Illuminating Bankruptcy Statistics Examining Recent Trends
With the global pandemic and the resulting financial crisis, there have been countless news stories about well-known businesses going bankrupt in the last two years. In this bankruptcy statistics overview, we’ll examine how many companies and individuals have filed for bankruptcy and take a closer look at the available data. We’ll also discuss the role of medical debt in personal bankruptcies in the US and share a few interesting facts on this subject.
Top 10 Bankruptcy Statistics and Facts for 2023
14,347 US businesses filed for bankruptcy in 2021.
Chapter 7 bankruptcies accounted for 69.7% of all US filings in 2021.
2020 was the year with most commercial bankruptcies since 2010.
The number of large bankruptcy cases decreased by 50.6% in 2021.
The UK saw an 81% year-over-year increase in company bankruptcies in Q2 of 2022.
In the US, there were 399,269 non-business bankruptcy filings in 2021.
The UK recorded a 31% decrease in personal bankruptcies in 2021.
Alabama is the US state with most personal bankruptcies per capita.
66.5% of all bankruptcies in the US stem from high medical costs.
Ecuador has declared bankruptcy 10 times in its history.
Business Bankruptcy Stats
14,347 US businesses filed for bankruptcy in 2021.
The number marked a 33.7% decline from 2020, when 21,655 of US companies filed for bankruptcy. Looking at the data for the last five years, the number of bankruptcy filings has been on a steady decline. For example, 23,157 companies filed for bankruptcy in 2017. This means that the number of bankruptcy filings has decreased by more than 38% over just half a decade.
(United States Courts)
Chapter 7 bankruptcies accounted for 69.7% of all US filings in 2021.
Of the 413,616 bankruptcy filings submitted in 2021, the vast majority (288,327) were Chapter 7, bankruptcy filing statistics reveal. This type of bankruptcy involves the liquidation of all assets owned by a business or an individual and their distribution to creditors. Chapter 13 was the second most common type with 120,002 filings. Unlike Chapter 7, this one is for individual debtors who get a chance to sort out their finances and repay their debt within 3–5 years.
(United States Courts, US Department of Justice)
28% of commercial Chapter 11 filings in 2021 came from real estate businesses.
According to US bankruptcy statistics for 2021, 275 medium and large companies — those with $10 million or more in liabilities — filed for Chapter 11 bankruptcy. The majority of these (28%) were real estate businesses. Other sectors with high filing rates included consumer discretionary (e.g., hotels, restaurants, furniture manufacturers, car dealerships, and automotive industry) at 20%, health care at 10%, energy at 9%, industrials at 8%, and finance at 5%.
(Jones Day)
2020 was the year with most commercial bankruptcies since 2010.
In 2010, 900 US companies went bankrupt due to the then-looming global financial crisis. Since then, the number had mostly declined — until 2020, when 630 companies went bankrupt, statistics show. For context, this was a notable increase from 578 company bankruptcies in 2019 and 513 in 2018. Some of the companies that declared bankruptcy due to the global pandemic in 2020 include famous retailers like J.Crew, JCPenney, and Neiman Marcus.
(GlobeSt, AARP)
The number of large bankruptcy cases decreased by 50.6% in 2021.
As the economy recovered following the COVID-19 pandemic, the bankruptcy rate among large companies — those with $50 million or more in liabilities at the time of filing — saw a massive decline. There were only 121 such cases in 2021, compared to 245 in 2020. The number was also below the ten-year national average of 130 cases per year. However, experts believe the number of filings may increase in 2022 as the government’s COVID-19 relief funds wane.
(Bloomberg)
Seadrift Limited tops the list of the largest US bankruptcies in 2021.
With $7.3 billion in assets at the time of filing, the gas production business Seadrift Limited was the largest US public company to go bankrupt in 2021. Other large companies that declared bankruptcy in 2021 include the real estate trust Washington Prime Group ($4 billion in assets), the internet company GTT Communications ($2.8 billion), the gas company Ferrellgas Partners ($1.7 billion), and the chain of coffee shops Luckin Coffee ($1.2 billion).
(Jones Day)
Lehman Brothers’ 2008 collapse is the largest bankruptcy in US history.
The once-reputable financial services firm had $691.06 billion in assets at the time of filing, putting it far ahead of second-placed Washington Mutual ($327.91 billion), which went bankrupt just 11 days later. Worldcom Inc.’s 2002 bankruptcy is the third biggest at $103.91 billion, while General Motors’ 2009 filing ($82.29 billion) puts it in fourth place. Interestingly, 2021’s largest bankruptcy — Seadrift Limited at $7.3 billion — ranks outside of the all-time top 50.
(Statista)
The UK saw an 81% year-over-year increase in company bankruptcy rates in Q2 of 2022.
Between April 1 and June 30, 2022, there were 5,629 company insolvencies, including 4,908 creditors’ voluntary liquidations (CVL). Not only is the total number 81% higher than in 2021’s second quarter, but the number of CVLs is the highest ever in a quarter since 1960. In the fiscal year between July 1, 2020 and June 30, 2022, 43.9 per 10,000 active companies entered liquidation — a steep increase from 26.9 per 10,000 active companies the year before.
(GOV.UK)
Personal Bankruptcy Data
In the US, there were 399,269 non-business bankruptcy filings in 2021.
Non-business filings have decreased by 23.6% from 522,808 in 2020. This is the continuation of a five-year downward trend that started in 2017. Back then, there were 765,683 personal filings, meaning their number has dropped by 47.9% since. Most non-business bankruptcy filings in 2021 (279,649) were Chapter 7, accounting for 97% of all Chapter 7 filings submitted that year.
(United States Courts)
The UK recorded a 31% decrease in personal bankruptcies in 2021.
The personal bankruptcy rate went down from 11.3% of all insolvency filings in 2020 to 7.9% in 2021. Even more impressively, the number of bankruptcy filings dropped by 48% from the pre-pandemic 2019 — from 16,472 to 8,688. On the whole, 110,022 Brits filed for insolvency in 2021. This was on par with 2020, when 111,578 Brits declared insolvency. It also marked a significant 9.9% decrease from 2019, when there were 122,155 insolvency filings.
(GOV.UK)
Alabama is the US state with most personal bankruptcies per capita.
Looking at personal bankruptcy filings by state as of June 2021, Alabama is in the lead with 306.37 filings per 100,000 people. Tennessee is in second place with 248.27 personal bankruptcies per 100,000 people, and Nevada is third with 246.7. The rest of the top five includes Kentucky (218.17 per 100,000) and Mississippi (216.5 per 100,000). Meanwhile, the state of Indiana has the lowest rate with just 22.98 personal filings per 100,000 people.
(Statista)
Women are more likely than men to file for personal bankruptcy.
According to a five-year analysis of personal bankruptcy trends in the US between 2006 and 2010, women are significantly more likely than men to file for bankruptcy. During this period, the share of women who submitted personal bankruptcy filings ranged from 52.26% in 2010 to 53.6% back in 2006. Analysts note this doesn’t completely align with the US population split (49.2% men vs. 50.8% women in 2010) and attribute it to the well-documented gender pay gap.
(SSRN)
Most Americans who file for personal bankruptcy are in the 35–44 age group.
The same five-year analysis referenced above found that people aged 35–44 are most likely to declare personal bankruptcy. Between 2006 and 2010, when the bankruptcy data was collected, their share ranged from 27.54% in 2010 to 29.8% in 2007. Unsurprisingly, young people in the 18–24 age bracket were least likely to file for personal bankruptcy. During the analyzed period, their share in the total number of filings varied between 1.33% in 2010 and 3.3% in 2006.
(SSRN)
Medical Bankruptcy Statistics
66.5% of all bankruptcies in the US stem from high medical costs.
A recent survey pointed to medical costs as the most prevalent cause of bankruptcies in the US. According to the findings, 530,000 American families file for bankruptcy each year as a result of medical treatments they are ultimately unable to afford. Other common causes include unpaid mortgages (45%), spending beyond one’s means (44.4%), helping friends and family members financially (28.4%), student loans (25.4%), and divorces and separations (24.4%).
(CNBC)
57% of Americans worry about being able to pay a medical bill of $1,000 or less.
Half of all US consumers (50%) and 57% of those living in families with children say they worry about their ability to pay medical bills, bankruptcy statistics reveal. Although the number is down from the beginning of the pandemic, when two out of three Americans were worried about their ability to pay medical bills, it is still concerning. To that point, 22% of Americans say they had to delay paying a medical bill, while 58% delayed medical care due to financial uncertainty.
(AccessOne)
Amid the global pandemic, two dozen US hospitals sued their patients for unpaid medical bills.
While most hospitals stopped suing patients for unpaid medical bills as the pandemic first hit in March 2020, some resumed doing so only months later. With medical issues one of the leading causes of personal bankruptcies, analysts deemed this very alarming. A 2020 study found that two dozen hospitals operating in Arizona, Florida, and Texas filed hundreds of lawsuits between January 1 and August 4 that year. The damages ranged from below $1,000 to $125,999.53.
(Axios)
70% of Americans had to cut their spending on food to pay medical bills.
Faced with large medical bills, many Americans — even those with medical insurance — must make financial sacrifices to avoid bankruptcy, facts reveal. The vast majority (70%) were forced to cut down on basic costs, including food and clothing. While 59% had used up their savings, 41% say they had to take a side job or work extra hours to pay their medical bills. Many also had to go into debt, with 37% borrowing from friends and 34% taking on credit card debt.
(Kaiser Family Foundation)
More Interesting Facts About Bankruptcy
Former US President Donald Trump filed for bankruptcy six times.
Since 1991, Trump’s companies have filed for Chapter 11 bankruptcy six times. In July 1991, the Taj Mahal casino filed for bankruptcy. A year later, three more Trump-owned properties went bankrupt — two Atlantic City casinos and the Plaza Hotel in New York. In 2004, Trump Hotels and Casinos Resorts filed for bankruptcy, and Trump Entertainment Resorts did the same in 2009. This makes Trump one of the billionaires with the most bankruptcies.
(The Washington Post)
Ecuador has declared bankruptcy 10 times in its history.
Over the last two centuries, nearly 50% of European, 40% of African, and 30% of Asian countries have declared bankruptcy. Ecuador has done it the most times — 10 in total. The list of countries that have declared bankruptcy 9 times includes Costa Rica, Spain, Russia, Brazil, Chile, Mexico, and Uruguay. And although we know it as one of Europe’s strongest economies, bankruptcy data shows Germany has gone bankrupt 8 times — and this all within just 2.5 years.
(The Business Standard)
The 2009 Greek debt crisis wasn’t actually a bankruptcy.
In 2009, Greece had a 12.3% budget deficit — more than four times the 3% maximum allowed by the EU. This sparked a much-publicized financial crisis, the effects of which unfolded over several years. Though many believed Greece would declare bankruptcy, it didn’t. In 2015, the country’s officials and the International Monetary Fund representatives agreed to call it a delay. Following severe austerity measures, the Greek economy has mostly recovered since then.
(The Balance)
Bankruptcy Statistics FAQ
What percentage of the US has filed for bankruptcy?
What is the average bankruptcy debt?
What is the number one cause of bankruptcies in America?
What percentage of bankruptcies are due to medical bills?
Bankruptcy Stats: The Takeaway
After hitting record highs in 2020 due to the global pandemic, the number of bankruptcy filings — both business and personal — saw a large decrease in 2021. And though this suggests the economy has largely recovered, there may still be reasons for concern.
For one, experts believe we might see more bankruptcy filings in 2022 due to the fact businesses can no longer rely on the government’s COVID-19 relief funds. Additionally, recent bankruptcy statistics from the UK, where business filings have increased by 81% between Q2 of 2021 and Q2 of 2022, suggest we could see similar trends around the world.
Sources:
