Bankruptcy / Statistics

2023 Ascend Bankruptcy Statistics Research Study

Written by Ben Tejes
Updated Mar 21st, 2023
If you are unfamiliar, Ascend develops and launches free bankruptcy and debt relief calculators that help individuals understand how to deal with their debt in a cost effective way in the shortest amount of time.

Ascend's mission is to empower users to get out of debt cheaper, easier and faster by building products that inform users to make the most informed decision.

Debt can already cause stress in an individual's life, and unfortunately, when an individual faces a financial hardship, that stress can explode when receiving hundreds of debt collection calls per week.

As such, we wanted to provide a research study based on 81,741 data points to provide a health check of the economy. 

How Ascend Collected The Data

Ascend collected the data primary from the debt relief calculators that Ascend built in 2018 - 2019. Here's one of Ascend's bankruptcy calculators, and here's an image of the example question that we review data from.
The calculators are dynamic and can provide information about income, expenses, etc. 

Let's look at the first statistic that we found interesting.

Inflation Has Hurt Americans (But There's A Bigger Story)

There's no surprise that inflation was a much bigger reason that people are looking to file bankruptcy or have experienced financial hardship when comparing 2020 to 2022.

For example, in 2020, less than 1% of respondents added that they were considering bankruptcy due to inflation while that number jumped to 9.1% in 2022. As of March 2023, that number has jumped to 12.8%, but there's a much bigger story.

Inflation + Credit Card Interest Rates Have Done the Most Damage

The following data has been taken from the question why the individual has been considering debt relief, based on a sample size 81,171 data point taken from calculators with data between 2020 and 2023.

As you can see, credit card interest rates have seen the most growth in terms of individuals considering bankruptcy or debt relief, from 0.9% in 2020 to 23.1% YTD 2023.

You can also see that the reasons of divorce, job loss and reduced income have all reduced from 2020 - 2023.

Source: Ascend Internal Data, Data sample = 81,171 respondents

There weren't many stories from the other bucket although we do ask a follow-up question if the individual puts other. The top 3 responses when selected "other" was "Too much debt", "Debt" and "Lawsuit" with approximately 6691 respondents

In summary, Americans are feeling the biggest pain from both inflation and interest rate increases.

Americans chose that interest rate increases and inflation caused them to consider bankruptcy or debt relief just 1.22% in 2020, but that number explored to 35.8% YTD in 2023.

Vehicle Payments May Not Yet Be An Issue

When 2023 came around, a bankruptcy attorney suggested that banks may delay car repossessions because the banks do not want to recognize that loss. The attorney's reasoning is that he's had consultations with many more individuals who have cars that are more than 3 months behind.

Based on 29,840 respondents take from individuals between 2020 and 2022, it did not seem that there was an increase in cars arrears.

Let's look at the top reasons why individuals stated that they were looking to file bankruptcy in 2023.

2022-2023 Top Reasons Why People File Bankruptcy

Finally, we wanted to look at why people file bankruptcy in 2022-2023. 

There's a 2019 study, titled "Medical Bankruptcy: Still Common Despite the Affordable Care Act" from the AM J Public Health that is commonly quoted that stated that medical bankruptcy accounts for 66.5% of bankruptcies. Here's the table that the data is based on.

Our challenge with this study is that it was only based on a sample size of 910, and only 44.2% of those respondents actually said that he/she very much agrees that medical expenses were at play for their bankruptcy. It's also a very old study as it was completed on data sets between 2013-2016.

Ascend's data below accounts for 48,788 individuals who took a bankruptcy calculators. The individuals answered the question why he/she is consider bankruptcy, and the data was pulled from those considering bankruptcy in 2022-2023. The data shows that credit card interest rate increases accounts for the top spot why individuals are looking to file bankruptcy in 2022-2023.

Top reasons why people file bankruptcy in 2022-2023.

In summary, Americans are facing pressure both from inflation and interest rate increases. As debt costs and food costs go up, more individuals look for bankruptcy and debt relief to help cope with his/her debt.