In 2025, the number of consumer bankruptcy filings increased significantly–in the Central District of California and across the country. That upward trend has continued into 2026. Here’s what you need to know about the numbers, some of the key reasons for the increase, and when bankruptcy may be the right solution.
2025-2026 Bankruptcy Statistics
Both consumer and commercial bankruptcy filings trended upward in 2025. In the consumer arena:
- Nationally, all consumer bankruptcy filings increased by about 10% year over year
- Chapter 7 filings nationwide increased by 15% from 2024 to 2025
This rise in filings is part of a longer-term upward trend. For example, in the Central District of California–the bankruptcy court serving Los Angeles and the surrounding area–Chapter 7 bankruptcy filings increased by 14.8% from 2024 to 2025. That comes on the heels of a 26% increase from 2023 to 2024 and a 20.8% increase from 2022 to 2023.
Here’s what that looked like for each case type:
| Case Type | 2022 | 2025 | Increase |
|---|---|---|---|
| All Consumer Bankruptcies | 17,289 | 25,935 | 50% |
| Chapter 7 Bankruptcies | 14,116 | 25,025 | 77% |
| Chapter 13 Bankruptcies | 2,935 | 4,166 | 42% |
Early data from 2026 says the trend is continuing. In January, there were 2,446 consumer bankruptcy filings in the Central District of California–16.9% more than in January of 2025. In some areas, the disparity was even greater. For example, consumer filings in Riverside jumped by more than 28% from January of 2025 to January of 2026. Chapter 7 cases in the same area increased by more than 33%.
Why are Bankruptcy Filings on the Rise?
One reason bankruptcy filings are increasing is a natural stabilization after the Covid-19 pandemic. Bankruptcy filings declined during and after the pandemic, first because of limited court operations and then because a wide range of formal and informal programs helped people around the country get through the spike in unemployment and other challenges the pandemic brought. Now, however:
1. Debt collection lawsuits have returned to or exceed pre-pandemic levels.
Debt collection lawsuits dropped off in 2020 and 2021, but began to climb again shortly after the pandemic. Many states reached pre-pandemic filing levels in 2022, and some had far surpassed pre-pandemic filings by 2024. Filings are still trending upward.
2. Covid relief programs have ended.
Rental assistance programs, utility assistance programs, enhanced unemployment, mortgage relief and other programs designed to take the pressure off as unemployment soared during Covid gave many people breathing room. Most of those programs ended in 2021 or 2022. However, most people who file for bankruptcy struggle with debt for two to five years before filing. Those whose financial problems started (or resumed) post-Covid are right in the middle of that range.
3. Student loan collections have restarted.
What started as a short-term pause on student loan payments in the spring of 2020 went through a string of adjustments and extensions. Ultimately, collection of defaulted student loan debt was on hold for more than five years before restarting in 2025. During the same time, some income-based repayment programs were scrapped or revised, increasing monthly payments for many borrowers. Fortunately, new rules introduced in 2022 make it possible for more student loan borrowers to discharge their debt in bankruptcy.
4. The cost of living continues to increase.
While inflation has cooled significantly since 2022, slowing inflation doesn’t mean prices settle back to previous rates. It doesn’t even mean they stop increasing–just that they’re increasing slower. Local residents have things even harder. The inflation rate in the Los Angeles metro area remains significantly higher than the national average.
5. Foreclosures on are on the rise.
In January of 2026, the number of new foreclosure filings was 26% higher than in January of 2025. Often, people facing the loss of their homes file bankruptcy to protect the property. Depending on the circumstances, that may mean filing Chapter 7 to eliminate other debts and free up money to pay the mortgage or catching up mortgage payments in a Chapter 13 plan.
6. Auto repossessions are surging.
The automobile repossession rate is higher than it’s been since the Great Recession. Many borrowers use bankruptcy to save automobiles at risk of repossession, or to return the vehicle while freeing themselves from any remaining balance on the loan. Bankruptcy can also help a borrower avoid a deficiency balance after repossession.
What Does the Rise in Bankruptcy Filings Mean for Los Angeles Residents?
In one way, the increase in bankruptcy filings is a bad sign–but it’s a sign of things most already know. Prices are high, interest rates are high, unemployment rates have been creeping upward, and foreclosures are rising.
But most of that isn’t new information. In fact, if 2025-26 bankruptcy filers are like most filers across time, they’d been losing sleep and juggling debt for quite a while. Bankruptcy can be a powerful tool for regaining control of your finances and turning toward greater financial security. To learn more about whether bankruptcy may provide the relief you need, contact an experienced Los Angeles bankruptcy attorney today. Just call 877-439-9717 right now to schedule a free consultation.