US small business bankruptcies are surging as if there is a recession:
A record 2,221 small firms have filed for bankruptcy under Subchapter V year-to-date.
Subchapter V allows businesses and individuals with under $3 million in debt to reorganize more quickly and cheaply than… pic.twitter.com/R2wg9XB4vk
— The Kobeissi Letter (@KobeissiLetter) December 6, 2025
A federal program aimed at helping America’s smallest businesses restructure debt is seeing record use, with more than 2,200 Subchapter V bankruptcy cases filed this year—an 8% increase from 2023, according to Epiq Bankruptcy Analytics. Designed to offer a faster, cheaper alternative to traditional Chapter 11 for debtors with under $3 million in liabilities, Subchapter V has grown even after its debt limit was reduced, reflecting mounting financial pressure on small firms, according to Steven Church of Bloomberg. Trustees say struggling owners are turning to the program as creditors tighten demands. While Chapter 11 filings overall have risen only 1%, consumer bankruptcies under Chapter 13 have also increased nearly 5%, signaling broader financial strain across both households and small businesses. Church writes:
A six-year-old federal program designed to help the smallest American businesses cut debt and get a fresh start has set a record for the number of cases filed, court data show.
More than 2,200 people and small firms filed bankruptcy this year under the so-called Subchapter V rules, which make it cheaper and faster to win relief from creditors, according to data provider Epiq Bankruptcy Analytics.
“Creditors are just breathing down their necks,” said Carol Fox, a court-approved trustee who oversees more than two dozen cases filed in Southern Florida.
The number of Subchapter V cases rose faster than the overall rate for Chapter 11 bankruptcies, which businesses and wealthy individuals typically use to restructure their debts. […]
The process is mostly used by small companies, Fox said. But most individuals she works with have filed Subchapter V with business as well as consumer debts, she said.
Consumers bankruptcy cases, typically filed under the Chapter 13 rules, are also up compared to recent years when an unusually low number of individuals sought protection from creditors. So far, more than 180,000 Chapter 13 cases have been filed, or nearly 5% more than the first 11 months of last year.
In July 2024, Magdalena Robinson was laid off from her job as a vice president of talent acquisition at a media agency. The news came as a shock — by all accounts she was doing well — but she saw a silver lining: Maybe it was finally time for a career break. She took the rest of the year off, soaking in the extra time with her husband and teenage daughter. Then she started applying for jobs in January.
Eleven months and 300 applications later, she still doesn’t have a single offer.
“I don’t know what’s going on right now,” she tells me. She has a great resume lined with reputable employers and a steady ascension to bigger titles. And as a recruiting executive, she thought she knew how to navigate the modern job market. Was it her age? Her experience? Some black hole sucking up all her applications before they ever reached a human being? “I think about what I’ve done in my professional life,” she says. “And I’m like, am I that unemployable?”
Just a hot take for those who are in the job hunt:
Go in person.
Don't do it online.
Walk your ass to the Headquarters with your resume and find the person who is hiring and put it on their desk.
You'll immediately be in the top 1% of applicants.
— Matt Van Swol (@mattvanswol) December 5, 2025