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Thursday, January 14th, 2010

Bankruptcy Filings Hit 1.44 Million in 2009

Bankruptcy filings in 2009 reach 1.44 million as consumers and businesses dealt with unemployment, foreclosure and tight credit.

The Year in Bankruptcy

A total 1,435,425 bankruptcy petitions were filed in the 50 states and Washington D.C. That figure increases to 1,446,967 when Puerto Rico, Guam and the Virgin Islands are taken into count.

Nationwide, the bankruptcy rate was up 32% in 2009 compared to 2008 and reached the highest level since the 2005 bankruptcy law change.

Arizona saw the largest increase in bankruptcy filings in the U.S., with 77% more filings in 2009 than 2008. Nevada and Wyoming followed, each with a 59% increase year-over-year. Nevada had the most filings per capita.

Bankruptcies for the year peaked in October, when 133,365 petitions were filed—the highest amount since October, 2005, when consumers rushed to file before the BAPCPA law went into effect. Filings slowed in November and December, but remained above the 2008 monthly totals.

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Posted in Year in Bankruptcy | 6 Comments »

Saturday, December 12th, 2009

Personal Finance News Roundup: 12/12/2009

This week, many November numbers about money and credit were released, with some surprising findings. Here’s a summary of a few important figures.

November Consumer Bankruptcy Filings Down 18 Percent

The American Bankruptcy Institute (ABI) reports that personal bankruptcy filings decreased 18 percent last month, compared to October’s numbers. Specifically:

  • Total filings: 112,152 consumers filed for bankruptcy in November 2009, compared with 135,913 in October.
  • Increase from 2008: A year ago, in November 2008, 99,925 consumers filed for bankruptcy. This year’s figure represents a 12 percent jump.
  • Chapter 13 filings: Only 29 percent of consumers who filed for bankruptcy did so under Chapter 13 of the U.S. Bankruptcy code last month, a rate unchanged from October.
  • Yearly estimate: Sources predict that total bankruptcies in 2009 will total more than 1.4 million.
  • Rate of cyber fraud: Of all online sales, 1.2 percent were found to be fraudulent in 2009, the lowest figure recorded in the 11 years CyberSource has been keeping track.
  • Online revenue lost: This year, $3.3 billion was lost to cyber fraud, compared to $4.0 billion last year and $3.7 billion in 2007.
  • Some areas still problematic: Online sales of electronics still have fraud rates approximately double those of other retailers.

Retail Sales Drop Surprise 0.3 Percent in November

However, this figure is not considered comprehensive, and will be reevaluated after the government releases its sales data on December 11th. Still, the initial figure has some retailers worried that this year’s holiday shopping season will mirror last year’s, when many Americans were holding onto their money after the tumult of the stock market’s crash.

The retail figures, quoted in this msnbc.com article, apparently don’t include online sales, sales from electronics chains or sales from Wal-Mart Stores, Inc., three groups the government’s figures will cover.

Report: Online Fraud Down Overall

In a survey out this month on online scams, the security company CyberSource reports that web fraud has decreased by about 18 percent in the United States in Canada since 2008. Here’s a closer look at the findings:

  • Rate of cyber fraud: Of all online sales, 1.2 percent were found to be fraudulent in 2009, the lowest figure recorded in the 11 years CyberSource has been keeping track.
  • Online revenue lost: This year, $3.3 billion was lost to cyber fraud, compared to $4.0 billion last year and $3.7 billion in 2007.
  • Some areas still problematic: Online sales of electronics still have fraud rates approximately double those of other retailers.

The dip in fraud doesn’t mean you should be any less vigilant when shopping online, though. Be sure to guard your credit card numbers carefully and only shop on secure web sites!

Additional Resources

2009 Online Fraud Report (PDF)

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Posted in Bankruptcy and the Economy | 53 Comments »

Wednesday, December 2nd, 2009

Bankruptcy Rate Drops in November

The number of Americans filing bankruptcy fell in November, according to the American Bankruptcy Institute, but the number remains above last year's filings.

A total 112,152 consumer bankruptcy petitions were filed in November, down 18% from the 132,749 filed in October. Even though the U.S. Courts were open fewer days in November, the number shows the bankruptcy rate slowing, though moderately.

The average daily filing was 6321 in October, and 5903 in November.

Still, the November statistic remains 12% above the November 2008 bankruptcy figure, when 99,925 consumers filed.

A chart at the Calculated Risk Blog predicts that total filings for the fourth quarter of 2009 will come in slightly below Q3. If December continues the downward trend, it would be the first time that quarterly filings decreased since the new bankruptcy law took effect in the third quarter of 2005.

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Posted in Bankruptcy News and Events | 7 Comments »

Saturday, November 28th, 2009

Late Credit Card Payments Dip in Third Quarter

According to an article from the Associated Press, fewer Americans were late on their credit card payments in the third quarter of this year than in the second quarter, signaling that consumers may be getting more responsible at managing their debt.

While the decrease isn’t staggering (1.10% of payments compared to 1.17%), the statistic itself is: this is apparently the first time in a decade that late payments have decreased between the second and third quarters.

The Bigger Picture

Here’s a look at how this decrease fits into the larger context of credit card payments and debt in the United States:

  • Steady decline: The 6% drop comes after an 11% decline in late payments between the first and second quarters, suggesting that, as a nation, our debt management skills are improving.
  • Trend follower: The highest late payment levels occurred in states where the housing bust was biggest (California: 1.33%; Arizona: 1.35%; Florida: 1.47%; and Nevada: 1.98%).
  • Outstanding balance: Average amounts due have also declined from earlier quarters and last year: in Q3, the average was $5,612, down from $5,719 in Q2.
  • Savings down: The third quarter also saw a slightly lower rate of savings among U.S. consumers, suggesting we’re putting money toward debt rather than in the bank.

So What Does It Mean?

While no definitive explanation can be offered for the drop in late payments, the trend may be affected by a variety of factors, including:

  • Unemployment: Both those who have lost their jobs and those who are still working (but are perhaps more aware of the threat of layoffs) tend to cut back on discretionary spending and focus on paying down debt rather than accumulating new “stuff.”
  • Tightened credit: Many credit card issuers have pulled way back on their offerings of consumer credit and have gotten stricter about raising interest rates for late and missed payments. This may “scare” consumers into taking their debt more seriously, or into paying down balances to have more wiggle room.
  • The holidays: For many of us, a major shopping and/or traveling season is upon us. The dip in late payments could represent a sort of collective preparation for the financial stresses of the season.
  • Increased caution: The drop could also point to a more cautious American consumer – one who’s a bit less cavalier about taking on masses of revolving debt.

Additional Resources

Putting Credit Card Debt on Notice (PDF)

How Credit Card Debt Ensnares Consumers (PDF)

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Posted in Credit and Bankruptcy | No Comments »

Friday, November 13th, 2009

October Foreclosures Dip from September, Soar from ‘08

RealtyTrac, a company that follows foreclosure data for the United States, released October numbers on Thursday. It seems foreclosure rates have decreased slightly since last month, but are still significantly higher than they were a year ago.

Foreclosure by the Numbers

Here’s a look at the statistical breakdown of recent foreclosure activity in the country.

  • 332,292 property filings in October: This number includes three specific types of action: notices of bank repossession, auction and borrower default. That means one in every 385 American households is in some phase of the foreclosure process.
  • Percentage changed: The numbers translate to a three percent drop from September of this year, but a 19 percent increase from October of 2008, suggesting that the moderate improvement is only relative.
  • Estimate for the year: Based on information gathered thus far, RealtyTrac is reportedly predicting as many as 3.4 million foreclosures this year, a 48 percent jump from 2008’s total of 2.3 million.

These numbers may seem astoundingly high, and they are – remember that this recession started in the real estate industry, and continues to plague homeowners.

So why are foreclosures still inching up even when the economy is showing signs of recovery? Most likely, sources suggest, the unemployment rate is to blame. Even though consumer spending may be on the rise, millions of Americans are still without jobs – and without serious hope of getting jobs in the near future, which means missed house payments.

Foreclosure Prevention or Just Delays?

The Obama administration has taken some action to try to ease the pain in the housing market. The Home Affordable Mortgage Program, an initiative designed to encourage lenders to offer mortgage loan modifications with cash incentives, apparently helped as many as 20 percent of eligible borrowers last month, up from 16 percent in September.

But those numbers still represent far less than the majority of struggling homeowners – and some other laws may be offering less help than they seem to be.

Nevada, for example, allegedly has a law in place that mandates foreclosure mediation for at-risk borrowers. And, while sources indicate that the state saw a drop in foreclosures this month, it could very well see a jump later on, if and when mediations have been completed and proven unsuccessful.

Additional Resources

Home Affordable Modification Guidelines

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Posted in Mortgage Foreclosure | 5 Comments »

Monday, November 9th, 2009

How Health Care Affects Filing Bankruptcy

Health care costs and filing bankruptcy rates are more closely related than you might think. Check out this chart that shows the skyrocketing costs of health. These costs could be driving many people to file bankruptcy.

Filing bankruptcy and the influence of medical care costs

Filing bankruptcy and the influence of medical care costs

Skyrocketing health care costs have many people considering filing bankruptcy.

Add this infographic to your site:

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Posted in Bankruptcy and the Economy | 2 Comments »

Saturday, September 26th, 2009

CFED Releases State Financial Report Cards

In late September, the Center for Enterprise Development released data reflecting extensive research on economic conditions in all fifty states. The findings reveal alarming realities about the current financial situation for millions of Americans.

Summary of the Findings

The CFED introduces its findings with the analogy of a house built on sand, claiming that, even when our economy was booming, wealth disparities between the very rich and the poor prevented the country from being truly economically healthy.

The study found, among other things:

  • Racial disparities: Minority households are more than three times as likely as white households to have a high-cost mortgage, more than twice as likely to be “asset poor” (with insufficient funds to sustain them in crisis), and four times as likely to be unbanked.
  • Wealth gap: The difference between wealthy and poor Americans is enormous – for every dollar owned by a household in the highest fifth of wealth, families in the lowest fifth own only two cents.
  • Gender differences: Households headed by females make only 83 cents for every dollar earned by male-headed households.
  • Revolving debt jump: Since 2007 – 2008, when the last “scorecard” was released by the CFED, median revolving debt has increased by 64 percent, to nearly $3,000.

Policy Suggestions from the Report

With the findings, the CFED also included suggestions for policies to correct or improve the economic disparities. Specifically, the suggestions include:

  • Earned Income Tax Credits and Individual Development Accounts: These would encourage families to set money aside by giving them tax breaks for putting part of their incomes in savings
  • Protections from Predatory Lenders: The CFED recommends that more states adopt lending caps for payday lenders and other restrictions on predatory loans.
  • Financial Literacy Education: To increase general knowledge about and understanding of economic tools and policies, the Center recommends instituting mandatory financial literacy education in public schools.

Learn More

For a detailed look at the findings in your state, you can check out the interactive map on the Center’s website. Get started by clicking on your state and checking out the numbers recorded. You may want to compare your state to others in your region to see how you stack up.

If your finances have deteriorated, you may want to consider speaking with a local attorney about your bankruptcy options. Millions of Americans have been able to stop creditor harassment, eliminate credit card debt and stop foreclosure by filing bankruptcy

Additional Resources

2009 – 2010 Assets Opportunity Scorecard (PDF)

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Posted in Financial Literacy | No Comments »

Monday, September 21st, 2009

U.S. Poverty Up, Income Down from 2007

In a press release early this month, the U.S. Census Bureau reported statistics on income, poverty and health insurance in the United States. For the most part, the numbers are not especially surprising, considering the current recession. Here’s what the Bureau reported.

Income Levels

Income levels were reported as decreasing year-over-year in all demographics. The breakdown of income change by race and ethnic origin in American households:

  • Non-Hispanic white households: Decline of 2.6%, to $55,530 (reported as statistically significant)
  • Black households: Decline of 2.8%, to $34,218 (reported as not statistically significant)
  • Asian households: Decline of 4.4%, to $65,637 (reported as not statistically significant)
  • Hispanic households: Decline of 5.6%, to $37,913 (reported as statistically significant)

The difference between men’s and women’s earnings has also changed since 2007: women who work full time, year-round in 2008 reportedly earned only 77% of what their male counterparts do, down from 78% in 2007.

Poverty Levels

For the first time since 2004, the poverty rate in the United States increased in 2008 at a statistically significant level. The poverty rate of 13.2 percent is apparently the highest in the country since 1997.

  • The family poverty rate in 2008 was 10.3% (up from 9.8% in 2007), with 8.1 million families living in poverty (up from 7.6 million).
  • The married-couple poverty rate increased to 5.5% (up from 4.9% a year before) and 3.3 million people (up from 2.8 million).
  • Racially and by ethnic origin, poverty levels increased in all demographics except blacks, for whom the poverty rate remained unchanged statistically.

Health Insurance Coverage

While the number of uninsured Americans rose from 2007 to 2008, the percentage of the total population without health coverage remained at 15.4%.

  • In 2008, 46.3 million Americans were without health insurance (up from 45.7 million in 2007).
  • 255.1 million Americans did have health insurance in 2008 (up from 253.4 million in 2007).
  • Private health coverage dipped in 2008 from 202.0 million to 201.0 million.
  • 87.4 million were covered by government health insurance, up from 83.0 million a year before.

The growing rate of uninsured and government-insured Americans is a major concern cited by proponents for health care reform, as well as the rate of Americans filing bankruptcy due to unmanageable health care costs.

Additional Resources

Income, Poverty and Health Insurance Coverage in the United States: 2008 (PDF)

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Posted in Bankruptcy and the Economy | No Comments »