Bankruptcy inquiries are surging to their highest level since early 2020, signaling a potential wave of filings in 2025. Record consumer debt and new tariffs could push financially strained households past their breaking point.
Trump’s tariffs, especially on Chinese goods and other imports (like steel and aluminum), have raised costs for American businesses that rely on those materials and components. Many companies have passed those costs onto consumers in the form of higher prices, contributing to inflation. These tariffs have added pressure at a time when prices were already rising due to supply chain disruptions and strong post-pandemic demand. Higher prices reduce consumer purchasing power, especially for lower- and middle-income households, which are more likely to rely on credit to cover essentials. This increases credit card usage and delinquency risk.
Tariffs have also disrupted global supply chains by making it more expensive or complicated for U.S. manufacturers to source affordable parts. Businesses that could not absorb the cost increases have raised prices, cut production, or laid off workers—all of which weigh on economic activity and household stability. Layoffs and reduced business investment in certain sectors (like manufacturing and agriculture) weaken regional economies and can lead to higher default rates on mortgages, auto loans, and other debts.
Many American households may reach a breaking point in the first half of 2025 as they deal with new tariffs, rising prices, increased debt and sustained elevated interest rates. U.S. bankruptcy filings surged 14.2% year-over-year by the end of 2024. Consumers are buried by record debt. The Federal Reserve Bank of New York reported that the share of households 90+ days late on credit cards and car loans hit a 14-year high at the end of 2024, and delinquencies are still climbing. Credit card balances hit a record high of $1.21 trillion.
If you’re facing burdensome debt, contact Nancy Thompson Law Office. Any kind of bankruptcy you file is likely going to be better than the constant struggle of repaying high cost debt.
