Why Bankruptcies in New Jersey are Increasing in 2026

More people are filing for bankruptcy in 2026.

With a seemingly endless news cycle focused on high prices, inflation, elevated interest rates, and financial uncertainty, it’s no surprise to see bankruptcy filings increase across the US. Bankruptcy filings reached a five-year high in 2025, totaling 533,949, a 12% increase from 2024. We expect that trend to continue into 2026.

At Veitengruber Law, we have seen this trend personally as more New Jersey residents file for bankruptcy. Year after year, we have seen more folks making the decision to file for bankruptcy. We tell our clients that every bankruptcy case is different—because it is. No two bankruptcy filings will be the same because the people filing for bankruptcy come from different personal, financial, and logistical circumstances. However, when we see overarching trends like we are currently seeing, it points to a bigger picture.

Here, we will explore the broader causes of the increase in bankruptcies.

Delayed Filings

Bankruptcy filings are almost never caused by current economic conditions. Instead, they are typically caused by economic events months or even years ago. The big-picture conditions that often lead to individual bankruptcy filings take a while to trickle down to the average person. Folks also tend to hold off on filing for bankruptcy as long as possible, long after they likely needed to file.

Bankruptcy has a ton of negative connotations associated with it. Many people can experience feelings of shame, guilt, and despair when they are considering filing for bankruptcy. And while bankruptcy certainly comes with some trade-offs, it is often the financial reset required to get back to financial health. Still, these negative connotations can further delay filings.

Big Picture Causes for Bankruptcy

As discussed above, the decision to file for bankruptcy is often deeply personal and will vary from person to person. No two bankruptcy filings are exactly the same. That said, Economists have identified several economic factors over the past few years that have led to a general increase in bankruptcy filings. Those include:

• Rising Medical Costs: Health insurance premiums have been increasing annually, and more Americans are choosing to forego coverage to maintain their already tight budgets. With the cost of healthcare surpassing many Americans' means, more and more individuals and families are finding themselves saddled with unmanageable healthcare debt. One unexpected medical emergency can lead to bankruptcy.
• Increased Credit Card Debt: According to Lending Tree, US credit card debt has reached an all-time high of $1.28 trillion. As the cost of living exceeds many Americans’ budgets, more and more consumers are turning to credit cards to make ends meet. With high interest rates, using a credit card for groceries, gas, or other basic needs can quickly snowball into an unmanageable pile of high-interest debt.
• Student Loan Payments Restarting: The Trump administration is set to resume wage garnishment on student loan borrowers in default in 2026. Some notices have already gone out to borrowers in default on their federal student loans. While it is not clear how much people can expect to be garnished from their paychecks, this will be another financial blow to struggling individuals and families.
• Income Disparity: As the cost of living gets higher, incomes are simply not rising to meet the increased costs. So, while it costs the average consumer more to heat the house or put food on the table, incomes remain stagnant. As individuals try to keep up with the cost of living and fall behind, they may turn to debt to make ends meet, while at the same time having fewer means to repay it.

All of these problems could individually lead to an increase in bankruptcy filings. Together, they are a major catalyst for the financial uncertainties of the average American. With many Americans already living paycheck to paycheck, preparing for emergencies caused by the above issues can be impossible for the average family.

An Important Note

It is important to point out that while bankruptcies are on the rise, they have not yet reached pre-pandemic levels. Before the 2020 COVID-19 pandemic, bankruptcy levels were much higher. Many economists see the increase in bankruptcies as a return to the pre-pandemic norm. During the pandemic, government funding and lender forbearance programs offered temporary relief measures to many Americans. Now that these programs have ended, we have seen a gradual return to pre-pandemic bankruptcy levels.

The concern is that 2026 will see filings surpass even pre-Pandemic levels as more and more Americans face insurmountable debt.

Should I file for bankruptcy?

The economic issues above point to big-picture problems impacting nearly every American right now, especially the middle and working classes. Not every person grappling with these issues will file for bankruptcy—but the rising rate of filings suggests many Americans are. Bankruptcy is a powerful financial tool.

Here are some signs you should consider filing for Increase.docxbankruptcy:

1. Legal and Collections Actions: If creditors are suing you, attempting to garnish your wages, or taking you to court to seize assets to pay back your debts, it may be time to file for bankruptcy. When you file for bankruptcy, you enter into the automatic stay period. During this time, your creditors are not allowed to move forward with legal actions against you. They must also stop all collection efforts until the end of your bankruptcy.

2. Foreclosure or repossession: If you are facing foreclosure, bankruptcy may be the best path to keeping your property. The automatic stay will also pause foreclosure proceedings, giving you time to determine how to keep your home. The same applies to vehicle repossession. Depending on what kind of bankruptcy you file, you can get caught up on your past due payments while still maintaining ownership of your property.

3. Increased Credit Card Debt: If you are using credit cards to pay for basic needs and carrying this debt from month to month, this is a sign that you are financially stretched beyond your means. When your budget cannot keep up with basic living expenses without going into debt, it may be time to consider bankruptcy.

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The big-picture causes of financial stress trickle down to individuals just trying to make ends meet. The cost of eggs at the grocery store is beyond your control, but it does affect your bottom line. If you are facing financial hardship, you have options. Bankruptcy is not a last resort. It can be a lifeline for individuals trying to pull themselves out of unmanageable debt.

Vetiengruber Law is an experienced bankruptcy attorney in New Jersey. We have nearly two decades of experience helping NJ residents file for bankruptcy, manage their debt, fight foreclosure, and find a path towards a brighter financial future.