Rising debt burdens, persistent inflation and record-high borrowing costs put mounting pressure on American consumers and businesses, with bankruptcy filings climbing across multiple sectors.
The United States recorded 469,719 individual and commercial bankruptcy filings during the first nine months of 2026, an 11 percent increase from the corresponding period in 2025, as persistent inflation, high interest rates, rising household expenses and economic uncertainty intensified financial pressures on American families and businesses.
According to the American Bankruptcy Institute (ABI), which released the figures on October 8, 2026, individuals accounted for 444,252 bankruptcy filings between January and September, while businesses recorded 25,467 cases. Commercial bankruptcy filings increased by 7 percent, highlighting mounting financial difficulties among businesses facing expensive borrowing, rising operating costs and uncertain market conditions.
The increase in bankruptcy filings comes amid sustained pressure on household finances, consumer credit and business debt servicing. Elevated mortgage rates, credit card interest exceeding 20 percent, growing consumer delinquencies and a softer labour market have contributed to financial stress across the American economy, affecting borrowers and companies dependent on credit to meet their obligations.
Small businesses have experienced a particularly sharp increase in financial distress. The ABI reported 2,442 bankruptcy filings under Subchapter V, a provision designed to facilitate bankruptcy restructuring for eligible small businesses, during the first nine months of 2026. The figure represents a 46 percent increase from the same period in 2025.
“The increase in bankruptcy filings, especially among small businesses, highlights the challenges many debtors continue to face amid persistent inflationary pressures, elevated borrowing costs, and economic uncertainty,” ABI Executive Director Amy Quackenboss said in the October 8 statement.
Borrowing costs remain a significant source of pressure for American consumers. The average weekly interest rate on a 30-year fixed-rate mortgage has reached its highest level in approximately three years, while credit card interest rates have remained above 20 percent for more than three years. These elevated financing costs have increased the burden of household debt repayment and consumer borrowing.
Employment conditions have added to the economic concerns. The United States added fewer jobs than expected in September 2026, indicating further challenges for a labour market already facing uncertainty. Combined with high living expenses and expensive credit, weaker-than-expected job growth has added pressure on households managing mortgages, credit card balances and other financial commitments.
Inflation has also remained elevated since the US–Iran war began in late February 2026. According to the Bureau of Labor Statistics, the 12-month inflation rate reached 4.2 percent in May before declining to 3.4 percent in August. Despite the decline, inflation remained above February’s 2.4 percent rate, continuing to affect household purchasing power and business operating expenses.
Financial distress has extended to major American corporations. Consulting firm Cornerstone Research reported on October 8, 2026, that 100 large companies filed for bankruptcy between July 2025 and June 2026, representing a 22 percent increase over the historical average for 2005–2025. During the preceding 12 months, 28 bankruptcy filings involved companies reporting assets exceeding $1 billion.
Matt Osborn, a principal at Cornerstone Research and co-author of the report, attributed the sustained pace of large corporate bankruptcies to economic challenges facing companies reliant on debt financing. He identified high interest rates, regulatory uncertainty, shifting demand and competitive pressures, particularly in manufacturing, as frequently cited factors behind corporate financial distress.
Meanwhile, Congress has passed the Bankruptcy Threshold Adjustment Act, which seeks to raise the small-business Chapter 11 Subchapter V debt threshold from $3.4 million to $7.5 million and increase the Chapter 13 debt limit for individuals from approximately $2.1 million to $2.75 million. Quackenboss said the changes would expand access to bankruptcy relief for struggling businesses and families.
