More Than 52,000 Bankruptcy Filings Made in August

A total of 52,007 bankruptcy filings were made by individuals and businesses in August, up 8 percent from a year ago amid cost pressures and geopolitical uncertainties, according to the American Bankruptcy Institute (ABI).

There were 49,377 filings made by individuals last month, up 9 percent year-over-year, and 2,630 commercial filings with a 2 percent increase, ABI said in a Sept. 4 statement.

“Persistent cost pressures, restrictive credit markets, and ongoing geopolitical uncertainty continue to create challenges for consumers and small businesses facing economic distress,” said Amy Quackenboss, executive director at ABI.

The ABI statement highlighted a 63 percent year-over-year increase in Subchapter V elections within commercial Chapter 11 filings.

“The August filing figures indicate that consumers and small businesses continue to navigate a challenging economic environment,” Michael Hunter, vice president of bankruptcy data provider Epiq AACER, said in the statement.

“The increase in Subchapter V elections reflects a growing preference for restructuring over liquidation as business owners seek practical solutions to manage debt and preserve value.

“As financial pressures persist, bankruptcy filings are likely to continue rising through 2026 and into 2027,” Hunter said.

Overall Economic Situation

The annual inflation rate in the United States dropped for two months and was at 3.4 percent in July, down from 4.2 percent in May, according to data from the Bureau of Labor Statistics.

Moreover, optimism among small businesses has improved, said an Aug. 25 statement from the National Federation of Independent Business (NFIB).

A survey of small businesses found that optimism in four industries—construction, manufacturing, retail, and services—rose in July from April, according to an NFIB report.

Optimism was highest among construction and manufacturing sectors.

A total of 69 percent of owners rated the overall health of their small business as excellent or good, which was up two points from April.

“While most metrics improved, many owners are reporting supply chain disruptions and difficulty finding qualified employees,” Holly Wade, executive director of NFIB’s Research Center, said in the statement.

“Despite some challenges, Main Street is feeling more confident about economic conditions and the health of their business.”

New Policies and Proposals

In its recent statement, ABI highlighted the Bankruptcy Threshold Adjustment Act of 2026 passed by the Senate last month.

This threshold is the maximum debt limit a business can have when applying for such bankruptcy.

The bill is now in the House of Representatives.

The measure also raises the debt limit of individuals filing for Chapter 13 bankruptcy.

“Congressional efforts to permanently increase the eligibility limits for both Subchapter V and Chapter 13 would create greater access for struggling businesses and families to access the restructuring tools they need to regain financial stability,” Quackenboss said.