Chapter 7 Bankruptcies Are on the Rise: What It Means for You
If you’ve been feeling the financial pressure lately, you’re not alone. Across the country, more people are turning to Chapter 7 bankruptcy as a way to get a fresh start. So why is Chapter 7 bankruptcy on the rise, and what does it mean for you?
According to recent data from Epiq AACER, Chapter 7 bankruptcy filings have seen a significant increase over the past year. This trend highlights the growing financial problems currently facing everyday Americans.
As a Memphis bankruptcy lawyer, I’m here to help you understand what’s happening and how it might apply to your situation.
The Numbers Behind the Trend
In November 2024, a total of 22,886 people filed for Chapter 7 bankruptcy—a 14% jump from the 20,149 filings in November 2023. This rise is happening alongside an increase in defaults on consumer debts, like credit cards and auto loans.
Overall, individual bankruptcy filings across all chapters increased by 7% year-over-year in November.
On a positive note, despite these increases, filings remain below pre-pandemic levels. But experts predict the numbers could rise even further after the holiday season.
What’s Driving the Increase?
Several factors have led to the uptick in Chapter 7 filings:
Rising Interest Rates
First, increased interest rates are making it harder for people to keep up with payments on credit cards, auto loans, and other debts.
Holiday Spending and Seasonal Pressures
While November typically sees a dip in filings because of the holidays, the stress of end-of-year expenses often leads to more people filing in early 2025. But while this may explain the rise per month, it doesn’t explain the rise compared to previous years.
Economic Strain on Households
Job losses, inflation, and other economic challenges are leaving many families with little choice but to seek relief through bankruptcy.
According to Epiq AACER, these trends are expected to continue into 2025. Inflation, growing consumer debt, and possible new government regulations could all potentially impact the numbers moving into the new year.
The Impact on Housing and Foreclosures
For many households, debt isn’t the only problem—housing stability is also at risk.
In October 2024, over 30,000 U.S. properties had foreclosure filings, which was a 4% increase from September. In addition, more mortgages went into forbearance, which suggests even more families are struggling to keep up than the foreclosure numbers suggest.
This data underscores the financial challenges homeowners are facing. Memphis residents aren’t immune to these pressures. For some families, filing for Chapter 7 bankruptcy can help relieve debts like medical bills and credit cards to make housing more affordable.
How Chapter 7 Bankruptcy Can Help You
If you’re feeling overwhelmed by debt, Chapter 7 bankruptcy might be the solution you need. It’s designed to give people a clean slate.
Under Chapter 7, you discharge your unsecured debts, including credit cards, medical bills, and personal loans. Filing for Chapter 7 triggers something called an automatic stay, which stops collection calls, lawsuits, and wage garnishments. It wipes away most unsecured debts so you can start over financially.
And while Chapter 7 doesn’t usually include mortgage debt, it can delay foreclosure through the automatic stay. This temporarily stops collection efforts and gives you breathing room to figure out your next steps.
(If you’re most concerned about your assets, we can also discuss your options using Chapter 13 – a different process that might be a better choice, depending on your goals.)
Take the First Step
With the rise in Chapter 7 filings, you’re not alone in considering bankruptcy as an option. If you’re struggling with mounting debt, now is the time to explore how bankruptcy could help you.
Waiting too long could mean more stress and fewer options. And while the decision to file can feel really scary, the process doesn’t have to be.
As a Memphis bankruptcy lawyer, I understand how overwhelming debt can feel. I’ve helped thousands of clients navigate the Chapter 7 process, and I’m here to help you, too.
We offer a free consultation, where we talk with you about your goals and give you an idea of all your options. We don’t push you to choose any one solution, but instead work with you and your specific situation.
That’s how we’ve received our 5-star rating on Google and Avvo, multiple awards for client satisfaction, and decades of A+ ratings from the Better Business Bureau.
Don’t wait for things to get worse. Reach out today for a free consultation, and let’s discuss how Chapter 7 bankruptcy can give you the relief you need and the peace of mind you deserve.