Corporate Bankruptcies Surged in the First Quarter of This Year Compared to 2023

The first quarter of 2024 has seen a surge in new bankruptcy filings, signaling continued economic challenges for both businesses and individuals.

According to data from Epiq Bankruptcy, the leading provider of U.S. bankruptcy filing data, all major filing categories experienced year-over-year increases from January 1 through March 31.

Commercial chapter 11 filings, which include subchapter V filings for small businesses, saw the most dramatic rise.

The 1,894 filings in Q1 2024 represent a 43 percent increase from the 1,325 filings during the same period last year.

Subchapter V elections alone rose 30 percent, from 465 in Q1 2023 to 606 this quarter. Overall commercial bankruptcies were up 22 percent, with 7,113 filings compared to 5,820 in the first quarter of 2023.

Individuals are also feeling the financial strain.

Total bankruptcy filings reached 120,094, a 14 percent increase from the 105,497 filings in Q1 2023.

Consumer filings rose 13 percent to 112,981, up from 99,677 last year.

Individual chapter 7 filings jumped 17 percent to 66,861, while chapter 13 filings increased 9 percent to 45,958.

Michael Hunter, Vice President of Epiq AACER, pointed to several factors contributing to this worrying trend: “higher cost of funds and interest rates, a reduction in consumer discretionary spending, higher housing costs, and a continued drawdown of excess savings.”

He believes these elements, combined with an anticipated post-pandemic normalization of bankruptcy volumes, will lead to continued increases throughout 2024. March 2024 marked the 20th consecutive month of year-over-year increases in total, individual, and commercial bankruptcy filings.

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The rise in bankruptcy filings serves as a sobering reminder of the ongoing financial struggles faced by both businesses and individuals under the burden of Bidenomics.