Over the past year, we’ve combed through our bankruptcy data to show bankruptcy filing trends in the United States (US). From this, we’ve seen an upward trend with consistent increases across the year’s first three quarters. After going through our Q4 data, we wanted to take a moment to review 2024 and make our predictions for 2025 bankruptcy filings.
What happened in 2024?
Although there have been strong economic indicators, the continual rise in bankruptcies shows financial strain. While the Q3 of 2024 showed a brief pause, total yearly filings are still projected to surpass 2023 by nearly 15%.
By Q3, total 2024 bankruptcy filings reached 369,564, showing a 14.5% year-over-year (YoY) increase from 2023. This follows a similar trend from 2023, continuing the pattern that began in 2022.
With this upward trend, US bankruptcy filings have not exceeded pre-pandemic levels. This could suggest overall financial pressures have not reached their peak. Ryan Sanders, director of enterprise sales for G2RS, noted, “While bankruptcy filings are increasing overall, we are seeing varied trends across states. Some states are consistently rising, while others are fluctuating or stable.”
Although regional bankruptcy filing trends show a steady increase overall, they vary significantly. While the Southeast region saw the largest increase in filings between Q2 and Q3, Florida took the lead in this area with the highest percentage growth at +9.9%. Hawaii led bankruptcy filings in the Pacific area with a 10.6% increase. The Mountain region recorded the highest increase in filings for 2024, with a 17.76% rise from 2023.
The future of bankruptcy—2025 and beyond
G2RS analysts predict that bankruptcy filings will continue to rise over the next two years, although the growth may be concentrated in specific states rather than a uniform increase nationwide. Sanders explained, “This growth may be propelled by certain states facing greater financial pressure rather than across-the-board increases.”
While bankruptcy filings are likely to increase over the next few years, here’s what we’re thinking could happen in 2025:
Continued shift toward financial restructuring: As we continue to see bankruptcy filings increase, there could be a growing shift in the types of bankruptcies being filed. In addition, companies may increasingly turn to bankruptcy as a means of restructuring to stay afloat rather than closing their doors permanently.
Regulatory and policy adjustments: Policymakers and regulators could respond with new measures to mitigate financial distress, including adjustments to bankruptcy laws or expanded debt relief programs. Regulators may also take a more active role in monitoring and addressing systemic risks within the banking system caused by rising bankruptcies.
Potential for financial institution consolidation: As smaller banks and lenders face financial strain due to the rising number of bankruptcies, we may see increased consolidation in the financial sector. Larger institutions might acquire smaller, struggling banks, leading to a more concentrated banking landscape.
The continued upward trend suggests that bankruptcy filings will remain a key economic indicator in the months ahead. That’s why monitoring these trends will be crucial for understanding the economic landscape moving forward.
To stay ahead of the curve this year, check out our bankruptcy risk solutions.