The data from Epiq AACER showed an 18% jump in US bankruptcy filing statistics in 2023 amid high interest rates, stronger lending standards, and the depleting number of pandemic-era supporting measures. Meanwhile, the level of the aforementioned filing was still lower than the level before the pandemic.
The total bankruptcy filings from both commercial and personal insolvencies increased from 378,390 in 2022 to 445,186 in 2023.
Commercial Chapter 11, frequently referred to as business reorganization bankruptcy filings, escalated by 72% from 3,819 in 2022 to 6,569 in 2023, as well as the consumer filings, which rose by 18% from 356,911 in 2022 to 419,559 in 2023.
However, the total filings in December 2023 increased by 16%, compared to December 2022, but decreased from 37,860 in November to 34,447.
The filing numbers are anticipated to keep rising in 2024, while there are still some gaps before reaching the 2019 level of 757,816.
Michael Hunter, vice president of Epiq AACER, stated that the filings number in 2023 rose as anticipated, while he also expected both consumer and commercial filings to increase in 2024 as they seek bankruptcy protection to continue in 2024.
Though financial conditions for businesses and households had tightened over the last two years due to the Fed’s attempt to contain inflation by increasing the interest rate, the decision from the authority to stop the hike and to start cutting the rate in 2024 had gradually eased the borrowing costs and overall financial conditions in Q4/2023.
