Tariffs and the Cost of Living Are Driving a Surge in Personal Bankruptcies

The Numbers

There were 549,577 personal (non-business) bankruptcy filings in the United States in 2025, according to data from the United States Courts. That represents an 11 percent increase over 2024, according to the House Budget Committee, which analyzed the U.S. Courts data. Non-business bankruptcy filings specifically rose 10.8 percent between September 2024 and September 2025, according to financial services company JG Wentworth.

Business bankruptcies also climbed. More than 700 U.S. companies filed for bankruptcy in 2025, the highest count since 2010 and a 14 percent increase from the prior year, according to The Washington Post, citing court records. High-profile corporate filers included Spirit Airlines and Rite Aid.

In Texas alone, more than 38,000 individuals and businesses filed for bankruptcy in 2025 — a 20 percent jump from 31,520 the year before — according to the Austin American-Statesman, citing federal court data.

What Filers Say Is Causing It

JG Wentworth surveyed 1,421 U.S. adults in February 2026 who had filed for bankruptcy, asking what contributed most to their decision to file. The results, published March 31, 2026:

• 43.4 percent cited the cost of living crisis as the leading factor
• 41.7 percent cited increased tariffs
• Mortgage increases, interest rate increases, poor financial planning, death of a loved one, and unexpected expenses each accounted for 0.3 percent or less

By the survey's measure, tariffs and the cost of living together dwarf every other cause of personal financial ruin by a factor of more than 100 to one.

The survey also found that 40.8 percent of respondents said they could cover expenses for only three months if their income suddenly stopped. On average, it would take $6,356.55 in additional debt to push a respondent to the brink of bankruptcy, according to JG Wentworth.

The Cost-of-Living Context

The House Budget Committee's February 2026 analysis found that American families spent an additional $1,625 on basic living expenses in 2025 compared to the year before, with groceries alone rising $310. The committee attributed the increases primarily to tariff policy.

Allianz Trade revised its global insolvency forecast upward in late 2025, projecting a 5 percent increase in corporate bankruptcies globally in 2026 — a significant upward revision from its earlier 3 percent estimate — and cited U.S. tariffs as a primary driver of the deteriorating outlook for businesses dependent on imported goods or export markets.

In Texas, the Austin American-Statesman reporting linked rising filings to "nagging inflation" and economic pressures tied to tariffs. Texas accounted for roughly 1 in every 15 U.S. bankruptcy cases in 2025, according to that reporting.

The Lasting Damage

The JG Wentworth survey tracked not just the causes of bankruptcy but the aftermath. Among those who filed:

• 97.8 percent said they are still feeling the impact of their bankruptcy filing, regardless of when they filed or whether they have rebuilt financially
• 73.7 percent said bankruptcy continues to affect their ability to obtain loans or credit
• 73.3 percent said their credit score remains impacted
• Among those who have not fully rebuilt, 88.4 percent cited high living costs and rising expenses as the main obstacle — followed by ongoing low income or unemployment (85.8 percent) and continued medical expenses (82.5 percent)

The emotional toll also registered in the data. Survey respondents said filing for bankruptcy was more stressful than having a baby (cited by 35.5 percent in that comparison) or buying a first home (36.6 percent). The positive note in the data: 89.3 percent of filers said they were ultimately able to rebuild financially, though the process typically took up to five years.

Analysis

The 11 percent rise in personal bankruptcies in 2025 reflects the combined weight of multiple pressures hitting American households simultaneously: tariff-driven consumer price inflation, elevated interest rates, and — in the months since — the energy price surge tied to the Iran war and its disruption of Gulf oil markets. The JG Wentworth survey is not a peer-reviewed economic study, and the methodology of attributing bankruptcy to tariffs specifically — rather than to broader inflation of which tariffs are one component — is contested by some economists. The aggregate filing numbers, however, come from U.S. Courts administrative data and are not in dispute.

The survey was conducted in February 2026, before the Iran conflict's most severe energy price shocks had fully rippled through consumer prices, suggesting the pressure on household finances may not have peaked.