Unexpected Bankruptcy Statistics That Will Blow Your Mind

Bankruptcy data reveals that there was a total of 4,742 business bankruptcy filings in the first quarter of 2022 in the US, exactly one-fourth fewer than the 6,361 filings in the first quarter of 2021. Moreover, the number of business Chapter 11 filings saw a 48% decrease in 2021, compared to 2020. Q1 in 2021 had 1,272 Chapter 11s, and it dropped by another 43%, to 720, in Q1 of 2022.

Corporate bankruptcy statistics further reveal that the number of commercial filings has decreased by 16% across all chapters, from 2,105 in April 2021, to 1,761 in April 2022. Finally, the number of commercial chapter 11 filings is also down by 15% in 2022, with 249 such filings in April 2022, compared to the 290 of April 2021.

(Lowenstein)

In comparison, there were 21,655 businesses going bankrupt in 2020, which is very close to the lowest number of annual bankruptcy filings from 2006, when 19,695 businesses went belly up. Since reaching the peak in 2009, the number of companies declaring bankruptcy has been steadily declining over the course of the past decade, with one exception in 2019, when 22,780 businesses declared bankruptcy.

(Statista)

Furthermore, 53% of the bankruptcy cases filed in the period mentioned above were from companies in the services industry, while 12% were from the retail trade sector, according to corporate bankruptcies by year statistics. Businesses from other industries account for considerably smaller shares of insolvent companies. Namely, 9% of the bankrupted businesses belong to construction, 5% transportation, and 4% to the agriculture industries.

Furthermore, the manufacturing and wholesale trade sectors each account for 3%, while the mining industry businesses account for 1% of the bankruptcies. Finally, only 0.03% of the insolvent companies were from the public administration sector.

(Statista)

On the other hand, bankruptcy filings by month statistics also show that November 2021 is the month with the lowest number of Chapter 11 fillings in the past decade, with 196. It is also the only month in the past 10 years when the number of commercial business bankruptcy fillings was lower than 200. In 2022, there have been 225 Chapter 11s in January, 203 in February, and 292 in March.

(ABI)

The above unfortunate turn of events remains the largest bankruptcy in the history of the US, ranked by assets at the time of declaring insolvency. The 2008 financial crisis is responsible for the number two victim on the all-time bankruptcy list. Washington Mutual was worth $327,913,000,000 when it went belly up, just 11 days after the Lehman Brothers, on September 26, 2008.

Worldcom Inc is third on the list, valued at $103,914,000,000 at the time of its downfall. The telecommunications giant was declared bankrupt on July 2, 2002, due to the famous $4 billion accounting scandal. General Motors and CIT Group round up the top five largest US bankruptcies, both declaring insolvency in 2009.

(Visual Capitalist)

The above figure is a considerable decrease compared to the 110 companies that filed for bankruptcy in 2020 and an even more significant decline compared to the 211 bankruptcies of 2009. The aggregate value of these 22 companies was $19.2 billion, while the 110 businesses that went bankrupt in 2020 were worth $292.7 billion.

Bankruptcy filing statistics also show that only eight out of these 22 public companies were worth over $1 billion. In comparison, in 2020, 51 billionaire companies declared insolvency. The largest company filing for bankruptcy in 2021, Seadrill Limited, did not even make the top 50 list of the largest public bankruptcies of all time, with its $7.3 billion in assets.

(Jones Day)

Personal bankruptcies by year statistics show that exactly 401,293 people filed for bankruptcy in the US in 2021. These people account for close to 0.15% of the 258.3 million adult population in the US, according to the latest information, from the 2020 census. Furthermore, historical data suggests that personal bankruptcies in the US have been on a decline, since 2019, when there were 757,634 personal bankruptcies filed.

In 2020, there were 529,106 bankruptcies, before reaching the figure above in 2021. Finally, there were 89,224 personal bankruptcy filings in the first quarter of 2022, according to the latest US personal bankruptcies by year statistics.

(Census, ABI)

In addition, 44.3% of debtors cite losing work because of medical problems as a reason for going bankrupt, accounting for the largest portion of the 77.8% of debtors who file for bankruptcy because of loss of income. Other prevalent bankruptcy contributors include unaffordable mortgage or foreclosure, cited by 45% and spending beyond means, cited by 44.4% of debtors.

However, medical expenses and health problems causing people to lose their jobs contributed to the most, or 66.5% of the cases, according to medical bills bankruptcy statistics. Other debts, like student loans, or divorce expenses, were cited in considerably fewer, or 25.4% and 24.4% of the cases, respectively.

(NCBI)

The statistics further reveal that 33,795, or 86%, of the filings in California, were Chapter seven, while the remaining 5,225 were Chapter 13. Moreover, because of California’s vast population of 36,961,664, the above filings only account for 1.07 filings per capita.

So instead, the bankruptcy rates by state place Alabama at the unfortunate number one spot, with 3.13 bankruptcies per capita. There were 14,716 bankruptcy filings in Alabama, 5,708, or 39%, of which were Chapter seven, while 8,966, or 61%, were Chapter 13. On the other end of the spectrum is Alaska, with a total of 214 bankruptcy filings, or 0.31 filings per capita.

(ABI)

A recent study done using the personal US bankruptcies data between 2006 and 2010 reveals that more than 50% of the debtors who filed for bankruptcy were aged 35 to 54, each year. While most of the debtors were aged between 35 and 44, between 24.90% and 28.45% of them belonged to the 45 and 54 age bracket. Debtors aged between 25 and 34 accounted for 21% of the bankruptcies in 2006, but steadily decreased to 15.44% by 2010.

At the same time, debtors aged between 55 and 64 made up 14% of the bankruptcies in 2006, but increased to 18.12% by 2010. Finally, bankruptcy stats show that the share of debtors older than 65 who filed for bankruptcy varied between 7.46% and 9.12%, while debtors between 18 and 24 only accounted for between 1.33% and 3.30%.

(SSRN)

The most recent research done on the gender gap in personal bankruptcies shows that women are more likely to file for bankruptcy than men. Moreover, bankruptcy rates from the same period reveal the marital status of the debtors who filed. Between 57.20% and 64.10% of debtors were married, while between 16.72% and 21.80% were single. Divorced debtors accounted for between 14.35% and 15.90% of the bankrupted people, while widowed debtors made up between 3.01% and 3.90%.

(SSRN)

They are followed by debtors who attended college, but never got a degree, who accounted for between 28.73% and 29.90% of the bankruptcy filers between 2006 and 2010. United States bankruptcy statistics further reveal that between 8% and 8.82% of the debtors had an associate’s degree, while between 11.20% and 13.97% had a bachelor’s degree. Lastly, debtors with college degrees accounted for between 4.90% and 6.73%, and those with primary school accounted for between 5.00% and 5.90% of the bankruptcy filings.

(SSRN)

By 2010, their share slightly decreased to 71.63%. Furthermore, the personal bankruptcy rate of African-Americans was 15.40% in 2006, before it dropped to 11.30% in 2010. On the other hand, the share of Hispanic debtors who filed for bankruptcy increased from 6.50% in 2006 to 8.68% in 2010, and so did the percentage of Asian debtors, from 2.10% in 2006 to 4.50% in 2010.

(SSRN)

With that, it has become the country that has gone bankrupt the most times among all sovereign nations. Bankruptcy facts also reveal that there are seven other countries that have declared bankruptcy nine times in their history: Brazil, Mexico, Uruguay, Chile, Costa Rica, Spain, and Russia. In addition, Germany has gone bankrupt eight times, while the USA has been insolvent five times in the past. Finally, China and the UK have declared bankruptcy four times, and Japan has done it twice.

(TBS News)

Even though he has never declared personal bankruptcy, he is among the billionaires with the most bankruptcies filed for their companies. The first time was in 1991, when he filed Chapter 11 for his Trump Taj Mahal casino. Just one year later, in 1992, Donald declared his second bankruptcy for Trump Castle Associates, which included another three of his casinos. Then in 2004, he filed his Trump Hotel & Casino Resorts for bankruptcy, before filing his most recent Chapter 11 in 2009, for his Trump Entertainment Resorts.

(CNN)

One of the most interesting facts about bankruptcy is that the better your credit score is, the more it is going to affect it. For example, a worse credit score of about 680 is likely to be reduced by between 130 and 150 points, and scores under 670 will get even a smaller reduction by a bankruptcy filing. Moreover, Chapter 13 filings can remain reported on credit reports for up to seven years, while Chapter seven filings may last up to 10.

(Credit)

Bankruptcy statistics show that Chapter 11 filings are by far the most expensive, and for complex cases, the attorney fee may exceed $100,000. In addition to paying their lawyers, debtors are expected to pay $1,738 in filing fees. In comparison, the average attorney fee for Chapter 13 filing is notably less expensive, at $3,000. The filing fees for this type of bankruptcy are $313. Lastly, Chapter seven filings have the cheapest average attorney fee at $1,450, plus filing fees of $338.

(Debt)