Great Debt Unwind: Personal And Commercial Bankruptcies Surge In March

Tyler Durden's picture

Authored by Wolf Richter via Wolf Street,

Commercial bankruptcy filings, from corporations to sole proprietorships, spiked 28% in March from February, the largest month-to-month move in the data series of the American Bankruptcy Institute going back to 2012. They’re up 8% year-over-year. Over the past 24 months, they soared 37%! At 3,658, they’re at the highest level for any March since 2013.

Commercial bankruptcy filings skyrocketed during the Financial Crisis and peaked in March 2010 at 9,004. Then they fell sharply until they reached their low point in October 2015. November 2015 was the turning point, when for the first time since March 2010, commercial bankruptcy filings rose year-over-year.

Bankruptcy filings are highly seasonal, reaching their annual lows in December and January. Then they rise into tax season, peak in March or April, and zigzag lower for the remainder of the year. The data is not seasonally or otherwise adjusted – one of the raw and unvarnished measures of how businesses are faring in the economy.

Note that there is no “plateauing” in this chart: since the low-point in September 2015, commercial bankruptcies have soared 65%! That red spike is the mega-increase in March:


At first, they blamed the oil bust. The price of oil began to collapse in mid-2014. By 2015, worried bankers put their hands on the money spigot, and a number of companies in that sector, along with their suppliers and contractors, threw in the towel and started filing for bankruptcy protection. But now the price of oil has somewhat recovered, banks have reopened the spigot, Wall Street has once again the hots for the sector, new money is gushing into it, and oil & gas bankruptcy filings have abated.

So now they blame brick-and-mortar retail which is in terminal decline, given the shift to online sales. I have reported extensively on the distress of the larger chain stores, but brick-and-mortar retailers include countless smaller operations and stores that no ratings agency follows because they’re too small and can’t issue bonds, and many of them are even more distressed.

Businesses file for bankruptcy protection because they have too much debt. Even brick-and-mortar retailers with little debt can get by just fine. Their sales might decline, and they might not make much money, but they can keep going. However, brick-and-mortar retailers with large amounts of debt are toast.

This is happening to other businesses too. Piling on debt in good times puts a business on the edge of a cliff, and it doesn’t take much to knock it over the cliff when adverse winds pick up.

Now come the consumers – not all consumers, but those with mounting piles of debt and stagnating or declining real incomes, of which there are many. They’d been hanging on by their teeth, with bankruptcy filings consistently declining since 2010. But that ended in November 2016.

In December, bankruptcy filings rose 4.5% from a year earlier. In January they rose 5.4%. It was the first time consumer bankruptcies rose back-to-back since 2010. I called it “a red flag that’ll be highlighted only afterwards as a turning point.”

In March, consumer bankruptcy filings rose 4% year-over-year, to 77,900, the highest since March 2015, when 79,000 filings occurred, according to the American Bankruptcy Institute data.  The turning point has now been confirmed.

Total US bankruptcy filings by consumers and businesses in March spiked 40% from February and rose 4% year-over-year to 81,590, the highest since March 2015:


The Fed’s monetary policies have purposefully encouraged businesses and consumers to borrow. But debt doesn’t just go away. It accumulates. By now, an increasing number of businesses and consumers are suffocating under this debt overhang in an economy that never developed the “escape velocity” needed – and hyped by Wall Street for years – to outgrow this debt. Rising bankruptcies are a turning point in the “credit cycle.” They’re not exactly a positive mile-marker for the economy.

The irony is thick: In all major sentiment surveys, economic confidence has soared since November: consumers, owners of small businesses, and corporate executives are riding high on their own ebullience. But the economic reality is tough for businesses and consumers struggling under the hangover from eight years of ultra-low interest rates.

I hope the model is wrong. Read…  Atlanta Fed GDPNow Forecast Spirals Toward Zero

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GUS100CORRINA's picture

Title: Great Debt Unwind: Personal And Commercial Bankruptcies Surge In March

My response: A lot more is coming because we have overleveraged balance sheets and market MARGIN DEBT at all time highs in an investment environment full of complacency.

For three decades, Government, Businesses and Americans have spent like there is no tomorrow and thrown prudent RISK MANAGEMENT and good financial stewardship to the wind.

For more detailed information on DEBT and other financial metrics, I have listed a web site below that has great information that helps one visualize the economic truth of a matter.

Lost in translation's picture

A friend of mine has $35,000 in credit card debt, yet still buys guns. He must have 200 or more now, plus related militaria.

Tells me he and his fiancé plan to "buy a new house this summer."

They have ballpark $65,000 cash for a down payment...

...blows my mind that he gets away with it. SMH.

space shitle's picture
space shitle (not verified) Lost in translation Apr 9, 2017 4:16 PM

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...

Larry Dallas's picture

Hey, 6 years on ZH and I agree that everyone is overleveraged.

However, where - or when - is the inflection point where these defaults will cascade short of the 10 year going to 3 handle first?

Nothing will happen.

SixIsNinE's picture

would love to see a bankruptcy chart going back 20 years, to 1997

anyone have it?



I am Jobe's picture

O boy, all those dreamers and parents who think they had a great future are going to be fucked. Love saved them , and then the divorce 

Deep Snorkeler's picture

When the recession hits, I hope the government

has enough money left to:

1. Bail out the banks again

2. Build another aircraft carrier

3. Pay owners for idle robots

4. Congressional pay raises

5. Subsidies for Exxon Mobil

6. Trump University, Gold Elite student loans

moorewasthebestbond's picture

7. Hose down the blood the the streets

PlayMoney's picture

8. Hookers and blow for all.... the new entitlement

Lost in translation's picture

Only one aircraft carrier? Why not 7?

OverTheHedge's picture

1. Banks always get free money - never  a problem.

2. Build replacement aircraft carriers (plural)

3. Robot owners in the club will be fine. Smaller manufacturers, not so much

4. Congressional pay rises guaranteed. Print print print print

5. Subsidies for Exxon. See 4

6. I have no opinion, but if in doubt, see 4.

Mtnrunnr's picture

You forgot rape and pillage

Bernardo Gui's picture

By 2020 the Millennials will have the numbers to elect a socialist, or whomever promises to forgive their student loans and (i.e., transfer the burden to others). After that fleecing, we can expect means testing for Social Security and Medicare, dropping the cutoff to the poverty line. And ultimately a default on sovereign debt obligations. They will be the generation to finish us off. Seems about right.

Mtnrunnr's picture

Let me list some things and I want you to tell me who's idea they were : medicare. Medicaid. Social security. Pension plans. Now tell me again how it is all millennial's fault because those are all things boomers either created or ruined to fund their bullshit.

WillyGroper's picture

"because those are all things boomers either created or ruined"

get a grip punk. 

boomers weren't even a gleem in they eye nor did they create or ruin M,M,SS.

do some homework...rule/mind. hint: govern-ment...bang up job of it too with your road to the blame game.


Mtnrunnr's picture

No but you raided SS for vietnam (good idea BTW), voted yourselves taxs breaks while increasing public benefit programs (medicaid, medicare), increased the publicly heald debt to 20T to fund it AND left infrastructure to pay for it. Thanks.

WillyGroper's picture

1. if you think any boomer that fought/mutilated/died in VN raided SS for the war, you've obviously been lobotimized. again the focus of your blame is in the wrong direction.

JHC, listen to yourself.

2. if you think your vote counts, again you're wrong.  it's who counts the votes.  did not helliary's scam on bernie teach you this?

3. if you think ANY of the citizenry "voted yourselves taxs breaks while increasing public benefit programs (medicaid, medicare), increased the publicly heald debt to 20T to fund it AND left infrastructure to pay for it."

again your focus is 180 off.  it's your CONgress.  with zerocare you can add the supremes.  the boomers or for that fact ANY generation did not have a say in the theft engineered by tptb.

you must have boomer parents neck deep in debt to be so misguided in your anger.

Mtnrunnr's picture

I love that you told me that I'm focusing in the wrong place when the header of this thread is about how my generation is fucking everything up. I just turned 25. How in the fuck are you going to pin the decay of the US on my cohort when it has CLEARLY been inherited.

WillyGroper's picture

the header of the thread is the debt unwind.

if you can comprehend my previous post i said NO generation is responsible for what the CONgress has passed.  it would appear either you had no civics course or you failed as the public has no vote on these issues. 

the decay has been inherited by all generations to varying degrees.  the ponzi has played out.

it's not about you.

you are primed for your ft. sumpter moment in your focus on any but the perps.

Mtnrunnr's picture

the header of this ARTICLE is the debt unwind. the header of this THREAD is a comment by a dipshit regarding millennials and how we're terrible. I have some news for you. 1) we're fucking trying. For those of you keeping score we just elected Trump. (he's a neocon asswipe, and morons elected him, but our public schools are terrible so what do you expect, and it was our first shot) 2) we actually try to save money. 3) we're doing the best with what we have. I'm directed right where I should be. Congress, the POTUS, the NeoCons and bankers. It infuriates me when these old assholes constantly harp on how I'm ruining everything when it's all just a progression from their horrible choices. it's time they (and we) got off our collective asses and stood up to those cocksuckers that are slowing enslaving us.

WillyGroper's picture

everyone is trying.

trump was selected not elected.

left wing, right wing, they're both attached to the same bird.  that big bird is what's always served us.

it's not boomers, millennials nor genX'rs that caused this.  all are captured in a perverse system.

yes, when you're thru with the shitty skools you can learn by choice in the information age.  you will pay for each layer of knowledge just as you do with the educational system.  you won't be happy with it as you learn how it works on deeper levels, and you can never look back.

gummint, finance, religion>>>>>>those are the control mechanisms.  not any particular generation and it's the uneducated that sets their sights on humanity rather than the rulers of.

divide & conquer will continue to work until folks see thru it...doubt it will happen.

Mtnrunnr's picture

side note: I was thinking about it and Nam was not boomers' fault. points to you for that. You guys were force marched to your death for no good reason.

SixIsNinE's picture

they had to secure the golden triangle opium production, and relieve the French.


Vietnam & Thailand are good trading partners now, go figure.


PresidentCamacho's picture

Millenials finishing off the prior generations that fucked them would be pretty rightious.

Hitlery_4_Dictator's picture

Millenials are tarded and will worship the beast system and bring it to us all.  They can suck it.


Signed a very late gen xer. 

Mtnrunnr's picture

well it isn't up to you. Gen X'ers can continue to masturbate to prono on websites and troll on websites because that's about where your computer sophistication ended.

Hitlery_4_Dictator's picture

I am a coder and webdesigner.  LOL. Another fail from a Millenialtard. You can't make this stuff up, enjoy being poor and in debt. 

Mtnrunnr's picture

Still using FORTRAN? Funny because I'm also a coder and I taught myself. Imm not paying some bullshit gen Xer to teach me mindnummingly simple front end design.

WillyGroper's picture

yup...and an iphone3 performs as a 7, right?

no change in the signal from edge, gsm, 4g, right?

"college educated" you're prolly the one in debt up to your eyeballs.

Mtnrunnr's picture

nope. and of course their are minor differences. I don't need 4g. I don't need an iphone with massive computing power. that's what my laptop is for. my work desktop is up to date. but unless you're playing the newest game at a professional level or VR it doesn't make a lick of difference. and I actually have no debt. I ran in college for a D1 program and I bought my 1997 Civic for 1k and put 100k miles on it, 38-42 mpg. the rest of my cohort might be leasing their cars, and going into debt for school, but that is a fool's errand.

WillyGroper's picture

good onya for fix'n both urself.

it's the engineered obscolescence that nails us.

aside from that, the emf will not only sterlize you but kill you cell by cell.

kudos for no debt! you're smarter than most your age.

learn to grow your own food & you'll be way ahead.

it's a lost art...very necessary for what's to come.

SixIsNinE's picture

and you're their Leader President Camacho.   your marksmanship is what gives the millennials the advantage.

according to, that is what happens.  the US is left with just 59 million people and a $15,000 per cap income. oh, and the Pentagram only has $8 billion to spend a year, so maybe it's not so bad... and only 6 people per square mile, plenty of huntin & fishin'...


but don't worry, be Happy - convert now before it's too late !   HappyCamping!  


Mtnrunnr's picture

that's because none of this debt ever created value (the iphone 3 is the same as the 7, but it costs more and doesnt create value for me, therefore when I go into debt to buy it I lost value/money overall). The fat cat bullshitters have been protected and all innovating companies get squashed before they can market their good. also the cost of living and owing assets has gobbled up all the capital that is needed to create a company to begin with. there is no way out but down.

Hubbs's picture

When you mentioned iPhone, you started on a roll. Nothing worth buying anymore. It's all crap, falls apart in no time. Even the food is crap GMO and grown increasingly in foreign countries using US outlawed pesticides I suspect.

It started out with Microsoft using its monopoly power to buy up or crush the innovators starting with Netscape, but now appears to have spread to Google (owns You Tube) cutting off advertising revenue to alternative media sites on You Tube to protect MSM which should be allowed to die a slow miserable death.

OverTheHedge's picture

Plumbing parts are my bellwether - plumbers get paid insane amounts of money not because they are skilled, but because they have to put crap, cheap fittings together and then work out how to stop the leaks. I only really swear when I am plumbing, and I seem to swear a lot, these days." Bloody buggery fucking  cheap Chinese shit plumbing crap", and similar. My daughter told me the other day that she learned to swear by hearing me plumbing. She is eight.

Mtnrunnr's picture

I did some work on my place (I'm not paying like 100/hr for that shit, I'll dig a shit pit and tote water up the hill before I pay that) and all the stuff A) didn't fit together or B) was so shitty I had to craft my own stuff. it's wild.

Mtnrunnr's picture

given my response to otherpost you're going to think I'm making this up, but I just replaced the battery on my Iphone 4 and replaced my 2011 laptop's drive with a 128 GB SSD (for like $100 and 2 hours of my time) and it's crazy but the shit works better than my girlfriends new SSD 2016 macbook retina pro (which you can no longer upgrade yourself because its fucking sodered together). It's the same old shit, at higher prices that are made more cheaply. its a waste of money.  

Hubbs's picture

I recently upgraded both my 4 year Dells with solid state drives rather than going out and buying new junk. Smartest move I have made in a while. Also holding off buying any more new vehicles , not just because of the outrageous price (I never finance), but because then I have pony up more for insurance and property tax. I am so sick of the government twisting my balls for more revenue. It is an insatiable money monster!

Mtnrunnr's picture

You're one of the first few people here I respect. Good on you man.

creeko's picture

You seem like a decent lad with your head on straight.  I know a lot of people here constantly bash the millenials, but if there are more like yourself, and I'm sure there are, then some hope remains.

MrSteve's picture

What size shorts should we put on**. Boxers or Bermudas??

Heroic Couplet's picture

It's not bankruptcy until the Too Big To Fail Banks and hedge funds are bankrupt. Make America Great Again.

hotrod's picture

Do ya want war or do ya want massive depression in the USA and millions starving?

Lost in translation's picture

"I'll take both for $800, Alex..."

Victory_Garden's picture

Bank account?

What's that??

anticultist's picture

brush up on your Nola online bankruptcy means test, tricks and traps.

Its about "allowable" federali expenses. If you spend $10 too much on housing,

say they jacked property-less taxes a few times and put you over, you have to

sell the house at any loss and come back in under allowable to qualify for chapter 7.

In some cases you'll do better to lower income, ask for a demotion at work no shit thats

how federali statute satanism works those overlords up there in DC are "esquires".

You have to be one too. Allowable housing expenses is county average so you can spend

all you want on housing and qualify for chapter 7 if you move into the hamptons first and then file,

no shit thats how satanism works up there in DC. But for sure your are getting killed if there is any

low income houses in your county at all where they might sell 10 of them for every middle class

house cutting your allowable 90% on county average math.

Check out the irs form for uncollectible status not sure the form name same structure

as allowable expenses. From this thing it is pretty clear that anyone under about 90k income

is already in uncollectible status and they dont know it, 90k is the new poverty limit according to

this thing no shit they are esquires up there in DC.


MEFOBILLS's picture

But debt doesn’t just go away. It accumulates.

A debt instrument formed at hypothecation, does eventually go away. 

When you pay down principle, the former credit disappears.  Think of it like a negative money meeting positive numbers in the ledger.  They get together and disappear.

Many people understand that if all debt is paid off, then the money supply disappears.  This is an output of having negative bank credit being the money we use.

When you take out a loan, you create new bank credit.  More than 97% of the money supply today is bank credit hypothecated into existence.

Debt instruments GROW with usury.  They grow faster than the money supply.  They grow with mathematical precision, making demands from the real economy.  Real economy is of human goods creation and trade.

The reason author thinks debts accumulate, is because to pay off old debts, people often go into more debt.  This action is harnessing future to pay off past.  

And of course... as usual, no discussion about defects of frauduent debt money system. 

Debt instruments and their hypothecated banking credit are not perfect mirrors of each other.  Until humanity gets a grip on that reality, then the shit show will continue forever.

Debt money system needs to be tossed into the crapper.

Humans are evolutionarily hardwired to pay off debts as part of honor codes.  This is especially true of white people, who developed elaborate high trust cultures.

 Evolutionary debts were goods debts, or service debts (not money).  People simply remembered who owed who what, and made deals.  Maria would give you a BJ for fixing her window, etc.

THERE ARE DIFFERENT KINDS OF DEBTS.  We keep using this one word as a catch-all.

Today, "debt" almost always means a claim on money.  A debt instrument could either be a hypothecation, or it could be a claim on existing money.

Yes, you are not taught this stuff in economics - because the economics profession is a disgrace, and has been captured by usurious banksters.

rejected's picture

Yep,,, Banks conjure currency out of thin air for loans. Then you repay their 'free' money with your earnings. Adding insult,,, you must pay taxes,,, then if you fail to pay the loan the bank ends up with real value and gets to loan even more 'free' money to the next victim who 'qualifies'.

Quite a scam...