New bankruptcy filings in February 2023 registered double-digit increases year-over-year across all U.S. major filing categories, according to data provided by Epiq Bankruptcy—a division of Epiq, a global technology-enabled services provider to the legal services industry and corporations.
The 31,889 total new bankruptcy filings in February were up 18% from the 27,006 filings registered in February 2022. Total commercial filings increased 18% to 1,696, compared to 1,442. Commercial Chapter 11 filings increased 83% to 373 filings, up from 204. Subchapter V small business filings increased 45% to 120, compared to 83 filings registered the previous year.
Continuing year-over-year, total individual filings increased 18% to 30,193, versus 25,564 in February 2022. While still below pre-pandemic levels, individual Chapter 7 filings increased 12% to 16,991, compared to 15,190, and individual Chapter 13 filings increased 28% to 13,149, versus 10,311 in 2022.
“The growing number of households and businesses filing for bankruptcy reflects the mounting economic challenges they now face,” said American Bankruptcy Institute (ABI) Executive Director Amy Quackenboss. “Debt loads are expanding as the prices of goods and services have gone up with inflation and the cost of borrowing continues to rise. While pandemic relief efforts have largely expired, the safe haven of bankruptcy is continually available for financially distressed businesses and consumers.”
Comparing month-over-month, and considering there are three fewer days in February, the 31,889 total filings were still 2% higher than the 31,161 reported in January. Total commercial filings decreased just 1% to 1,696 from 1,713 the month prior. Total Chapter 11 filings remained relatively flat, 373 filings versus 376 filings, and Subchapter V increased just 5% to 120 filings from 114 filings. Total individual filings increase 3% to 30,193 from 29,448, while individual Chapter 7 filings increased 8% to 16,991, from 15,717 and the individual Chapter 13 filings decreased 4% to 13,149, from the 13,678 filed in January.
Comparing open to closed cases, while new filings are on the rise, the current 662,204 total open cases represent another month-over-month decline. There were 36% fewer open cases reported since May 2019 when there were more than one million. Looking back one year, there are 52,662 fewer open cases than the 714,866 in February 2022, a 7% decline.
“Overall, the stimuluses have had a positive effect for individuals and companies, as 10,843 more cases have closed than opened in 2023,” said Gregg Morin, VP of Business Development and Revenue for Epiq Bankruptcy. “However, as new monthly filings rise, this trend is likely to end.”