Changing Structure of Household Debt Playing Large Part in Falling Bankruptcy Filings According to October ABI Journal Article

Changing Structure of Household Debt Playing Large Part in Falling Bankruptcy Filings According to October ABI Journal Article

Alexandria, Va. — The record duration of the current decline in U.S. bankruptcy filings is largely a reflection of the changing structure of household debt, according to an article in the October edition of the ABI Journal. “Bankruptcy filings have been on the decline for nearly four years, and the length and severity of the decline is far greater than most other periods of bankruptcy decline,” Ed Flynn of ABI writes in his column, “Bankruptcy by the Numbers: Why Are Filings Still Falling?” Flynn, a researcher with more than 30 years in the bankruptcy field, examined a number of economic conditions present during the 13 straight quarterly declines in bankruptcy filings since they most recently peaked in September 2010. “The fact that there has been a decline is not too surprising given the improved economy,” Flynn writes. He examined filing data from the Administrative Office of the U.S. Courts, consumer debt levels, delinquent debt levels, mortgage delinquency rates, non-mortgage delinquency rates, third-party collections and household well-being data from the Federal Reserve. “The Great Recession led to massive job losses, as well as large decreases in home values and household net worth,” Flynn writes. “Although the economy is not booming, each of these [measures] has improved in recent years.” As unemployment rates have been falling and the number of homeowners with negative equity in their homes have been declining, Flynn took a closer look at the changing debt structure of households. “In particular, higher student loan debt (generally not dischargeable) and lower credit card debt has made bankruptcy a less-attractive option for many who face financial distress,” he writes. “Many financial indicators point to a fairly high number of people who are still in financial distress, but bankruptcy won’t help them.” Despite data showing that consumers are displaying signs of financial distress, Flynn does not expect to see the filing decline ending anytime soon. “The amount of delinquent debt outstanding, particularly credit card debt, continues to drop each quarter.” Flynn writes. “This points to continuing declines in bankruptcy filings.” To obtain a copy of “Bankruptcy by the Numbers: Why Are Filings Still Falling?,” published in the October issue of the ABI Journal, please contact John Hartgen at 703-894-5935 or via email at [email protected] ### 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. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.