Bankruptcy inquiries surged in the first quarter to their highest level since early 2020, signaling a potential summer wave of filings, LegalShield reported in April. The legal service provider’s data, historically a leading indicator of bankruptcy and other consumer financial trends, suggests record consumer debt and new tariffs could push financially strained households past their breaking point.

“Bankruptcy inquiries hit the highest we’ve seen since early 2020, just before Americans’ checkbooks were boosted by COVID checks from the government,” said Matt Layton, LegalShield senior vice president of consumer analytics. “When you combine record debt, rising delinquencies, and prolonged financial stress, topped by price pressures driven by tariff uncertainty, the risk of a summer surge in bankruptcy filings becomes very real.”

U.S. bankruptcy filings surged 14.2% year-over-year by the end of 2024, according to the U.S. Courts, and LegalShield data indicates filings may continue to rise.

Historically LegalShield’s Bankruptcy Index is a leading indicator of actual bankruptcy filings by two quarters.

The bankruptcy warning signs come amid a third straight quarter of elevated consumer stress measured by LegalShield’s Consumer Stress Legal Index (CSLI), pointing to a heightened financial strain that has become a “new normal” for American households.

The CSLI has remained elevated since a spike in July of 2024, leveling off slightly to close Q1 2025 at 65.3, down from 67.3 at the end of 2024. The decline was driven by a significant drop in consumer finance inquiries amidst tax refund season and relatively strong employment numbers, which may be masking greater concerns as bankruptcy and foreclosure inquiries increased before tariff announcements sent the markets into turmoil.