Which States Have the Most Bankruptcy Filings in America? (2025 Report)
Rising debt, stagnant wages, and inflation have pushed many Americans to seek financial relief through bankruptcy. Which states have the most bankruptcy filings in 2025?
In 2025, states like Alabama, Georgia, and Tennessee have the highest bankruptcy filings per capita, each exceeding 450 filings per 100,000 residents.
At Kostopoulos Bankruptcy Law, we specialize in helping individuals and families break free from overwhelming debt. In this article, we present up-to-date statistics on state-level bankruptcy trends, national filing patterns, and key insights from U.S. Courts and financial research institutions.
How Have Bankruptcy Filing Rates Changed Over Time?
U.S. bankruptcy filings decreased from 860,000 in 2015 to 645,000 in 2023, but have begun rising again—reaching 740,000 cases in 2025.
Economic relief programs during the COVID-19 pandemic temporarily slowed consumer filings. However, with inflation, credit card debt, and student loan repayment resuming, bankruptcy filings are increasing across many states.
Bankruptcy Filings in the U.S. (2015–2025)
Which States Have the Highest Bankruptcy Rates?
Bankruptcy filing rates vary widely across the country due to differences in cost of living, healthcare debt, and state protections. The table below lists the top 10 states by bankruptcy filings per 100,000 residents in 2024.
Top States by Bankruptcy Filings (Per Capita)
| State | Filings per 100K | Total Filings (2024) |
|---|---|---|
| Alabama | 527.3 | 119,730 |
| Georgia | 514.6 | 158,860 |
| Mississippi | 483.1 | 87,425 |
| Tennessee | 478.9 | 126,350 |
| Kentucky | 472.5 | 98,113 |
| Indiana | 458.2 | 132,024 |
| Nevada | 442.1 | 104,222 |
| Missouri | 430.4 | 112,708 |
| Michigan | 423.6 | 139,920 |
| Arkansas | 417.2 | 79,810 |
Which Regions of the U.S. Have the Most Bankruptcies?
The Southern U.S. consistently sees the highest bankruptcy rates per capita. This region alone accounts for roughly 38% of all filings, despite only making up about 25% of the population.
Here’s a breakdown by region based on 2024 filings:
| Region | Avg Filings per 100K | Total Filings |
|---|---|---|
| South (AL, GA, TN, MS, etc.) | 465 | 278,000 |
| Midwest (MI, IL, OH, IN, etc.) | 375 | 180,000 |
| West (CA, AZ, NV, OR, etc.) | 285 | 150,000 |
| Northeast (NY, NJ, MA, PA, etc.) | 210 | 132,000 |
This disparity is tied to factors such as cost of living, availability of healthcare, income volatility, and differences in state collection laws.
Bankruptcy Filing Rates by State in 2024
While national statistics provide a broad picture of financial distress, state-level bankruptcy data reveals where debt pressures are hitting hardest. The map below illustrates 2024 bankruptcy filing rates across the U.S., measured per 100,000 residents.
Darker shades of blue represent states with higher filing rates, reflecting local economic stress, healthcare debt burdens, and differences in wage garnishment laws or creditor practices. This visualization offers a detailed, state-by-state perspective on where bankruptcy relief is most commonly sought.
Chapter 7 vs. Chapter 13 Bankruptcy Filings by State (2024)
Bankruptcy isn’t one-size-fits-all. Across the U.S., states differ widely in how often residents file under Chapter 7 versus Chapter 13. While Chapter 7 is often used to discharge unsecured debts quickly, Chapter 13 repayment plans are more common in states with aggressive wage garnishment laws or stronger protections for homes and vehicles.
The table below presents the percentage of bankruptcy filings by chapter type for each state, based on 2024 data. These trends reflect the influence of state-specific laws, local economic conditions, and court policies.
| State | Chapter 7 (%) | Chapter 13 (%) |
|---|---|---|
| Alabama | 61.3% | 38.7% |
| Alaska | 32.5% | 67.5% |
| Arizona | 43.4% | 56.6% |
| Arkansas | 50.1% | 49.9% |
| California | 72.2% | 27.8% |
| Colorado | 56.4% | 43.6% |
| Connecticut | 63.3% | 36.7% |
| Delaware | 34.2% | 65.8% |
| Florida | 60.5% | 39.5% |
| Georgia | 54.9% | 45.1% |
| Wyoming | 44.6% | 55.4% |
What Causes Higher Bankruptcy Rates in These States?
Southern and Midwestern states tend to have higher bankruptcy rates due to limited wage protection laws, lower median incomes, and high medical debt burdens. For example:
- Alabama and Tennessee do not fully protect wages from garnishment.
- Georgia has high rates of Chapter 13 filings due to aggressive collection practices.
- Michigan continues to see elevated bankruptcy activity due to healthcare debt and job instability in key sectors.
Chapter 7 vs Chapter 13: Which Is Filed More Often?
Chapter 7 bankruptcy accounts for 67% of filings, while Chapter 13 makes up about 31%. Chapter 7 is preferred for wiping out unsecured debt quickly, whereas Chapter 13 involves repaying some debt over 3 to 5 years.
| Type | What It Does | % of Filings |
|---|---|---|
| Chapter 7 | Liquidates assets to eliminate unsecured debt | 67% |
| Chapter 13 | Sets up a repayment plan to retain assets | 31% |
| Other | Includes Chapter 11 and small business filings | 2% |
Which States File the Most Chapter 13 Bankruptcies?
Southern states file Chapter 13 bankruptcies at significantly higher rates than the rest of the country. In states like Georgia and Alabama, over 60% of filings fall under Chapter 13, often due to aggressive debt collection laws and limited wage garnishment protections.
The table below compares Chapter 13 vs. Chapter 7 usage in the top 10 states:
| State | Chapter 13 (%) | Chapter 7 (%) |
|---|---|---|
| Georgia | 68.4% | 31.6% |
| Alabama | 64.2% | 35.8% |
| Tennessee | 59.1% | 40.9% |
| Mississippi | 56.7% | 43.3% |
| Louisiana | 53.3% | 46.7% |
| South Carolina | 50.9% | 49.1% |
| North Carolina | 47.5% | 52.5% |
| Texas | 45.2% | 54.8% |
| Illinois | 41.7% | 58.3% |
| Michigan | 39.5% | 60.5% |
This geographic variation highlights how local laws shape debt relief strategies—and why having an experienced attorney is critical when deciding how to file.
Who Files for Bankruptcy in the U.S.?
According to the American Bankruptcy Institute and U.S. Courts data:
- 67% of filers earn less than $50,000 per year
- Nearly half are filing due to medical expenses or job loss
- Women file slightly more often than men
- Most are between the ages of 35 and 54
Bankruptcy is more often a last resort triggered by crisis—not irresponsibility. Rising housing costs, credit card APRs over 25%, and reduced access to affordable healthcare all contribute to the decision to file.
Are Bankruptcy Filings Likely to Keep Rising?
Yes. Analysts expect bankruptcy filings to continue increasing through 2026 as interest rates stay elevated and pandemic-era protections expire. Credit card balances reached $1.13 trillion in 2024—the highest on record—according to the Federal Reserve Bank of New York.
More Americans are falling behind on:
- Medical bills
- Credit card minimums
- Private student loans
- Rent and mortgage payments
This environment makes bankruptcy a tool many turn to for long-term relief and legal protection from creditors.
What Types of Debt Most Often Cause Bankruptcy?
Medical bills, credit card balances, and job loss remain the top triggers for personal bankruptcy in 2025. According to the American Bankruptcy Institute and NerdWallet’s national surveys:
| Debt Type | % of Bankruptcy Filers |
|---|---|
| Medical Expenses | 61% |
| Credit Card Debt | 57% |
| Job Loss | 45% |
| Divorce/Separation | 22% |
| Personal Loans | 19% |
| Student Loans | 15% |
| Mortgage Foreclosure | 11% |
Despite the misconception that most bankruptcies result from financial mismanagement, research shows the opposite: unexpected emergencies and health-related debt push most Americans into insolvency.
Struggling with Debt? Kostopoulos Bankruptcy Law Can Help.
If you’re overwhelmed by bills, late notices, or creditor harassment, you’re not alone—and you don’t have to go through this process alone either.
At Kostopoulos Bankruptcy Law, our experienced attorneys help individuals file Chapter 7 or Chapter 13 to:
- Stop wage garnishment
- Eliminate credit card and medical debt
- Save homes from foreclosure
- Rebuild credit faster than you think
Call (877) 969-7482 today or visit us online at: thebankruptcylawfirm.net
Your consultation is 100% free. We’ll give you honest answers and help you take back control of your finances.
Further Reading:
- What Are the Differences Between Chapter 7 vs. Chapter 13?
- Do You Lose Your Home if You File Bankruptcy?
- How to Qualify for Chapter 13 Hardship Discharge
- What Does Non-Exempt in Bankruptcy Mean?
- How Long Does it Take to File Bankruptcy?