Surge in Chapter 11 Bankruptcy Filings and Legislative Response
In April 2026, commercial Chapter 11 bankruptcy filings surged by 42%, reaching 644, as reported by Epiq AACER. Overall commercial bankruptcy filings rose 21% year-over-year, totaling 3,060 compared to 2,520 in 2025. Small business filings under subChapter V of Chapter 11 saw a significant 46% increase, with 301 filings compared to 206 the previous year.
Michael Hunter, Vice President of Epiq AACER, highlighted persistent challenges in consumer credit affecting rising individual bankruptcy filings. These challenges include high auto loan delinquencies and a 26% increase in foreclosure filings in Q1 2026. Higher fuel costs and increased home values are straining budgets, likely leading to more Chapter 7 and Chapter 13 filings.
Total bankruptcy filings hit 56,427 in April 2026, marking a 14% increase from 49,641 the previous year. Individual filings rose by 13% to 53,367. Separately, individual Chapter 13 filings climbed 11% to 18,007, while Chapter 7 filings grew by 14% to 35,224.
Legislative Efforts to Address Financial Pressures
Chapter 12 filings, supporting family farms and fisheries, jumped 130% to 62, the highest monthly count since February 2020. Amy Quackenboss, Executive Director of the American Bankruptcy Institute, noted increasing financial pressures such as inflation and high borrowing costs. Legislative efforts in Congress aim to expand small business and individual access to bankruptcy relief.
The "Bankruptcy Threshold Adjustment Act of 2026," sponsored by Sen. Chuck Grassley (R-Iowa), seeks to raise debt eligibility thresholds to $7.5 million for subChapter V restructurings and $2.75 million for Chapter 13 filings, while removing distinctions between secured and unsecured debt. The bill is under Senate review following its advancement in the House Judiciary Committee.
From March to April 2026, commercial bankruptcy filings and subChapter V elections increased, rising 4% and 12%, respectively. Despite a 3% decrease in total filings from March, Chapter 12 filings surged 82%. Individual filings decreased by 4%, with commercial Chapter 11 filings slightly down by 2%, and Chapter 7 and 13 filings falling 4% and 3%, respectively.