Small Business Bankruptcies Jump 46% — Evening Brief – 10.12.26
Small-business bankruptcy reorganizations increased sharply during the first nine months of 2026, outpacing the broader rise in filings as companies and households sought relief from financial pressures.
Subchapter V elections within Chapter 11 totaled 2,442 through September, up 46% from 1,672 during the same period last year, according to Epiq AACER. Subchapter V provides a streamlined reorganization process for eligible small businesses.
Total bankruptcy filings increased 11% to 469,719 from 423,168. Individual filings reached 444,252, compared with 399,379 a year earlier. Those totals imply an approximately 11.2% increase, although Epiq’s release listed the change as 7%. Individual Chapter 7 filings rose 13% to 282,413, while Chapter 13 filings increased 8% to 160,817.
“The continued increase in bankruptcy filings reflects the strain of higher borrowing costs, rising household expenses, growing consumer delinquencies, and a softer job market,” said Michael Hunter, vice president of Epiq AACER.
Hunter said the firm expects filing volumes to continue climbing into 2027.
Commercial filings increased 7% to 25,467 during the nine-month period. Commercial Chapter 11 cases rose 11% to 6,560.
September presented a mixed picture. Total filings increased 6% year over year to 52,299, and Subchapter V elections climbed 38% to 276. However, commercial filings declined 7%, while commercial Chapter 11 cases fell 16% to 648. Epiq noted that September 2025 included 109 related filings involving a long-term care pharmacy services provider, affecting the comparison.
The increase comes as Congress has approved legislation to expand bankruptcy eligibility. The Bankruptcy Threshold Adjustment Act would permanently restore the Subchapter V debt limit to $7.5 million and raise the Chapter 13 limit to $2.75 million. The proposed changes would broaden access to reorganization, while the filing data show increasing demand for relief across businesses and individual debtors.