Bankruptcy filings across Texas are climbing at their fastest pace since the pandemic recovery began, and the data for early 2026 reveals a state where financial pressure is intensifying from Houston's energy corridors to Austin's booming suburbs and San Antonio's sprawling south side. Federal court records show that 3,314 bankruptcy petitions were filed across all four Texas federal district courts in February 2026 alone. That figure, part of a nationwide surge that saw 45,881 total filings during the month, signals that Texas families and small businesses are facing mounting pressure from credit card debt, medical bills, and rising costs of living.
The national picture provides important context. Year-to-date bankruptcy filings through February 2026 reached 91,716, an increase of nearly 12 percent compared to the same period in 2025. Chapter 7 filings, the type of bankruptcy most commonly used by individuals seeking a fresh start, rose 12 percent year over year. Perhaps most striking, Chapter 11 filings (typically used by businesses) skyrocketed by nearly 79 percent over the same period, a clear sign that small and mid-size businesses across the country are struggling to stay afloat. Industry projections estimate that total filings nationwide will reach approximately 628,000 by the end of 2026, with a continued climb toward 697,000 in 2027.
Texas is one of the highest-volume bankruptcy states in the country, and its four federal district courts each reflect distinct economic pressures. In the Southern District of Texas, which covers Houston, Galveston, Corpus Christi, Laredo, Brownsville, and Victoria, 923 bankruptcy petitions were filed in February 2026. Of those, 512 were Chapter 7 cases and 339 were Chapter 13 cases. Houston's economy, while anchored by the energy sector, has a diverse population of working families, small business owners, and independent contractors who are feeling the squeeze of elevated interest rates and rising living costs.
The Western District of Texas, encompassing San Antonio, Austin, El Paso, Waco, and Midland-Odessa, recorded 699 filings during February. This district's numbers reflect growing financial strain in Central and West Texas, where rapid population growth in the Austin and San Antonio corridors has pushed housing costs higher even as wages in many sectors have not kept pace.
The Northern District of Texas, home to Dallas and Fort Worth, recorded 1,189 filings, the highest volume among the state's four districts. The Eastern District, covering Tyler, Beaumont, Sherman, and surrounding communities, saw 503 filings. Taken together, these numbers place Texas among the leading states for total bankruptcy volume.
Several factors are converging to drive bankruptcy filings higher in Texas and nationally. Consumer debt has reached historic levels, with credit card balances exceeding $1 trillion nationwide. Many Texas households are juggling high-interest credit card payments alongside auto loans, medical debt, and mortgage or rent obligations that have risen substantially over the past two years. When a job loss, medical emergency, or unexpected expense disrupts the balance, the entire financial picture can unravel quickly.
For small business owners, the picture is equally challenging. The nearly 79 percent year-over-year increase in Chapter 11 filings nationally reflects the cumulative toll of pandemic-era debt, supply chain costs, and tightening credit conditions. In Texas, where small businesses form the backbone of local economies, these pressures are felt acutely.
One important consideration for Texas residents contemplating bankruptcy is that the state offers some of the most protective exemption laws in the country. Texas provides an unlimited homestead exemption for a primary residence (subject to acreage limits), substantial protections for retirement accounts and life insurance, personal property exemptions covering vehicles, household goods, and tools of the trade, and current wages that are generally exempt from garnishment in most circumstances. These exemptions mean that many Texans who file for Chapter 7 bankruptcy can eliminate their unsecured debts while retaining their home, their vehicle, and their essential belongings.
Para las familias en Houston, San Antonio, Austin, El Paso, y en todo Texas que enfrentan dificultades financieras, el mensaje es claro: no están solos, y hay opciones disponibles. La bancarrota no es un fracaso. Es un derecho protegido por la Constitución que ofrece un nuevo comienzo financiero. Nuestro equipo habla español y estamos listos para ayudarle.
Attorney Donald E. Hood has spent over 20 years helping thousands of Texans navigate the bankruptcy process and achieve the fresh start they deserve. Licensed in all four Texas federal district courts, the Northern, Southern, Eastern, and Western Districts, Mr. Hood and his team serve clients across the state and offer free initial consultations in both English and Spanish.
If you or someone you know is struggling with debt, call (888) 239-7259 or visit dehlaw.com to schedule a free evaluation. The conversation is confidential, and there is absolutely no obligation. Si prefiere hablar en español, estamos a su disposición.
The bankruptcy law establishes stricter criteria for filing Ch. 7 bankruptcy cases. A debt can typically be discharged in a Ch. 7 case if it is unsecured, means there is no property securing the debt.
Filing for bankruptcy is an important decision, and The Law Office of Donald E. Hood, PLLC wants to make sure that the type of bankruptcy protection that you choose is the right one for you.
You are entitled to keep a generous amount of your belongings when filing Ch. 7 bankruptcy. Texas law provides for high personal exemptions–items that are protected from seizure by your creditors.
