Bankruptcy filings have increased noticeably across the United States in 2025, and New York was no exception. After several years of historically low filing levels following the covid pandemic, the past year marked a clear shift. More individuals have turned to the bankruptcy courts for relief as financial pressures accumulated, signaling that many of the economic challenges of the past few years have taken their toll.
National Bankruptcy Trends in 2025
Nationally, total bankruptcy filings rose by 11% compared to 2024, reflecting steady growth throughout the year rather than a single spike. Individual filings, particularly consumer Chapter 7 cases, climbed at a slightly faster pace at 12%, suggesting growing stress among households struggling to keep up with debt obligations. While overall filing levels remained below some pre-pandemic highs, there was a consistent upward trend throughout 2025. We expect that trend to continue this year as well.
Bankruptcy Filings 2024 vs 2025
Total Bankruptcy Filings: Up 11% (565,759 vs. 508,953).
Total Consumer Bankruptcy Filings: Up 12% (533,949 vs. 478,752).
Consumer Chapter 7 Bankruptcy Filings: Up 15% (332,706 vs. 288,908).
Chapter 13 Bankruptcy Filings: Up 6% (200,055 vs. 190,000).
Chapter 11 Bankruptcy Filings: Up 1% (7,940 vs. 7,893).
Source: uscourts.gov
Financial Pressure in New York in 2025
For New York consumers, the increase in filings reflected mounting household pressures. High housing costs, persistent inflation in everyday expenses (for example – rent, utilities, and food), and elevated interest rates made it harder for many families to manage credit card balances, personal loans, and other living expenses. According to the latest consumer debt data from the Federal Reserve Bank of New York, total credit card balances have increased to $1.233 trillion as of the third quarter of 2025. This is the highest balance since the New York Fed began tracking these statistics in 1999. The high cost of living in New York combined with record credit card debt is a formula for financial stress, especially for the lower and middle class. Additionally, many small business owners with personally guaranteed business debt, in particular SBA EIDL debt, who have been struggling since COVID have sought relief from their creditors in Chapter 7 and Chapter 13, depending upon their individual circumstances.
Bankruptcy Can Provide a Fresh Start
For New Yorkers overwhelmed by debt, bankruptcy can provide an opportunity for debt relief and a fresh start. Chapter 7 bankruptcy provides a fast fresh start, eliminating a debtor’s dischargeable debt, such as credit card and personal loan balances. If Chapter 7 is not an option, Chapter 13 bankruptcy allows a debtor to restructure their debt over a 36-60 payment plan. Depending on the debtor’s budget, assets and other factors, in some cases only a percentage of the debt may be repaid in the plan. Chapter 13 can also be very helpful to homeowners, enabling them to repay mortgage arrears and prevent foreclosure. Both Chapter 7 and Chapter 13 bankruptcy provide a debtor with an automatic stay that protects them from debt collection, stopping harassing collection calls, garnishments, frozen bank accounts, and foreclosure auctions.
The Rise in Bankruptcy Filings in 2025 and Looking Ahead to 2026
Despite the rise in filings, 2025 did not resemble a full-scale economic crisis. Compared to the aftermath of the Great Recession or the early months of the COVID-19 pandemic, bankruptcy levels remained relatively moderate. Still, the steady increase throughout the year suggested that financial strain was becoming more widespread and persistent.
Looking ahead, the increase in bankruptcy filings in New York serves as an important indicator of underlying economic stress. For individuals, it highlights the ongoing challenges of managing debt in a high-cost environment. Hopefully, the trend may be noticed by policymakers, who can renew conversations on legislation concerning appropriate revisions to the bankruptcy code, access to affordable credit, and support for small businesses navigating uncertain financial conditions.
Contact the Law Offices of David I. Pankin, P.C.
As 2026 unfolds, whether bankruptcy filings continue to rise or begin to level off will offer valuable insight into the financial health of New Yorkers, and the broader economy, moving forward. If you are feeling financially stressed, feel free to contact the Law Offices of David I. Pankin, P.C. at 888-529-9600 or by using our easy online contact form and schedule a free consultation today. Remember, “bankruptcy is not the end, it’s a new beginning”.
