If bankruptcies rise again, the largest share is likely to come from Chapter 7 liquidation, which is the most common form for both business and non-business bankruptcies. Chapter 7 entails selling off certain property or assets to generate cash to pay creditors. Chapter 13 bankruptcy, which involves the creation of debt repayment plans, is the next most common form for non-business debts, while Chapter 11 reorganization is most commonly used by larger businesses.
Bankruptcies in the U.S. are also spread unevenly across geography. Many of the locations that currently struggle most with debt are located in more economically distressed parts of the country. Southern states make up six of the 10 states with the most bankruptcies, and they are joined at the top of the list by a number of Rust Belt locations like Indiana and Ohio.
The data used in this analysis is from the Administrative Office of the U.S. Courts, U.S. Census Bureau, and Experian. To determine the states with the most bankruptcies in 2021, researchers at Smartest Dollar calculated the number of bankruptcies per million residents.
Here are the states with the most bankruptcies per capita.