US bankruptcies steeply rising in first week of May 2025

Bankruptcy Watch: “Comparing with previous years reveals a concerning upward trajectory, with the current weekly filing volume of 13,363 cases approximately 40% higher than 2022 levels and 18% above 2023 averages”

by Gabriele Bonafede

With good news about a trade deal between US and China, Wall Street is in a bullish mood. However, the real economy of US is currently facing the damage already done by Trump’s tariffs.

Logistics, retailing and agriculture sectors are being hit, resulting in contraction, lay-offs and, of course, financial distress. This is clearly visible from local news concerning empty ports, stalled truck deliveries and mounting losses for farmers. Real-time data about bankruptcies confirm increasing financial distress, depicting an unsustainable trend: US bankruptcies steeply rising and an alarming pace.

US bankruptcies steeply rising

In fact, Bankruptcy Watch – a real-time service provider for lenders – has registered 13,363 cases filed in the first week of May 2025 until May 5^th. This is a 15% increase compared to the first week of May 2024. For what concerns Chapter 11 the increase is even steeper at almost 18%, showing a big suffering for businesses. When compared with previous years the upward trend is even more worrisome: “approximately 40% higher than 2022 levels and 18% above 2023 averages”.

The weekly report for May 1^st to 5^th states that “Weekly bankruptcy filings saw a massive increase compared to the same week last year. Chapter 7 filings—a lifeline for many struggling households—were up 22.08% year-over-year (7,134 in 2024 to 8,709 in 2025).”

For what concerns Chapter 13 filings, allowing individuals to restructure their debt, Bankruptcy Watch reports  “…up 4.75% year-over-year (4,340 in 2024 to 4,546 in 2025). 

Brace for higher rates of delinquencies

Further in its report, the service provider advises to brace for growing number of delinquencies: “The current trajectory of bankruptcy filings is on a steep climb. Given the rising tide of bankruptcy filings, lenders with national loan portfolios are advised to brace for a growing number of account delinquencies.”

The analysis of Bankruptcy Watch for the beginning of May 2025 reckons “a clear increase in bankruptcy activity week over week” representing “a notable jump”.

“This upward movement hints at deeper economic issues beginning to surface more widely. If this pattern holds, the year will likely end with significantly higher bankruptcy totals than recent years.”

For what concerns the Quarterly Report, Bankruptcy Watch reports that: “During Q1 2025, we continued to see this trend with significant filing increases across most chapters and jurisdictions, resulting in one of the highest filing quarters since the COVID-19 pandemic.”

The report is consistent with data from US port’s activity showing that shipment arrivals for May 2025 are down to the level reached at the worst moment of pandemics lows.

Indeed, it is a “good reason” for ruined famers, dockers and truckers – who massively voted for Donald Trump – to thank the President of United States.

On the cover, photo by Blogging Guide on Unsplash.