Rising Bankruptcy Filings Among Young Adults Reflect Economic Strain

For a growing number of young adults burdened by substantial debt, bankruptcy is emerging as a last resort. Attorneys specializing in bankruptcy are reporting a noticeable increase in clients aged 25 to 35 in recent years, with some firms seeing a severalfold rise in this demographic.

Factors Contributing to Young Adult Bankruptcy

Several key factors are driving this trend, including soaring living costs, stagnant wages, and the ease with which credit card debt can accumulate. The proliferation of “buy now, pay later” (BNPL) loans and the accessibility of online betting platforms are also accelerating debt accumulation for some young people.

“We’re definitely seeing more young filers, and it’s not because they’re irresponsible,” said Florida bankruptcy attorney Chad Van Horn. “It’s because they entered adulthood during one of the most financially distorted environments in decades.”

National Bankruptcy Trends

Personal bankruptcy filings in the United States have been increasing since their low point during the COVID-19 pandemic in 2022. However, filings remain below the peak experienced after the Great Recession in 2010, when cases exceeded 1.5 million.

In 2025, more than 533,000 individual bankruptcy cases were filed, according to the American Bankruptcy Institute, citing data from Epiq Bankruptcy Analytics. Nearly 333,000 of these filings were Chapter 7 cases, which typically allow for the discharge of most unsecured debts, such as credit card balances and medical bills. Chapter 13 filings, involving repayment plans, accounted for just over 200,000 cases.

Debt Composition of Young Filers

While comprehensive data on the ages of bankruptcy filers is limited, attorneys report that young adults often carry significant debt loads. According to data from Hoyes Michalos, the average person in their 20s who files for bankruptcy or a consumer proposal owes:

• Personal loans: $15,372
• Credit card debt: $8,627
• Student loan debt: $4,273
• Tax debt: $2,198
• Other unsecured debt: $3,091
• Non-mortgage secured debt: $8,419

Easy access to credit, coupled with often high interest rates for those with lower credit scores, contributes to the problem. Nearly half (48%) of clients aged 18 to 29 carry at least one payday loan, making them the most likely age group to turn to payday lenders during financial hardship.

Marketing Shifts and Increased Awareness

The surge in younger clients has prompted some law firms to adjust their marketing strategies to reach this demographic. Van Horn’s firm, for example, is focusing on platforms and messaging that resonate with individuals aged 25 to 35.

Increased discussion of bankruptcy on social media platforms like TikTok, where some young people are openly sharing their experiences and advocating for bankruptcy as a debt relief solution, may also be contributing to greater awareness and acceptance of this option.

The Role of Gambling Debt

Both Van Horn and Ed Boltz, a North Carolina bankruptcy attorney, have observed a growing number of young clients, particularly men, accumulating substantial credit card debt through online gambling. Some clients have incurred debts of $20,000 to $40,000 in a relatively short period.

While some sports betting companies have stopped accepting credit card deposits, the availability of credit card funding through platforms like Polymarket continues to be a concern.

Looking Ahead

The increasing number of young adults seeking bankruptcy protection highlights the financial challenges facing this generation. Addressing these challenges will require a multifaceted approach, including improved financial literacy education, policies to address rising living costs, and responsible lending practices.