2023 Bankruptcy Trends
Read about 2023 bankruptcy trends to learn more
  • tech
  • legal
Blog Specialist
Published on Jun 05, 2023


Bankruptcy law is a relevant aspect of law for many legal professionals and the general public. As individuals progress through 2023, examining the emerging trends and developments that will shape the future of bankruptcy filings and proceedings becomes crucial.

This article will explore the key factors driving these trends, delving into the implications for individuals and businesses and discussing the potential impact on the legal community. From the effects of economic fluctuations to the influence of technological advancements, the 2023 bankruptcy trends will be dissected.

What Is Bankruptcy? 

Bankruptcy is a legal proceeding carried out to free individuals or businesses from debts. It happens when an entity has more cash outflow and borrowing without sustainable profits. Over time, this builds up, leading to multiple debts with no way of repayment. Bankruptcy allows creditors an opportunity for repayment.  

The process provides a legal means for individuals or businesses to start over financially when they cannot afford to pay their debts. Bankruptcy cases are handled in federal courts under the rules outlined in the U.S. Bankruptcy Code. Depending on the type of bankruptcy filed, the court decides how the debtor pays the creditors. It can also collect and sell the debtor's assets and belongings or create a repayment plan.

2023 Q1 Bankruptcy Trends 

In the first three months of 2023, bankruptcy trends were high, especially for corporate America. According to S&P Global, over 230 American companies have filed for bankruptcy between January and April. This was the highest level since 2010. 

Also, according to Docket Alarm data, the first quarter of the year saw bankruptcy filings skyrocket from 92,421 to 106,680 in 2022, an increase of over 15%. This data cuts across all chapters of the bankruptcy code. 

Prominent companies have been implicated in the bankruptcy trend. In an announcement on April 23, Bed Bath & Beyond Inc. revealed its decision to file for bankruptcy and outlined its strategy to sell off its assets. As a result of its financial difficulties, they plan to close approximately 500 stores unless they sell a large amount that can enable these stores to continue operations. 

Another major company that recently announced bankruptcy is Virgin Orbit Holdings Inc., a notable company. On April 4, the company sought bankruptcy protection to facilitate the search for a potential buyer. The company released a statement outlining its intent to find a buyer as part of its bankruptcy proceedings.

Why are these filing more common in 2023? During the COVID-19 era of 2020, there was a consistent decline in bankruptcy filings compared to the previous year. Various social safety measures, such as the distribution of stimulus checks and the implementation of the Paycheck Protection Program, likely influenced this trend. 

However, in 2022, there were signs of a shift as bankruptcy filings began to rise while COVID restrictions were lifted. This indicated a potential change in the economic landscape. This increase of 15% could be attributed to the well-documented inflationary pressures experienced during that period. Funds were also relieved as significant layoffs occurred in prominent companies like Meta and Amazon.

Regarding the type of bankruptcy, Bankruptcy filing at the end of Q1 of 2023 shows that there have been increases across the significant filing categories. However, there were more filings in some sectors. The customer discretionary sector was the highest at the 30% mark. It was followed closely by industrials at 23% and financials at 18%. Other sectors that had an increased bankruptcy filing include;


  • Health care - 18%

  • Information technology - 9%

  • Customer staple - 8%


Then, statistics show that individual Chapter 13 filings saw a notable increase of 28 percent in the first quarter of 2023, reaching a total of 42,364. This figure represents a significant rise from the 33,189 individual Chapter 13 filings recorded during the corresponding period in 2022.

Factors Driving Bankruptcy Trends

An economic recession stands as a prominent factor driving bankruptcy across diverse industries. While it holds significant influence, other contributing factors leading individuals and businesses to file for bankruptcy include medical expenses, job loss, foreclosure, overwhelming debt, and business failure. These circumstances can engender substantial financial losses or insurmountable debts for businesses.

Other factors driving bankruptcy trends include rising interest rates, soaring inflation, and declining market liquidity. The sectors most affected by these challenges are real estate, retail and consumer financial services, and health care. However, the overall economic outlook for the EU is more optimistic, with an expected growth of 4.2% in 2023 and 4.4% in 2024.

Implications For Individuals and Businesses

Filing for bankruptcy can have tremendous implications for both individuals and businesses. The effects can range from automatic stay and asset protection to contract renegotiation and liquidation. Consequences also vary on the type of bankruptcy filed, which could be Chapter 7, chapter 11, or Chapter 13, the most common type of bankruptcy filing for businesses and individuals.

Businesses primarily use Chapter 11 bankruptcy, but it is also available to individuals with substantial debts. Its purpose is to provide a structured framework for reorganizing debts and developing a plan to repay creditors while allowing the business or individual to continue operations.

Chapter 7 is commonly used by individuals with significant debt and limited income or businesses that cannot continue operations. It involves the sale of non-exempt assets to repay creditors. The remaining qualifying debts are typically discharged, giving individuals or companies a fresh start.

Chapter 13 bankruptcy is primarily designed for individuals with regular income who want to create a repayment plan to address their debts. Debtors propose a method to repay creditors over a three to five-year period. Chapter 13 allows individuals to retain their assets while repaying their debts based on their income and a court-approved plan.

NextChapter Offers Chapter 13 Bankruptcy Filing Services

NextChapter introduces a specialized software package known as the Chapter 13 Plan Package, tailored to assist attorneys and paralegals in streamlining the preparation of Chapter 13 cases with enhanced efficiency and precision.

Due to the individualized nature of Chapter 13 cases, the plan package has been designed with customization in mind to address the specific requirements of debtors and the court. NextChapter’s platform ensures flexibility by allowing users to tailor their plans and treatments according to their unique circumstances. 

Notably, the calculator table provides real-time recalculations whenever adjustments are made to the plan or treatments. This feature guarantees accurate and up-to-date figures, offering a seamless experience that aligns with the diverse needs of Chapter 13 filers.


Navigating the multifaceted process of bankruptcy requires the expertise of attorneys and financial advisers. The increasing number of Chapter 13 filings highlights the need for attorneys to streamline their operations and leverage technology to make filing easier and more efficient. The complexities of Chapter 13 cases necessitate the adoption of software solutions. If you’re looking to streamline your practices, save time, provide better value to your clients, and set your firm apart in bankruptcy law, NextChapter is the ideal starting point.