With the global coronavirus pandemic on the rise, 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 Stats and Facts About Bankruptcy
- The state with the highest rate of bankruptcy (Chapter 13) was Alabama with 1 in 112 bankrupt households.
- In the States, there were 755,182 bankruptcy filings in 2018.
- The annual bankruptcy filings from June 2017 tallied 796,037.
- Debtors with an income of $30,000 or less per annum are more likely to face bankruptcy.
- 62.1% of bankruptcies in the US are caused by expensive medical problems.
- Bankruptcy trends reveal that 26% of US citizens between the ages of 18–64 struggle with paying healthcare bills.
- In March 2019, there was an increase in the number of proposals and bankruptcies in Canada by 16% compared to February that year.
- On a corporate level, 8,235 was the number of bankruptcies in 2018 in Japan.
- Only 17% of lottery winners use their winnings to dissolve debts, whereas 37% go on a vacation.
- Declaring bankruptcy actually costs money.
Statistics on United States Bankruptcy
1. How many bankruptcies were filed in 2019? 452,797 was the number of filing for bankruptcy cases in the initial seven months of 2019.
This was a slight increase compared to 450,568 during the same time the previous year.
These upsetting statistics by the American Bankruptcy Institute reveal that, in July 2019, the number of bankruptcy filings had risen by 5% from June 2019. In fact, there were a total of 64,283 bankruptcy filings, compared to 62,241 for the same month the previous year.
2. Stats on U.S. bankruptcies from 2018 reveal that there were 12.8 million bankruptcy petitions by consumers filed between October 2005 and September 2017.
(US Courts) (US Courts)
During the 12-year span, 68% (8.7 million) were filed under Chapter 7, and 32% (4.1 million) were filed under Chapter 13. The main difference between the two chapters being that the former does not involve the filing of a repayment plan.
3. Bankruptcy rates by state report that Alabama is the state with the highest rate of bankruptcy (Chapter 13) with 1 in 112 bankrupt households.
Statistics from 2016 also show that the state with the second-highest rate of bankruptcy is Tennessee with 1 in 119 households, followed by Georgia (1 in 135), Louisiana (1 in 179), and finally Mississippi (1 in 190).
On the flip side, Alaska showed the lowest rates of bankruptcy with 1 in 4,359 households.
4. 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.
5. How many bankruptcies were filed in 2017? The annual bankruptcy filings from 2017 tallied 796,037.
According to the Administrative Office of the US Court, there was a 2.8% drop in bankruptcy filings for June 30, 2017, during a 12-month period, compared to June 30, 2016, when the annual bankruptcy filings totaled 819,159.
6. Bankruptcy filings were the highest in 2005, with over 2 million, based on statistics dealing with U.S. personal bankruptcies by year.
5.3 for every 1,000 individuals was the bankruptcy filing rate in 2004, which is four times higher than the one in 1980.
What’s more, despite the record-high rates in 2005, the figure dropped to 597,965 in 2006. Fortunately, the number of bankruptcy filings has decreased every year since the beginning of the decade.
7. Debtors with an income of $30,000 or less per annum are more likely to face bankruptcy.
Bankruptcy data indicates that more than half of the total bankruptcy filings are generated by debtors who have a high school diploma or a college degree.
Not only that, but findings also reveal that African-Americans are much more likely to file bankruptcy (Chapter 13) than any other race.
8. 62.1% of bankruptcies in the US are caused by expensive medical problems.
A recent study found that 92% of individuals had over $5,000 in medical debts and pre tax family income of 10%. Likewise, the latest bankruptcy facts also reveal that the majority of debtors owned houses and were educated.
Yet another study found that medical expenses affect more than 2 million individuals negatively.
9. 26% of US citizens between the ages of 18–64 struggle with paying healthcare bills.
Based on reports by the US Census, 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.
10. Who files for bankruptcy the most? The married and the divorced display higher rates of bankruptcy.
The majority of debtors are, in fact, married as these couples have a lot more expenses and higher instances of debt than those individuals who are single.
In addition, divorced debtors are more likely to file bankruptcy, seeing how attorneys, and divorce, in general, are expensive.
Global Bankruptcy Stats
11. In Australia, the percentage of personal insolvencies dropped by 15.1% in 2018 and 2019, compared to the previous 2 years.
(Australian Financial Security Authority)
More specifically, debt agreements dropped by 22.1%, personal insolvency agreements dropped by 15.9%, whereas bankruptcies fell by a total of 8.8%.
On the whole, there were 15,329 bankruptcies in Australia in 2018 and 2019.
12. 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 in Canada reveal 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.
13. 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 statistics 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).
14. Stats on personal bankruptcies from 2018 for England and Wales reveal that cases of insolvency rose by 16.2% since 2017.
In other words, 11,299 was the number of individuals facing insolvency in 2018 in England and Wales.
Unfortunately, experts claim that this personal bankruptcy figure was the highest of all annual individual insolvencies since the year 2011. Furthermore, the number of DROs in 2018 was 27,683 — an increase of 11.2% since 2017.
15. On a corporate level, 8,235 was the total number of bankruptcies in 2018 in Japan.
Fortunately, in Japan, 2018 marked the lowest level of corporate bankruptcies since the economic bubble from 1986–1991. In 2018, bankruptcies for liabilities of ¥10 million ($92,297 ) or higher declined each year by a staggering 2%, based on Tokyo Shōkō Research reports.
Overall, since 2009, bankruptcies in Japan have displayed a steady decline. When it comes to 2018, there were only 198 bankruptcies involving ¥1 billion ($9,229,775 ) or more in liabilities.
16. In China, stats on bankruptcies from 2019 reveal that there was a 68.4% growth in bankruptcy court filings 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.
Less Known Bankruptcy Rates and Facts
17. 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.
Apart from these, 37% of lottery winners invest in real estate, bonds, or stocks. Another 23% of winners decide to buy a home, whereas 20% start thinking about remodeling.
18. Lottery winners bankrupt statistics reveal that almost 33.3% 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.
19. Restaurant bankruptcy statistics reveal that in 2019 and 2018, Subway closed around 8% of its restaurants.
(Restaurant Business) (Restaurant Business)
Subway not only struggled with regaining a solid footing in marketing, but also the rising costs and the declining rates which took a toll on the restaurant chain as well.
In fact, at the beginning of February 2020, Subway had to let go of some 300 workers, while in 2018 it closed a whopping 1,100 restaurants.
20. Facts about filing bankruptcy reveal that the process costs money — and lots of it.
For some reason, many people believe that bankruptcy is, in fact, free. Yet, in reality, one needs to hire an attorney first. In the majority of cases, these lawyer fees are also added to the filing. One may also need to pay court expenses as well.
Also, you need to take into account that Chapter 13 fees are costlier as the process is more time consuming than, per se, Chapter 7.
What is the number one cause of bankruptcies in America?
As previously mentioned, the main reason why people in the US go bankrupt is due to costly medical expenses. Sadly, these expenses can swiftly wipe out college education funds, savings, and retirement accounts. The negative financial impact of serious illnesses highlights the importance of disability insurance too.
Other common reasons for bankruptcy include layoffs or resignation, followed by poor use of credit, separation or divorce, and unexpected expenses such as loss of homes due to floods, earthquakes, or tornados.
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 it is likely to impact the overall FICO score.
How to remove bankruptcy from a credit report early?
Removing bankruptcy from your credit report early is possible, but difficult. In general, there are five steps one must take in order to do this.
The first step is to check the credit report for bankruptcy errors and to 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 often do people file 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.
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 just need to start over.
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.