Small Business Bankruptcies Surge 24% YoY Amid Rising Debt and Tight Credit
Event summary
- July 2026 saw 54,718 total bankruptcy filings, up 10% YoY from July 2025.
- Subchapter V elections within Chapter 11 rose 24% YoY to 234 filings.
- Commercial Chapter 11 filings dropped 27% YoY to 666, partly due to fewer healthcare-related cases.
- Legislation passed the Senate to permanently raise Subchapter V debt limit to $7.5M for small businesses.
The big picture
July's bankruptcy data reflects cumulative financial strain from elevated interest rates and softer consumer demand. The legislative push to expand Subchapter V access signals growing recognition of small business distress. Commercial filings remain depressed but may normalize as one-time factors fade. Epiq's data highlights how structural economic shifts are reshaping bankruptcy patterns across consumer and business segments.
What we're watching
- Debt Dynamics
- How rising household debt ($18.8T) and tighter credit conditions will impact future bankruptcy filings.
- Regulatory Progress
- Whether the House will pass companion legislation to permanently expand Subchapter V eligibility.
- Sector Stress
- The pace at which commercial bankruptcies rebound from current lows, particularly outside healthcare.