What Creditors Can Expect in Bankruptcy for 2026
As we enter 2026, the bankruptcy landscape is anticipated to shift in ways that will significantly impact creditors this year.
After years of post-pandemic uncertainty, filings are climbing steadily, and economic pressures continue to affect consumer behavior. During a recent Ask a Pro webinar, our experts, Shareholder Milos Gvozdenovic and Attorney Garry Masterson, weighed in on what lenders should expect in the coming year.
Click here to watch the full Ask a Pro episode
Here’s a recap of our team’s top six predictions and actionable takeaways. For a deeper dive into all the commentary and questions answered, we recommend watching the full webinar.
1. Bankruptcy filings on the rise
The most prominent trend for 2026 is a sustained increase in bankruptcy filings.
While filings have not reached pre-COVID levels, month-over-month growth suggests we’re on track to surpass them soon. As of September 30, 2025, bankruptcy filings increased by 10.6 percent compared to the previous calendar year. Filings could climb even higher in 2026 if consumers and business institutions fall behind on their debts.
While chapter 13 filings continue to heighten, chapter 7 filings, the most common type of consumer bankruptcy, are expected to dominate court dockets. This trend is driven by consumers’ lack of disposable income and mounting financial strain. Other key drivers include:
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Persistent inflation and elevated interest rates
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Record-high credit card debt and depleted savings
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Resumption of federal student loan payments
2. Economic pressures influence consumer behavior
Despite recent rate cuts by the Federal Reserve, interest rates remain high, and borrowing costs continue to climb. Combined with rising costs for essentials, many households are struggling to stay afloat. Indicators such as consumers using “buy now, pay later” for groceries and surrendering recently purchased vehicles demonstrate financial stress.
As a creditor, you may see more repossessions and vehicle surrenders in the coming months and year. You should also prepare for increased delinquency rates on auto loans and mortgages. It’s also important to closely monitor credit portfolios as debt levels remain high.
3. Delays in mortgage-related bankruptcies
Mortgage defaults are not expected to drive bankruptcy filings in 2026, but foreclosure starts are increasing. We predict that the real impact will hit in 2027, when these foreclosures move to completion and trigger bankruptcy filings. Rising property taxes and homeowners’ insurance costs are already pushing first-time delinquents into financial distress.
How can creditors stay one step ahead of mortgage-related bankruptcy filings? Your team should complete a thorough review of foreclosure processes, protocols and timelines. Additionally, you should anticipate changes in borrower profiles. Many impending defaults may arise from previously strong credit segments.
4. Credit reporting remains a hot button issue
In recent years, credit reporting in bankruptcy cases has become one of the most contentious topics. This year will be no different. But it’s important that creditors stand firm. If a debtor does not reaffirm a loan, you should not continue reporting the account as active. Doing so could violate the discharge injunction and expose lenders to compliance risks.
Here are a few more best practices to follow:
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Stop reporting discharged debts as active accounts.
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Resume normal reporting only after a reaffirmation agreement is signed and filed.
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For Chapter 13 cases, follow the plan terms carefully and consult compliance teams on reporting obligations.
As consumers become more credit savvy, errors in reporting can lead to disputes and potential litigation. Accurate reporting protects both creditors and borrowers in the long run.
5. Rising pro se filings and student loan challenges
Another trend to watch is the increase in pro se filings—cases filed without attorney representation. Unfortunately, these cases often create procedural complications for creditors. Some debtors may fail to accurately disclose their assets, income and expenses. They can even miss key court hearings. Again, these issues add complexity to bankruptcy cases.
The resumption of federal student loan payments may also indirectly impact bankruptcy filings. Some recent college grads may juggle obligations and resort to bankruptcy to manage overall debt.
The takeaway: Creditors should prepare for more complex case management and consider proactive outreach to borrowers facing significant financial strain.
6. Lien perfection: A top priority
Finally, lien perfection remains a major compliance risk. The failure to perfect a lien within 30 days of loan origination can result in a creditor being treated as unsecured in bankruptcy. The responsibility lies solely with the creditor, and courts show little leniency for delays.
Our team’s recommendations include:
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Audit lien perfection processes regularly.
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Maintain documentation and proof of timely filing.
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Consider protective measures such as UCC filings when delays occur.
Preparing for 2026 and beyond
The bankruptcy landscape in 2026 will continue to be shaped by economic uncertainty, regulatory scrutiny and evolving consumer behavior. The more prepared you are, the easier it is to navigate these challenges.
It’s critical to strengthen compliance practices, monitor economic indicators and stay informed on legal developments. By anticipating the trends mentioned above, you can mitigate exposure and maintain operational resilience in the year ahead.
If you have any questions or concerns about these predictions or other bankruptcy topics, please connect with our Bankruptcy Recovery Group or contact Milos or Garry directly any time.
This blog is not a solicitation for business, and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
