No signs of slowing down on the surging U.S. bankruptcy filings in 2024

U.S. bankruptcy filings jumped 18% in 2023 on the back of higher interest rates, tighter lending standards and the continued runoff of pandemic-era backstops, according to data released Wednesday. But the volume of bankruptcy cases remains well below levels seen before the outbreak of COVID-19.

According to data from bankruptcy data provider Epiq AACER, total bankruptcy filings, which include commercial and personal bankruptcies, rose from 378,390 in 2022 to 445,186 last year.

The number of commercial Chapter 11 cases rose 72 percent to 6,569 from 3,819 a year earlier. Consumer filings increased by 18% to 419,559 from 356,911 the year before.

In the final month of the year, the number of cases filed dropped to 34,447 from 37,860 in 

November, but was up 16 percent from the year before.

The number of bankruptcy cases is still some distance from surpassing the 757,816 bankruptcies filed in 2019, the pre-pandemic year, but the number is expected to continue to rise in 2024.

Indeed, according to the New York Federal Reserve, household debt reached a record high of $17.3 trillion at the end of the third quarter. Delinquency rates are also on the rise, according to the data. However, they remain below the rates seen just before the pandemic.

Financial conditions for businesses and households have tightened considerably over the past two years, thanks to the Federal Reserve’s aggressive raising of interest rates to keep inflation in check. For example, home loan pricing in the second half of last year reached its highest level since the turn of the century. Nevertheless, credit costs and general financial conditions have eased in Q4 after the Fed signaled they were nearing the endof their rate-hike cycle, and Fed officials themselves indicated last month they expect to cut rates this year.