Uptick in Bankruptcy Filings in 2023: An Opportunity for Attorneys
In the most recent fiscal year (ending September 30, 2023) bankruptcy filings have witnessed a noteworthy increase, marking a significant shift from the longstanding trend of decline. Business-related bankruptcies, in particular, have surged, highlighting a shift in the economic landscape.
Overview of Bankruptcy Filings
Statistics indicate a 13 percent escalation in overall bankruptcy filings during the twelve-month span concluding in September 2023. This change suggests a departure from over ten years of consistently decreasing figures. The data, provided by the Administrative Office of the U.S. Courts, shows a rise from 383,810 filings in the year prior to 433,658 in the current year.
Business vs. Consumer Bankruptcy Trends
A sharp uptick of nearly 30 percent was observed in the domain of business bankruptcies, climbing from 13,125 to 17,051. Chapter 7 and Chapter 13 filings also experienced an increase of 12.4 percent, up to 416,607 from the 370,685 reported at the same point in 2022. These statistics underscore a growing trend among both commercial entities and individual consumers toward bankruptcy as a viable financial option.
To add context to this development, this increment marks the third consecutive quarter of rising bankruptcy filings, a significant event given the backdrop of over a decade of decline. Interestingly, bankruptcies saw a particularly steep fall following the onset of the COVID-19 pandemic in early 2020—a time when economic disruptions might have led to an expected increase.
As some have speculated, irregularities in economic activity caused by the pandemic would reveal the complete scope of their consequences in the coming years. It may be that we are witnessing that result.
Despite these recent surges, the current bankruptcy filings are still substantially lower than historical highs. For context, filings peaked in September 2010 with nearly 1.6 million cases, dwarfing the present figures and indicating that, while on the rise, bankruptcy filings are still not at their most extreme historical levels.
Accounting for that fluctuation over a decade ago was, of course, the housing crisis and the recession that followed. While economic conditions are not as extreme as they were in 2010, a sharp incline in bankruptcy rates, both personal and corporate, is a sign of an equally sharp increase in demand for the services of a qualified bankruptcy attorney.
Benefits for Bankruptcy Attorneys
The discernible uptick in bankruptcy filings presents a crucial window of opportunity for bankruptcy attorneys. The current trend not only reflects an increase in demand for legal bankruptcy services but also underscores the necessity for legal professionals to prepare and adapt to the evolving needs of both businesses and consumers considering bankruptcy.
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