posted by Bob Lawless

On a year-over-year basis, the U.S. bankruptcy filing rate dropped for the 13th consecutive month in November. According to statistics from Epiq Systems, Inc., the November daily bankruptcy filing rate was 4,923, a decline of 12.5% from one year ago. November marks the first time that the daily bankruptcy filing rate has dropped below 5,000 since January 2009.

Although the past seven months have seen double-digit year-over-year drops, these drops have consistently stayed between 10-17%. In other words, there is no increase in the rate of decrease. Extrapolating from this trend, we simply would expect to see about 10-17% fewer filings over the coming year than in the past year. Whether this trend continues, however, will depend principally on the ups and downs of the consumer credit market (not unemployment or foreclosure rates as conventional wisdom holds). In the next few weeks, I plan to be do my annual and slighlty more formal analysis of how these variables might interact and come up with a projection for 2012 U.S. bankruptcy filings.The chart to the right shows the daily bankruptcy filing rate since 2004. (Clicking on the chart should open up a bigger version in a pop-up window.) The red line running across the middle of the chart is the daily filing rate in 2004, which allows for comparison between current filing rates and the filing rates prior to the 2005 changes in the bankruptcy law. The figures are population adjusted (using November 2011 as the base rate) such that the chart shows the daily bankruptcy filing rate after controlling for population growth. In 2004, the U.S. had 5.44 bankruptcy petitions per 1,000 persons. For the past twelve months, we have averaged 4.46 bankruptcy petitions per 1,000 persons. After accounting for the fact that the U.S. is almost 7% bigger now than it was in 2004, the per capita bankruptcy filing rate has dropped by 23%.

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Data through September 2011, released today by S&P Indices and Experian for the S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, showed the only decrease in credit line default rates in September was for auto loans, which fell to 1.29% from August’s 1.31%. First and second mortgage default rates increased slightly; first mortgages went from 1.92% in August to 1.99% in September, and second mortgages from 1.27% to 1.32%, respectively. Bank card default rate showed the largest basis point increase, from 5.26% in August to 5.36% in September.

“While this is only one month of data, we have not seen so many increases in default rates in about a year or more,” says David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Indices. “For most of the past three years, consumer credit default rates have been declining across both loan types and regions. September’s report was the first time we saw increases in four of five regions, three of four loan types and the composite, which rose from 2.04% to 2.10%. Bank cards rose to 5.36% in September from 5.26% in August, which is a bit of a concern. First and second mortgage default rates also rose during the month. This is the first time we have seen the rates go up for first mortgages since November 2010. Looking at the regions, New York saw the largest increase, moving from 1.80% to 2.01%. Given the fragile state of both the economy and consumer confidence can, we will have to closely monitor these data over the next few months to determine if September was just a temporary blip or the reversal of the recent trend.”

Among the five major Metropolitan Statistical Areas (MSAs) reported in this release, New York showed its highest default rates since April 2011, increasing from 1.80% in August to 2.01% in September. Chicago, Los Angeles and Miami increased moderately to 2.47%, 2.12% and 4.59% in September, from 2.43%, 2.07% and 4.52% in August, respectively. Dallas was the only MSA where default rates fell, from 1.51% in August to 1.33% in September.

Jointly developed by S&P Indices and Experian, the S&P/Experian Consumer Credit Default Indices are published on the third Tuesday of each month at 9:00 am ET. They are constructed to accurately track the default experience of consumer balances in four key loan categories: auto, bankcard, first mortgage lien and second mortgage lien. The Indices are calculated based on data extracted from Experian’s consumer credit database. This database is populated with individual consumer loan and payment data submitted by lenders to Experian every month. Experian’s base of data contributors includes leading banks and mortgage companies, and covers approximately $11 trillion in outstanding loans sourced from 11,500 lenders.

For more information, please visit: www.consumercreditindices.standardandpoors.com.

S&P Indices, a leading brand of the McGraw-Hill Companies (NYSE: MHP), maintains a wide variety of investable and benchmark indices to meet an array of investor needs. Over $1.25 trillion is directly indexed to Standard & Poor’s family of indices, which includes the S&P 500, the world’s most followed stock market index, the S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, the S&P Global BMI, an index with approximately 11,000 constituents, the S&P GSCI, the industry’s most closely watched commodities index, and the S&P National AMT-Free Municipal Bond Index, the premier investable index for U.S. municipal bonds. For more information, please visit: www.standardandpoors.com/indices.

Standard & Poor’s does not sponsor, endorse, sell or promote any S&P index-based investment product. The S&P/Experian Consumer Credit Default Indices are products of S&P Indices, which operates independently of Standard & Poor’s Ratings Group. Standard & Poor’s Ratings Group plays no role in the compilation, distribution or licensing of the Indices.

Experian is the leading global information services company, providing data and analytical tools to clients in more than 90 countries. The company helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score and protect against identity theft.

Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2010, was $3.9 billion. Experian employs approximately 15,000 people in 40 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; Costa Mesa, California; and Sao Paulo, Brazil.

By EILEEN AJ CONNELLY AP Personal Finance Writer

NEW YORK October 18, 2011 (AP)

In what may be an early sign that credit card users are again having trouble paying their bills, five of the nation’s top six credit card issuers said Monday that late payments rose in September.

That’s the first month since February 2009 that so many major companies reported upticks in payments late by 30 days or more.

The increases all were smaller than a percentage point, and card companies have seen small increases in delinquency in individual months during the last two years.

But the broader trend has been for vast improvements in payment habits that have brought delinquency rates down to historic lows. So it is worrisome that more people appear to be falling behind, especially with unemployment remaining above 9 percent and some economists predicting another recession.

Analysts generally expect improvements in delinquencies and defaults to level off as the year draws to a close.

The biggest increase reported Monday was at Capital One Financial Corp., which saw delinquencies rise to 3.65 percent of balances on an annualized basis, from 3.43 percent in August.  Read More Here

U.S. consumer bankruptcy filings totaled 1,044,722 nationwide during the first nine months of 2011 (Jan. 1-Sept. 30), a 10 percent decrease from the 1,165,172 total consumer filings during the same period a year ago, according to the American Bankruptcy Institute (ABI), relying on data from the National Bankruptcy Research Center (NBKRC). September consumer bankruptcies decreased 17 percent nationwide from September 2010 as the data showed that the overall consumer filing total for September reached 108,517 down from the 130,329 consumer filings recorded in September 2010.

“The trend of declining filings has been consistent with consumers continuing to reign in their spending, household debt, and an overall pull back in consumer credit,” said ABI Executive Director Samuel J. Gerdano. “Total consumer filings for 2011 will be less than 2010.”

The September 2011 filings also represented a 4 percent decrease from the August 2011 consumer bankruptcy total of 113,432 filings, a slight change that could be the result of one less day in the month. The percentage of chapter 13 filings for September was 30 percent, a one percent increase from August.

ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information.

NBKRC is an online research center that offers subscribers access to up-to-date research and statistics on bankruptcy filings. The database contains complete information dating back to 1995.

By Inside Arm

http://www.insidearm.com/daily/economic-news/bankruptcy/consumer-bankruptcy-filings-down-10-percent-through-q3-2011/

We had a recent customer call us and say, “I signed up for Bankruptcy but having second thoughts”.  We have some good articles that explain the complexities of Bankrutpcy below:

SmartMoney  Bankruptcy step one that will follow you around for seven to 10 years, depending on the route you take. And the requirements have become much stricter than they were a few years ago, thanks to changes in bankruptcy law.

Here are answers to the 10 most frequently asked questions about bankruptcy.

1. What Is the Difference Between Chapter 7 and Chapter 13?

If you file for Chapter 7 bankruptcy, most of your unsecured debts are written off within 90 days of filing. The bankruptcy will stay on your credit report for 10 years. While debts will be forgiven, you’ll have to sell some of your property, with the proceeds distributed to your creditors. In most cases, this means you’ll lose your home (if you own it), as well as any expensive items such as art, jewelry and pricey consumer electronics.

Chapter 13, on the other hand, is a repayment plan: You set up a three- or five-year schedule with your creditors. Chapter 13 bankruptcy remains on your credit report for seven years. With this type of bankruptcy, you get to keep all your property, including your home.

United States Courts A chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives or where the business debtor is organized or has its principal place of business or principal assets. (3) In addition to the petition, the debtor must also file with the court: (1) schedules of assets and liabilities; (2) a schedule of current income and expenditures; (3) a statement of financial affairs; and (4) a schedule of executory contracts and unexpired leases. Fed. R. Bankr. P. 1007(b). Debtors must also provide the assigned case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case (including tax returns for prior years that had not been filed when the case began). 11 U.S.C. § 521. Individual debtors with primarily consumer debts have additional document filing requirements. They must file: a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; evidence of payment from employers, if any, received 60 days before filing; a statement of monthly net income and any anticipated increase in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts. Id. A husband and wife may file a joint petition or individual petitions. 11 U.S.C. § 302(a). Even if filing jointly, a husband and wife are subject to all the document filing requirements of individual debtors. (The Official Forms may be purchased at legal stationery stores or downloaded from the internet at www.uscourts.gov/bkforms/index.html. They are not available from the court.)

Chicago Tribune  Stressful economic periods lead to stressful family finances, which can lead to bankruptcy filings.

Bankruptcy is not a panacea to lift up all your financial troubles and put a smile on your face, as late-night television commercials would have you believe. But in case it turns out to be the only answer, you should have a full understanding of choices and potential repercussions.

Total U.S. bankruptcies filed during fiscal year 2011 (ended Sept. 30) dropped 8 percent over fiscal year 2010, according to the American Bankruptcy Institute. Filings by individuals or households with consumer debt decreased 11 percent for the nine-month period ended Sept. 30 compared with the same period in 2010.