According to the Fitch Ratings’ Report, annual U.S. personal bankruptcy filings are dropping for the fifth year in a row. However, the report also states that the rating decline should begin to level off soon, as lending guidelines become more lax. Total bankruptcy filings are predicted to fall another eight to 10 percent in 2015. These findings are reflective of a still positive macro environment, and they follow last year’s drop of 12 percent (which was very much in line with Fitch’s forecast of 12 to 13 percent.)
This improved bill of health for our economy will likely lead to more lenient lending guidelines. According to Fitch Ratings’ Managing Director Michael Dean, “the continued loosening of lenders’ underwriting guidelines and the increase to consumers’ access to credit should begin to slow the pace of the double-digit declines observed over the past four years.”
Consumer credit in the U.S. rose for the fifth straight year in 2014, however, revolving credit (mainly credit card use) has remained somewhat flat. The more pronounced increase has been in non-revolving credit use, such as student loans. “Both auto and student loan borrowing are continuing to surge and have grown at a considerable pace to above $2.4 trillion,” said Dean.
Fitch predicts 2015 will be another strong year and that personal bankruptcy filings will continue to decrease over the year. Dean sees many contributing factors, saying, “Reduced interest payments and full employment will take away the incentive for consumers to seek bankruptcy protection. Lower gas prices will also help household finances.”
Statistics mean nothing when you are in over your head in debt. The more positive outlook may open up some alternatives to bankruptcy for your family, such as debt negotiation. However, an experienced bankruptcy lawyer like Joel R. Spivack, Esq. is your best defense against drowning in debt. Contact him today for a confidential consultation about your personal financial situation.
