada
- Jones Day
- Making of a Millionaire
- National Bankruptcy Forum
- NBC News
- Restaurant Business
- Ryan Hart
- Tampa Bay Times
- The Balance
- The Balance
- The Gazette
- US Courts
- US Courts
- US Courts