June 26, 2025 — The San Francisco Bay Area, long a beacon of economic prosperity driven by its tech industry, is grappling with a sharp rise in personal and business bankruptcy filings, climbing at a rate nearly double that of the national average.
As economic pressures mount, local attorneys report an influx of cases tied to job losses, high living costs, and the lingering effects of pandemic-era financial disruptions.
This surge paints a sobering picture of a region struggling to regain its footing in a post-boom tech landscape.
According to data from the Administrative Office of the U.S. Courts, bankruptcy filings across the United States rose by 13.1% for the 12-month period ending March 31, 2025, totaling 529,080 cases compared to 467,774 the previous year.
Non-business (personal) filings increased by 13.0% to 505,771, while business filings grew by 14.7% to 23,309.
In California, the state with the highest number of filings, 38,597 bankruptcy cases were recorded in 2023 alone, a figure that has continued to climb into 2025.
In the Bay Area specifically, personal bankruptcy filings are rising at a rate of approximately 25% year-over-year, significantly outpacing the national increase.
J. Doling Law, PC, a California-based bankruptcy firm, reports that personal bankruptcies in the state are occurring at a rate of 40 per 1,000 people, marking a 38% jump from 2023 to 2024.
Local attorneys, such as David Gardner in Santa Rosa, have seen their caseloads swell.
“I used to get maybe two calls a month, now I probably get 15,” Gardner told The San Francisco Standard.
Tech Layoffs and Lifestyle Mismatches Fuel the Surge
The Bay Area’s economic woes are closely tied to its tech-heavy labor market.
The region, home to Silicon Valley, has been hit hard by widespread layoffs in the tech sector.
Since 2022, major firms like Google, Meta, and smaller startups have slashed thousands of jobs, leaving highly skilled professionals—many accustomed to six-figure salaries—without stable income.
Bankruptcy attorney Carl Gustafson notes that former high earners, including unemployed tech workers, are increasingly turning to bankruptcy after failing to adjust their lifestyles post-layoff.
“They didn’t make really dramatic lifestyle changes,” Gustafson said, explaining that many clung to expensive leases or car payments, expecting quick reemployment that never materialized.
Posts on X echo this sentiment, with users like @alexfreeus highlighting a trend of tech professionals earning over $300,000 annually just months ago now strategically filing for Chapter 13 bankruptcy to restructure their debts.
This chapter, which allows individuals to reorganize their finances while retaining assets, is particularly appealing to higher earners ineligible for Chapter 7’s debt discharge due to income thresholds.
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Business Bankruptcies Reflect Broader Economic Strain
The Bay Area’s business landscape is also under strain.
Santa Clara bankruptcy attorney Robert G. Harris reports a wave of small business owners, particularly in the restaurant sector, facing insurmountable debt.
Many took on high-interest loans during the pandemic to stay afloat, only to find revenues stagnating as consumer habits shifted.
“When those loans are personally guaranteed and the owner has assets, that means they go into bankruptcy too,” Harris said.
A notable example is Books Inc., the Bay Area’s oldest independent bookseller, which filed for Chapter 11 bankruptcy in January 2025 to reorganize its finances amid rising operating costs and changing consumer behaviors.
The company plans to close its Berkeley location but insists it “isn’t going anywhere.”
Nationally, commercial Chapter 11 filings dropped 20% from April 2024 to April 2025, but in the Bay Area, local economic challenges—such as San Francisco’s slower recovery compared to other metropolitan areas—have kept business insolvency rates elevated.
Ted Egan, San Francisco’s chief economist, noted, “The recovery is happening, but it’s slower than other places.”
While bankruptcy filings are rising across the U.S., driven by inflation, higher interest rates, and the depletion of pandemic-era stimulus, the Bay Area’s unique economic profile amplifies these pressures.
The region’s high cost of living, coupled with a reliance on a volatile tech industry, creates a perfect storm.
Unlike states like Wisconsin or Oregon, which saw bankruptcy declines tied to strong GDP growth, California’s economic output, while robust at a 98% increase in gross regional product from 2001 to 2020, masks disparities in recovery.
Silicon Valley’s per capita economic output has nearly tripled, but this growth has not trickled down to stabilize small businesses or unemployed professionals.
Nationally, Chapter 7 filings, which allow for debt discharge, rose 10.19% year-over-year to 5,287 in a single week of 2025, while Chapter 13 filings saw a modest 0.08% increase.
In contrast, the Bay Area’s spike in both personal and business filings reflects a regional economy under unique stress, with credit defaults—rather than mortgage foreclosures—driving the trend.
Despite the grim statistics, bankruptcy attorneys emphasize that filing is not a mark of failure but a legal tool for recovery.
“Bankruptcy is for the honest but unfortunate debtor,” notes J. Doling Law, citing a U.S. Supreme Court ruling.
Many clients rebuild their credit within 12 months, with some qualifying for FHA loans within 12-18 months post-bankruptcy.
For Bay Area residents and businesses, early action is critical.
Attorneys advise assessing debt, consulting certified bankruptcy specialists, and avoiding predatory debt relief companies that often exacerbate financial distress.
As the region navigates this economic turbulence, bankruptcy remains a vital lifeline for those seeking a fresh start.
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