Individuals and families are struggling with the combined effects of rising living costs, high-interest debt, unexpected expenses and changes in income. This is reflected in the increasing number of Americans filing for bankruptcy.
During the 12 months ending June 30, 2026, more than 608,000 bankruptcy cases were filed nationwide — an almost 50% increase from 2022. But those numbers tell only part of the story. Behind many bankruptcy filings is a person or family who has reached a point where they can no longer stay ahead of their debt.
Few people can point to one cause for their financial hardships. Instead, many problems happen at once. A person may lose a job while dealing with medical bills, rising household expenses or significant credit card debt. Some other factors contributing to financial problems include:
- The use of credit cards as a temporary way to cover expenses, leading to large balances with high interest rates
- An unexpected illness or injury that can prevent someone from working while medical expenses result in significant debt
- Unexpected financial emergencies such as major car or home repairs can force people to rely on credit cards or loans
Warning signs of unmanageable debt
Not everyone who has debt needs to file for bankruptcy. However, there are warning signs that your debt is becoming unmanageable, such as the following:
- You can only make the minimum payments on credit cards.
- You are using credit cards for basic living expenses.
- Debt collectors are repeatedly contacting you.
- A creditor has threatened to sue you.
- You have little or no money left over after making monthly bills.
- You are considering borrowing from your retirement fund to pay bills.
- You are using one credit card to make payments on another.
Filing for bankruptcy doesn’t mean you’ve failed financially. In reality, bankruptcy is a legal tool for dealing with overwhelming debt. For some people, it can provide an opportunity to stop creditor harassment, address certain debts, protect eligible assets and begin rebuilding their lives.