Rising bankruptcy filings hit state, nation

Indiana’s bankruptcy filings are climbing as consumers and businesses feel the economic pinch from housing costs, high credit card debt and student loans.

The U.S. Courts announced in May that bankruptcy filings nationally rose 13.1 percent during the 12-month period ending March 31.

According to the agency, that is a similar rate of acceleration as in the Dec. 31, 2024, quarterly report, but new bankruptcy cases remain significantly lower than after the 2007-08 Great Recession.

Corey Benjoya, an attorney with the Bankruptcy Law Office of Mark S. Zuckerberg, said his firm is seeing an increase in cases, although still not as high as pre-pandemic levels.

“However, it certainly is feeling like it’s toward that direction,” Benjoya said.

For Indiana’s Southern District, there were 9,695 bankruptcy cases filed (covering Chapters 7, 11 and 13) in 2024, a 13.2% increase over the previous year.

So far this year, there have been 4,397 filings district-wide, with year-over year increases in every month.

Statistics released by the Administrative Office of the U.S. Courts showed total national filings rising to 529,080 cases, compared with 467,774 cases reported during the year ending March 31, 2024.

Business filings increased 14.7 percent, from 20,316 in March 2024 to 23,309 in the newest report. Non-business filings rose 13.0 percent, from 447,458 in March 2024 to 505,771 in March 2025.

For more than a decade, total filings fell steadily, from a high of nearly 1.6 million in September 2010 to a low of 380,634 in June 2022.

Total filings have increased each quarter since then, but they remain far lower than historical highs.

Matthew Cree, a Greenwood-based solo practitioner who specializes in personal bankruptcy, debt defense and student loan resolution, said his office has 15% more bankruptcy cases compared to the same time last year.

“I am still getting folks coming through that are tracing their financial difficulties back to the COVID pandemic,” Cree said.

Why the increase?

Bankruptcy attorneys across the state are seeing several different factors that are behind the increase in filings.

Benjoya said one big factor his office is seeing with clients includes business owners that either opened a business during COVID and took out a Small Business Administration loan they are struggling to pay back or took an SBA loan prior to the pandemic

He said the end of the student loan repayment moratorium has resulted in a negative impact on a lot of consumers’ credit reports.

Benjoya pointed to a statistic he had read where, in the first quarter of 2025, the delinquency rate for student loans went from below 1% to 8%.

“So people are really feeling the heat from the government in that aspect,” Benjoya said.

He’s seeing a lot of trucking businesses file for bankruptcy, but Benjoya added that there are a wide range of businesses facing the same fate, including construction companies and restaurants.

Cree said inflation, higher costs of goods and property taxes are all economic reasons clients bring up when they talk about filing for bankruptcy protection.

Crushing credit card debt also comes up frequently, Cree said.

He said he is also seeing more Generation Z clients coming in this year, a trend that started in the latter half of 2024. Some of those 20-something clients have attributed their financial issues to a lack of financial literacy, Cree noted.

That’s in contrast to early last year, when more clients were in their 60s and 70s.

Cree said there are a lot of Gen Z clients with student loan debt.

“I would say the student loans are definitely creating a financial hardship for this younger generation,” Cree said.

While his clients are mainly on the south side of Indianapolis, Johnson County and Morgan County, Cree said he’s been getting more inquiries from people in northern and southern Indiana.

Eric Lewis, an attorney at Lewis Legal Services in Indianapolis, said he’s definitely busier compared to last year.

March and April were the busiest months he’s seen with bankruptcy-related appointments since prior to the pandemic.

“It’s a peak for us,” Lewis said.

A lot of different things have played into that peak, with cost of living increases, inflation, cost of doing business, higher car payments all cited by clients.

More recently, some clients have become more concerned about student loan debts, Lewis said

He noted that a lot of people have huge student loan debt, with balances of $40,000 to $50,000 not being unusual.

He emphasized that student loan debt is not discharged in bankruptcy filings, but it serves as an additional stressor for someone who has fallen behind on other financial obligations.

Department of Education Secretary Linda McMahon announced in April that the department’s Office of Federal Student Aid would resume collections of its defaulted federal student loan portfolio in May. The department had not collected on defaulted loans since March 2020.

At the time of the announcement, the department noted that 42.7 million borrowers nationally owe more than $1.6 trillion in student debt.

More than 5 million borrowers have not made a monthly payment in more than 360 days and sit in default—many for more than 7 years—and 4 million borrowers are in late-stage delinquency (91-180 days).

Only 38 percent of borrowers are in repayment and current on their student loans, according to the DOE.

Most of the remaining borrowers are either delinquent on their payments, in an interest-free forbearance, or in an interest-free deferment. A small percentage of borrowers are in a 6-month grace period or in school.

Currently, almost 1.9 million borrowers have been unable to even begin repayment because of a processing pause put in place by the Biden administration.

Harley Means, a partner with Kroger Gardis & Regas LLP, said he is seeing a rise in both commercial and consumer bankruptcy cases.

He noted the firm had hired an additional attorney to deal with the increased case volume.

One trend on the consumer side he’s seeing is an increase in cases involving gambling debts.

Means said he’s seen a couple of cases where someone has had millions of dollars of gambling losses incurred from use of sports betting apps.

On the commercial side, Means is seeing a lot of trucking industry cases.

“The ability to make a profit on loads in decreasing,” Means said.

Means said, based on conversations he’s had with some other consumer attorneys, there might be a lag of 6-12 months before any real impact from student loan debt is felt on bankruptcy filings.

Will increase continue for rest of 2025?

The peak of bankruptcy filings in Indiana’s Southern District came during the Great Recession, with more than 10,000 filings in 2010.

Means said he expected commercial filings to stay high through 2025 and into 2026, with uncertainty in the financial markets, tariffs and inflation still big concerns.

Jim Tamke, a South Bend bankruptcy attorney who described himself as semi-retired, said in northern Indiana a lot of bankruptcy filings come from people who work in the recreational vehicle industry.

He said people don’t always plan ahead for layoffs, leading to foreclosures and other financial difficulties.

Tamke said he’s seen a lot more bankruptcy cases since the end of the pandemic.

He thought bankruptcy cases would taper off last year after tax season ended.

“But it didn’t,” Tamke said.

Cree said his firm typically sees filings slow down in the summer months. But he expects he will stay at a filing rate 10-15% higher than last year through the remainder of 2025.

With prices for cars and groceries rising and interest rates still high, Lewis said the increase in filings is something that people thought might happen sooner.•