A total of 54,028 bankruptcy filings were made in October, a 2 percent rise from a year ago, according to the American Bankruptcy Institute (ABI). The surge marks the first year‑over‑year increase since 2022.
Individual filings increased 2 percent year over year, while business filings fell 4 percent, the ABI said in its Nov. 6 statement. The split suggests divergent pressures on households and firms.
“Elevated costs, tight credit conditions, and geopolitical risks continue to provide challenging economic headwinds for small businesses and families,” ABI Executive Director Amy Quackenboss said. These headwinds have persisted despite modest economic gains.
The 12‑month inflation rate stayed at 3.7 percent in September, the seventh straight month above 3 percent, per Bureau of Labor Statistics data. The persistence of inflation above 3 percent raises concerns for consumer spending.
Gasoline prices jumped 9 percent and the overall energy index rose 5.2 percent, driving the inflation increase. Energy price spikes are reshaping budgeting decisions across the nation.
Small Business Bankruptcies
Subchapter V Chapter 11 filings, which represent small‑business bankruptcies, surged 24 percent, according to ABI. The rise signals growing stress on small‑business cash flows.
Quackenboss said the Bankruptcy Threshold Adjustment Act will help more small businesses and households confront elevated costs and geopolitical risks. The measure aims to ease filing access for struggling firms.
The legislation permanently raises the debt threshold for small‑business Chapter 11 bankruptcy to $7.5 million and also lifts the debt limit for individuals filing Chapter 13. The higher threshold reflects the administration’s effort to support larger enterprises.
Congress passed the bill in both chambers and sent it to President Donald Trump on Nov. 5 for signature. The bill now awaits the president’s signature to become law.
Michael Hunter, vice president of bankruptcy data provider Epiq AACER, warned that filing volumes are expected to climb through 2027. Analysts expect the trend to continue as debt burdens rise.
“While the broader economy continues to grow, household budgets remain strained by high energy prices and elevated interest‑rate borrowing costs,” Hunter said. The comment underscores the ongoing strain on household finances.
Major Bankruptcies, US Economic Situation
Character.AI, the AI chatbot platform, filed for Chapter 11 bankruptcy, reporting estimated assets and liabilities of $50 million to $100 million, and cited costly technology operations in a court filing. The filing highlights the high cost structure of AI platforms.
Getty Images Holdings Inc. announced on Oct. 21 that it had filed for Chapter 11 as part of a financial restructuring. The restructuring is intended to stabilize the company’s balance sheet.
The U.S. added 165,000 jobs in October, far exceeding the 65,000 forecast, and the unemployment rate fell to 4.1 percent, according to Nov. 6 Bureau of Labor Statistics data. Job growth outpaced expectations despite the rise in bankruptcies.
White House spokesman Matthew Middleton said the jobs report proved President Trump’s pro‑growth agenda was working. The administration cites the data as evidence of its economic policies.
“From almost 20 fair‑trade deals to trillions in manufacturing investments, this administration is putting America back on a path to prosperity,” Middleton added. The quote reinforces the message of continued growth.
The economy has added 861,000 jobs through October, far surpassing the 116,000 created in all of last year. The strong job numbers suggest a resilient labor market.
Business activity remained robust in October, with all seven sectors tracked by S&P Global—technology, financials, consumer goods, consumer services, basic materials, industrials and healthcare—showing growth. Across all sectors, confidence is rising.
