Overall commercial bankruptcy filings increased 8 percent in August 2024 to 2,562 from 2,358 in August 2023, according to data provided by Epiq AACER, the leading provider of U.S. bankruptcy filing data. August 2024 commercial chapter 11 filings decreased 3 percent to 616 from the 635 filings in August 2023. The number of distressed small businesses electing to file for subchapter V of chapter 11 of the U.S. Bankruptcy Code increased 5 percent to 185 last month from 176 registered in August 2023.
The 45,131 total U.S. bankruptcy filings in August 2024 increased 8 percent from the August 2023 total of 41,642. Individual bankruptcy filings also registered an 8 percent increase, to 42,569 in August 2024 from the August 2023 individual total of 39,284. The number of consumers filing for chapter 7 increased 11 percent to 25,432 in August 2024 from the 22,888 who filed for chapter 7 last August, while chapter 13 filings increased 4 percent to 17,056 in August 2024 from the 16,338 chapter 13 filings in August 2023.
“August new filing volumes remained relatively flat month-over-month to end the summer while year-over-year volumes continue to show a steady increase,” said Michael Hunter, vice president of Epiq AACER. “As delinquency rates increase in many domains, debt levels continue to grow, high interest rates remain intact with relatively flat household income, we expect continued increases in new filing volumes this fall and into the winter of 2024.”
August’s total bankruptcy filings represented a 2 percent increase from July’s total of 44,439. Total individual filings for August represented a 1 percent increase from the July 2024 individual filing total of 42,083. Commercial filings registered a 9 percent increase from the July 2024 commercial filing total of 2,356, and commercial chapter 11 filings grew 21 percent over the 511 filings in July 2024. Consumer chapter 13 filings increased 5 percent over the 16,303 filings last month, while chapter 7 filings decreased 1 percent from the 25,716 chapter 7s filed in July 2024.
“As debt loads continue to steadily climb, access to the financial lifeline of bankruptcy is imperative for consumers and businesses,” said ABI Executive Director Amy Quackenboss. “ABI remains committed to research focused on improving the availability of a financial fresh start for struggling families and businesses.”
ABI recently launched a portal for practitioners and experts to provide their experiences on the real-world impact of small businesses electing to file for subchapter V. The site, available at https://abi.org/subvstories, allows professionals to share videos and written accounts about their experiences with distressed small businesses or creditors who have used or benefited from the subchapter.
Subchapter V originally went into effect on February 19, 2020, to provide a more streamlined path for distressed small businesses to restructure their debts. Although it launched with a debt eligibility limit of $2,725,625, Congress increased the subchapter V debt eligibility limit to $7.5 million through the CARES Act in March 2020. Congress subsequently extended the higher debt eligibility limit twice, but despite legislative efforts to extend it further, the limit reset on June 21, 2024, to $3,024,725 due to a statutory sunset.
The impact of the lower debt eligibility limit on subchapter V filings has been substantial. Between January 1 and June 21, 2024, there were 1,153 subchapter V cases filed — an increase of 66.2 percent from the same period in 2023. Since then, 391 subchapter V cases have been filed, an increase of only 4.5 percent from last year.