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U.S. Bankruptcy Filings Rose 11% in 2025: What Rising Numbers Mean for Filing Bankruptcy in 2026
By Martin E. Long, Experienced Bankruptcy Attorney and Former Trustee for the US Bankruptcy Court at LONG & LONG P.C. | February 25, 2026
If you’re drowning in debt and wondering if you’re the only one, the latest official numbers prove you’re not. On February 4, 2026, the Administrative Office of the U.S. Courts announced that total bankruptcy filings for the 12-month period ending December 31, 2025, reached 574,314 — an 11% increase from 517,308 the year before.
- Non-business (consumer) filings: 549,577 (up 11.2%)
- Business filings: 24,737 (up 7.1%)
Meanwhile, Americans ended 2025 carrying a record $1.28 trillion in credit card debt (Federal Reserve Bank of New York, Q4 2025).
These statistics are more than numbers — they represent real families in Denver, Colorado and across the country facing high interest rates, medical bills, job changes, and the lingering effects of inflation. As a bankruptcy attorney who has helped clients in Colorado achieve a fresh start, I see this trend every day. The good news? Bankruptcy law exists precisely to give honest people relief when debt becomes unmanageable.
This guide explains what the rise means for you, why it’s happening, and how filing Chapter 7 or Chapter 13 bankruptcy in 2026 could be your smartest financial move.
Why Bankruptcy Filings Are Rising in 2025–2026
The increase isn’t random. Multiple economic forces are converging:
- Record consumer debt and high interest rates (credit cards often 20%+ APR)
- Medical expenses — still one of the top reasons people file
- Lingering inflation and cost-of-living pressures
- Normalization after pandemic-era relief suppressed filings
- Soft job market in certain sectors and slower wage growth
Experts at PwC, Epiq AACER, and the American Bankruptcy Institute expect filings to remain elevated or modestly rise further into 2026.
What the Rise Means for Everyday People Like You
Rising numbers don’t signal weakness — they signal that more Americans are choosing smart, legal protection instead of endless stress. You’re not alone, and bankruptcy is not failure. It’s a fresh start Congress designed for situations exactly like this.
Common warning signs it may be time to explore filing:
- Creditors calling or sending collection letters daily
- Wage garnishment or bank levies
- Falling behind on mortgage, rent, car payments, or utilities
- Using credit cards for groceries/gas while balances grow
- Overwhelming medical bills
- Debt stress affecting sleep, health, or relationships
If any of these describe your situation, a free confidential consultation can give you clarity and options.
Chapter 7 vs. Chapter 13 Bankruptcy in 2026 — Which Is Right for You?
Most individuals file under Chapter 7 or Chapter 13. wallstreetmojo.com
Chapter 7 vs Chapter 13 Bankruptcy | Which Bankruptcy to File?
| Feature | Chapter 7 (“Liquidation”) | Chapter 13 (“Repayment Plan”) |
| Best for | Lower income, mostly unsecured debt | Steady income, want to keep home/car |
| Duration | 3–6 months | 3–5 years |
| Means Test | Must qualify (income below state median) | No strict test; based on disposable income |
| What happens to assets | Keep exempt property (most people do) | Keep all assets if you complete the plan |
| Debt outcome | Most unsecured debt discharged | Repay some, discharge remainder |
| Credit impact | Stays on report ~10 years | Stays on report ~7 years |
2026 Means Test Update: Income limits (effective for cases filed after November 1, 2025) are state-specific and updated twice yearly. They range from roughly $65,000–$80,000 for a single person in lower-cost states to well over $100,000+ for a family of four in high-cost areas. If your 6-month average income is below your state’s median, you usually qualify for Chapter 7. We run the exact test for free during your consultation.
In Colorado, generous exemptions often let you keep your home, car, retirement accounts, and household goods.
Immediate Benefits of Filing in 2026
The second you file, the Automatic Stay protects you:
- Stops creditor calls and harassment
- Halts foreclosures, repossessions, wage garnishments, and most lawsuits
- Gives breathing room to plan your fresh start
Additional advantages:
- Discharge most credit card, medical, personal loan, and utility debt
- Potentially eliminate older income tax debts (3-2-240 rule)
- Stop IRS or state tax collections during tax season
- In Chapter 13, catch up on mortgage or car payments to keep your property
Many clients describe feeling an immediate sense of relief.
Common Myths About Bankruptcy — Busted in 2026
Myth: You’ll lose everything. Fact: Over 90% of Chapter 7 filers keep their home, car, and essentials thanks to exemptions.
Myth: Bankruptcy destroys your credit forever. Fact: The notation stays 7–10 years, but scores often rebound within 12–24 months with responsible habits (secured cards, on-time payments).
Myth: Only irresponsible people file. Fact: Medical issues, job loss, divorce, and economic shifts affect hardworking families every day.
Myth: You can’t get credit afterward. Fact: Many clients qualify for mortgages, auto loans, or credit cards within 1–2 years.
What to Expect: The Simple Step-by-Step Process
- Free, confidential consultation (we review your numbers same day)
- Short online credit counseling course
- Gather documents (we provide a simple checklist)
- File the petition (we handle all paperwork)
- 341 Meeting of Creditors (quick, usually 5–10 minutes)
- Complete debtor education course
- Receive discharge order — most debts gone, fresh start begins
In the District of Colorado, cases typically move efficiently.
Frequently Asked Questions
Q: Will the rise in filings make my case take longer? A: No. Courts are equipped to handle volume; each case is decided on its own facts.
Q: Can I file bankruptcy on credit card debt? A: Yes — most unsecured credit card debt is fully dischargeable in Chapter 7.
Q: How much does it cost to file bankruptcy in 2026? A: Court filing fees are $338 (Chapter 7) or $313 (Chapter 13). Attorney fees vary; we offer flexible payment plans.
Q: Can I keep my tax refund if I file? A: Often yes — we help time the filing and protect what you’re entitled to.
Q: How soon after filing do collections stop? A: Usually within hours or the same day via the Automatic Stay.
Q: What about my house or car? A: Most clients keep both. Chapter 13 is excellent for catching up on missed payments.
Q: Is there a minimum debt amount to file? A: No — even modest debt can qualify if payments are unmanageable.
Ready for Your Fresh Start in 2026?
The 11% jump in bankruptcy filings shows that thousands of Americans are choosing relief over continued struggle. There is zero shame in using the legal tools created to help you.
At LONG & LONG P.C., we’ve guided hundreds of metro Denver and Colorado residents through Chapter 7 and Chapter 13 bankruptcy with compassion, expertise, and results. Consultations are always free, confidential, and with no obligation.
Take the first step today — call 303-832-2655 or complete our secure online form for a same-day or next-day appointment. We serve the entire Front Range and surrounding areas.
Don’t let debt control another month of your life. 2026 can be your year of financial freedom.
This article is for informational purposes only and does not constitute legal advice. Bankruptcy outcomes depend on your unique financial situation. Please consult a licensed bankruptcy attorney in your jurisdiction for advice specific to your case.
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