Over the past couple of decades, bankruptcy statistics in 2022 show that bankruptcies in America have skyrocketed, making it a problem across income levels.
We have researched and gathered a lot of new data on bankruptcy for your consideration.
This article will discuss mind-boggling bankruptcy statistics that you may or may not know about. If you don’t, these will literally boggle your mind.
Not only will we cover facts and figures about bankruptcy, we will also briefly discuss what it is, what it means, and its pros and cons.
Filing bankruptcy is a legal process where an individual or a business that cannot pay their debts files to either reorganize or totally wipe out the debt.
Does bankruptcy have a catch attached to it? Sometimes yes, but sometimes no.
That is some of the things we will address in this article about bankruptcy statistics and general facts and knowledge about bankruptcy.
Let’s get started!
Key Bankruptcy Statistics 2022
- 97% of all bankruptcies in America are filed for individual debt.
- Medical bills are the number one reason cited for individual bankruptcy.
- 8% of those who filed for bankruptcy have done so at least once before.
- Bankruptcy statistics show that at least 5% of all bankruptcy filings are due to reckless spending habits.
- 60% of those who file for bankruptcy make under $30,000 per year.
- Individual bankruptcy statistics show that men are more apt to file than women.
- 20% of people with bachelor’s degrees or higher filed for bankruptcy in 2010.
- Corporate American bankruptcy filings rose in the first three quarters of 2020.
- In 2020, 470 companies went bankrupt between January and September.
- New York revealed over 600 corporate bankruptcies in 2019.
Personal Bankruptcy Statistics 2022
First, we will use this section to discuss some individual facts and stats about bankruptcy that you may not know.
If you do know them, you may have “declared” bankruptcy in the past, or you know someone who has.
Let’s talk about bankruptcy by the numbers.
1. 97% of All Bankruptcies in America Are Filed for Individual Debt.
Believe it or not, most bankruptcies are not filed by businesses, but by individuals with debt problems.
Debt like student loans, credit cards, auto loans, or mortgages are the most erased in bankruptcy.
In 2019, 752,160 bankruptcies were filed, of which 97% were for individual debt. The other 22,780 (3%) were business bankruptcies.
Not surprisingly, most individuals who filed for bankruptcy were not wealthy, according to bankruptcy statistics.
2. Medical Bills Are the Number One Reason Cited for Individual Bankruptcy.
One study showed that 62.1% of all bankruptcies were because people couldn’t afford to pay their medical bills.
Another study showed that more than 2 million people are impacted by medical bill debt.
One out of every five people in another survey reported that they had been contacted by collection agencies over medical bills.
It’s heinous how much medical care costs and that people have to file bankruptcy to settle their debts from medical expenses.
3. 8% of Those Who Filed for Bankruptcy Have Done so At Least Once Before.
According to individual bankruptcy statistics, about 8% of those who filed bankruptcy have filed before.
This figure accounts for 16% of all types of bankruptcy cases. Experts believe that bankruptcy laws are being exploited due to these repeated filings.
Even though there are some policies in place to prevent the abuse of bankruptcy, they have very little effect on who can declare bankruptcy, when, and why.
The bankruptcy system isn’t supposed to be used to erase debt repeatedly, but it is used that way at least 8% of the time.
4. Bankruptcy Statistics Show that At Least 5% of All Bankruptcy Filings Are Due to Reckless Spending Habits.
Most bankruptcy filings are not attributed to reckless spending. Only 5% of all bankruptcy cases are due to reckless spending.
Lower-income families, financial hardships, and unexpected expenses that send them over their income level do contribute to bankruptcy.
The loss of a job, major medical bills due to an accident or illness, and other things that are out of your control can and will cause serious financial implications.
Bankruptcy is designed to ease that load.
5. 60% of Those Who File for Bankruptcy Make Under $30,000 per Year.
This data is from 2011. According to debt.org. It’s a reduction from the 66% figure from just four years earlier.
During that same period, there was an uptake in those making over $60,000 per year filing bankruptcy.
This income demographic grew from 5.5% to 9.2%.
The data from 2006 to 2010 shows that people who make more than $60,000 annually, with no cause filed for bankruptcy.
This simply means that people at this income level filed for bankruptcy more than usual, but they had no reason to do so.
6. Individual Bankruptcy Statistics Show that Men Are More Apt to File than Women.
According to individual bankruptcy statistics on debt.org, the numbers between men and women who file personal bankruptcies are almost equal.
Men are slightly more apt to file for bankruptcy, at 52% than women, at 48%.
Another 64% of personal bankruptcies are filed by married couples, according to 2010 data.
That does include those who file their taxes jointly as married. Also, 3% of all debtors are widowed, 17% are single, and 15% are divorced.
7. 20% of People with Bachelor’s Degrees or Higher Filed for Bankruptcy in 2010.
According to 2011 bankruptcy statistics from a study, people with at least some formal higher education are in the higher risk group for bankruptcy due to financial woes from student loans.
Roughly 36% of bankruptcy filers had a high school education, while 29% had some college coursework.
When the financial burden of a college student in loans outweighs the income they are able to achieve, bankruptcy is an out for them.
The rising costs of college education aren’t helping this problem.
Corporate American Bankruptcy Statistics 2022
In this section, we will talk about corporate America and bankruptcy statistics based on corporate filings.
8. Corporate American Bankruptcy Filings Rose in The First Three Quarters of 2020.
This is an extensive problem for corporate America. In Q1 of 2020, corporations filed Chapter 11 at 33%. The average is 18%.
Mega bankruptcies during the same quarter were at 6%. Chapter 11 accounted for 8% of public companies and 25% of private companies.
By the third quarter of 2020, corporations filed Chapter 11 bankruptcies at 49%. Mega bankruptcies were at 15%.
Public filings were at 26%, and private company filings accounted for 23%.
9. In 2020, 470 Companies Went Bankrupt Between January and September.
That number is higher than any other comparable number since 2010.
By the end of that year, they were pushing 500 companies, according to bankruptcy statistics.
Advanzeon Solutions, a managed care insurer founded in 1969, filed a Chapter 11 reorganization bankruptcy.
KB Holdings, Inc., a supermarket conglomerate, also filed for bankruptcy, along with Providence Hospital of North Houston LLC, and TNT Crane & Rigging Inc.
These were a few of the 470-500 that filed for bankruptcy in 2020.
10. New York Revealed Over 600 Corporate Bankruptcies in 2019.
2019 was a significant year for corporate bankruptcies. In New York alone, there were 636 corporate filings for bankruptcy.
California came in second with 577 corporate bankruptcies. Texas was third in line with 530.
These corporate bankruptcy numbers are the highest seen since the recession of 2007, in California alone.
Moreover, Illinois took fourth place with 486, and Pennsylvania came in fifth with 483 corporate bankruptcies.
Bankruptcy Statistics 2022: The Future
In this section, we will look ahead at some bankruptcy statistics for the future, both for personal and business.
11. Non-Business Bankruptcy Filings Fell by 23.6% by The End of 2021.
At the end of 2021, personal (non-business) bankruptcies fell to 399,269, down from 522,808 from 2020.
That should give us all some reason to hope that bankruptcy courts will be less busy in 2020.
Of course, we have to factor in the unemployment bonuses of 2020 that spiked in March for the pandemic emergency response.
That said, there are many factors that affected decisions people made about filing for bankruptcy between 2019 and 2021.
12. Alaska Had the Fewest Cumulative Bankruptcies for 2021.
Alaska had a total of 107 bankruptcies in 2021. California had the most, with 18,817 plus.
Other states that kept bankruptcies under 300 for the year include Montana, North Dakota, South Dakota, Wyoming, Vermont, New Hampshire, and Maine.
For those following in California’s footsteps, there were these with over 6,000 bankruptcies in 2021: Texas, Florida, Alabama, Georgia, Tennessee, Illinois, Indiana, Ohio, Michigan, and New York.
13. In 2021, There Were a Total of 413,616 Bankruptcies in America.
This figure shows a drop from the 544,463 bankruptcies filed in 2020. This figure represents a 24% decrease in bankruptcy filings.
Bankruptcies seem to be on the decline since the COVID-19 pandemic crisis.
Business filings also fell by 33.7%, which represents the difference between 21,655 to 14,347 by the end of 2021.
We can hope that this steady decline continues.
Some of the decline in bankruptcy for businesses revolves around the ease of government borrowing to ward it off.
14. In May 2022, There Was an Increase of 32% in Corporate Filings from 2021.
As government help programs ward off bankruptcy for some businesses in 2020 and 2021, that issue seems to be coming back to haunt American businesses.
There has been an uptake in business bankruptcies in the first two quarters of 2022.
As of April 2022, corporate bankruptcy filings were at 250.
As the economy goes into further decline, we will see more bankruptcy filings for individuals and in corporate America.
15. Insolvencies Are Expected to Increase by 15% in 2022.
After a two-year decline for insolvencies, there will be a 15% increase over 2022. The support measures put into place by the U.S.
Government, this is an inevitable result. Bankruptcy filings reached a historic low throughout the pandemic, but are now expected to take a rise.
The massive intervention of the government may have helped to prevent a few bankruptcies, but ultimately, there will be an increase in 2022 in America and across the world.
We have reached the end of the most mind-boggling bankruptcy statistics that have impacted America and the globe for the past three to four years.
Now, let’s discuss a little more about bankruptcy with these questions and answers.
What Is Bankruptcy?
Bankruptcy is processed through the U.S. bankruptcy courts in front of a judge and court trustee.
They examine liabilities and assets of the person, partnership, or business who have accumulated more debt than they feel they can pay.
The court then decides if they can discharge (erase) the debts, or dismiss the case if they feel the person, business, or partnership, can pay the debt.
The idea behind bankruptcy is to help people start over again when their finances have gone awry.
It can be due to bad luck, illness, job loss, accident, reckless spending, loss of income, bad decisions, or other reasons for debt issues.
What Are the Types of Bankruptcy?
We cannot go through all the types of bankruptcy types because there are several.
However, we can cover some brief information about the three main types of bankruptcy.
Chapter 7 Bankruptcy: This form of bankruptcy is for individuals or businesses with few assets and low incomes.
Chapter 7 is the most popular form of bankruptcy filed in America, accounting for 63% of all bankruptcies in 2019.
Chapter 7 stays on your credit for 7 to 10 years and will have an instant impact on your credit score. You may file Chapter 7 again after 8 years of the last filing.
Sometimes, you must pay back some of the debt, and sometimes all debt is discharged.
Chapter 13 Bankruptcy: 36% of non-business bankruptcy filings are Chapter 13.
This type of bankruptcy is where you repay some of your debts in order to have the other debts forgiven. There is usually a 3- to 5-year repayment plan involved.
If a person cannot pay back the debt on time, or finish the plan on time, they may have to file a Chapter 7 bankruptcy to discharge the debt. If that can’t be done, they will still owe the debt.
Chapter 11 Bankruptcy: Chapter 11 is also called a reorganization bankruptcy that allows businesses to remain open as they restructure their assets and debts to pay back their creditors.
Only 6,808 of 2019’s bankruptcies were Chapter 11.
What Are the Pros and Cons of Bankruptcy?
There are several pros and cons of bankruptcy filings, but here are just a few for your information.
• Filing can remove old tax liabilities
• Repossessions, lawsuits, defaults, and missed payments can be dismissed
• Bankruptcy gives you a new financial start
• It makes creditor calls stop
• Bankruptcy doesn’t get rid of student loan debt
• It can make you feel defeated
• You can lose some luxury possessions
• It will lower your credit score
• Most tax debt cannot be discharged
Who Can File for Bankruptcy?
Essentially, any person or business that has more debt than the funds to cover them can file for bankruptcy.
There are guidelines for how much or how little income or revenue you can have to file, along with state laws that impact your ability and method for filing.
Now you have more information about bankruptcy than you did when you started reading this article.
Hopefully, these bankruptcy statistics in 2022 have enlightened you to the court process of filing and its pros and cons.
Most people feel that bankruptcy is a last resort, and that’s exactly what it is. As long as you can pay off your debt, you are better off in the long run.
However, disasters, illnesses, job loss, pandemics, accidents, and other factors can ruin your financial health.
That’s when bankruptcy can be a lifesaver, even with the disadvantages of it.
One way to know if you should file for bankruptcy or not is to consider if you can pay off your current debt within five years or less.
If you cannot, it may be time to file for bankruptcy.
If you’re struggling with medical bills that just keep coming, bankruptcy is a good way to get a new start.
Remember, you will be stuck in bankruptcy issues and will not easily be able to get financing for a house, car, or any kind of loan or credit for 7 to 10 years.
That’s one reason it’s so smart to consider this decision carefully.
For those who don’t qualify for bankruptcy, there are other debt relief options like debt consolidation, debt settlement, or other debt management solutions that can help you reduce your debt load and be free within 3 to 5 years without a bankruptcy looming over you for 7 to 10 years.
Have you ever filed for bankruptcy? Was it due to medical bills, which is the biggest reason people file?
Have you ever filed for a business bankruptcy? Would you file for bankruptcy if you couldn’t pay your debts, or would you get debt relief another way?
Do you know someone who has had a very bad experience with bankruptcy?
Always consult with an attorney before deciding to declare bankruptcy. You may have better options.