A steep increase from a relatively low rate
The LendingTree data, shared with the KSL Investigators, show Utah added 34 business bankruptcy filings, a 26.8% increase. Nationwide, filings increased by 2,642, or 11.4%, from 23,154 in the 12 months ended March 31, 2025, to 25,796 in the following 12 months.
"It's certainly not great news," said LendingTree's Matt Schulz, who attributed the pressure on businesses to higher interest rates, inflation and narrowing profit margins.
Measured against the number of small businesses, Utah had 43.3 filings per 100,000, below the national rate of 71.1. That placed Utah 37th among the 50 states and the District of Columbia. "Utah businesses are filing at a lower rate than most of the rest of the country, even if it is trending in a not-so-great direction," Schulz said.
Delaware's rate was the country's highest by a wide margin: 538.9 filings per 100,000 small businesses, more than seven times the national figure. The District of Columbia followed at 147.6, then Texas at 129.7. The largest year-over-year percentage increases were in Louisiana, where filings climbed 83.8%, from 240 to 441, and New Jersey, where they rose 79.3%, from 546 to 979.
A separate, more recent national report covers a different period. On October 22, 2026, the Administrative Office of the U.S. Courts reported 27,054 business bankruptcy filings for the 12 months ended September 30, 2026, up 12.5% from 24,039. Across business and non-business cases combined, filings increased 11.4% to 621,111.
What happens to customers' advance payments
A bankruptcy filing does not necessarily signal a shutdown; a business may reorganize and continue operating. In the period LendingTree analyzed, Chapter 7 liquidation cases made up 56.8% of business filings nationwide, while Chapter 11 reorganizations accounted for 36.1%. Together, they represented nearly 93% of the total. Chapter 13 accounted for 5.1%, with all other chapters making up 1.9%.
If a business does close, customers with outstanding prepaid orders may have to seek repayment as creditors alongside others owed money. Get Gephardt previously reported that customers were left with unusable paid-for gift cards after Bed Bath and Beyond filed for bankruptcy in 2024.
Construction customers can face uncertainty over projects that stretch across weeks or months. In a report last week, Get Gephardt described a West Valley City family's nearly yearlong effort to recover a door deposit of more than $5,000 after the business never began the work. The owner told Get Gephardt his company was going bankrupt.
Utah's lien fund is depleted, but homeowner protections remain
Another financial safeguard in construction has run out of money. Utah lawmakers established the Residence Lien Recovery Fund in 1994 to protect homeowners from having to pay twice when they had fully paid a contractor who then failed to pay subcontractors or suppliers.
Contractor licensing fees financed the fund until the legislature ended that funding; fee collection stopped in 2018. Its remaining $2 million balance dwindled over the last decade. In June 2026, the Utah Department of Commerce's Division of Professional Licensing, or DOPL, announced that the money was exhausted.
The loss of the fund leaves unpaid subcontractors and suppliers without that last-resort source of payment. According to the Department of Commerce, they must pursue contractors who owe them through the standard legal avenues used in other business disputes.
Homeowners nevertheless retain a legal safeguard against paying twice for the same work. A homeowner who proves there was a written contract, that the contractor was licensed and that payment was made in full can obtain a Certificate of Compliance from DOPL. Once the certificate is issued, the lienholder must legally remove the lien from the residence within 15 days.
