More people seeking ‘fresh start’ through bankruptcy

As everyday bills eat up more of the paycheck, a growing number of Southwestern Pennsylvanians are turning to bankruptcy for a fresh start.

Federal court cases in the Western District of Pennsylvania have climbed to a five-year high — an increase also unfolding nationally. Attorneys attribute the jump to the cost of living, credit card bills, and stacking loan payments.

“I think the consumers are being pinched,” said Donald Calaiaro, shareholder and president at Calaiaro Valencik, with 48 years of experience and a dual certification in consumer bankruptcy law and business bankruptcy law.

“The cost of housing is up. The cost of cars is up. The cost of groceries is up. The cost of fuel is up, and they have very little money left over at the end of the month. And unfortunately, they're invading credit to make the difference. And that's a short-term solution that won't have a happy ending.”

The Western District encompasses about 40% of the state, from west of Altoona to the New York border and down to the West Virginia border

Filings and reopened cases reported from January through June are already 93 cases higher than the total for all of last year, and nearly 22% higher than 2021, according to data from the Federal Courts of the United States.

Those pressures are also reflected in the September Beige Book for the Federal Reserve’s Fourth District, which tracks economic conditions in Ohio, western Pennsylvania, eastern Kentucky and the northern panhandle of West Virginia.

The report found that consumer spending declined for the fourth consecutive reporting period, as higher food and fuel prices strained household budgets. It said rising fuel costs related to the conflict in the Middle East also contributed to higher costs for businesses.

Neighborhood Legal Services, a nonprofit that provides legal assistance to low-income residents in Southwestern Pennsylvania. Most people who seek the agency’s assistance with bankruptcy simply do not make enough money to pay their bills, said Catherine Martin, director of advocacy. Some of those clients have more than one job. 

“If you don't have enough income, there's no clever way around that problem,” Martin said. “I think that people, almost everybody, pays their bills when they can, but if you don't have money, then there's no magic way to turn that into — oh, if I only knew better, if I had more financial counseling classes, I would be able to pay all my bills. People just don't have enough.”

Chapters 13 and 7 are the most frequently filed types of bankruptcy protection, according to local court records.

Chapter 7 bankruptcy can allow someone to wipe out some unsecured debt, like credit cards and personal loans, depending on their income

Chapter 13 bankruptcy allows someone to repay some or all of their debt through a repayment plan, typically lasting three to five years.

Debt is considered secured when it is backed by collateral, such as property. Unsecured debt is not backed by collateral and can include medical bills, utility bills, and credit card debt

Many bankruptcy attorneys offer a free consultation because they can assess debt and income to determine whether someone is a candidate for bankruptcy, said Shawn Wright, a bankruptcy attorney who has his own firm. 

“I think people are struggling right now with the cost of living and it's hard for them to manage their credit card bills,” he said. “People have noticed — well, I'm paying more for gasoline, I'm paying more for food, I'm paying more for rent.”

Martin agreed that inflation is hitting people she sees at Neighborhood Legal Services - and often they don’t have savings to insulate against unforeseen expenses. 

“What our clients file bankruptcy for is to try and hang on to some essentials of daily living to try and protect their housing,” Martin said. “They're probably going to have to repay that rent, or repay that mortgage to stay living where they are. But bankruptcy, Chapter 13 bankruptcy, can give them a mechanism to do that.”

Bankruptcy can provide a reset for households, Calaiaro said.

“Bankruptcy can be a life-changing situation where it gives them discipline, gives them a fresh start all over again, and gives them dignity as they’ve learned from their mistakes,” Calaiaro said. “The whole concept of bankruptcy is to give an honest debtor a fresh start.”

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Cassandra Harris is a reporter with the Pittsburgh Media Partnership newsroom.  A spring 2026 graduate of Point Park University, Cassandra interned at Pittsburgh Magazine, Pittsburgh Latino Magazine, and The Homepage Newspaper. Reach her at cassandra.harris@pointpark.edu.

‍The PMP Newsroom is a regional news service that focuses on government and enterprise reporting in southwestern Pennsylvania. Find out more information on foundation and corporate funders here.

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Header graphic by Olivia Valyo.