BANKRUPTCY PREDICTIONS FOR 2020

BANKRUPTCY PREDICTIONS FOR 2020: CONSUMER CREDIT AND SPENDING CONTINUE TO INCREASE

Each year our office looks at the coming trends for consumer bankruptcy to figure out if bankruptcy filings are on the rise of will continue to fall.

Based on my past research in this area, bankruptcy filings are tied closely to the level of consumer debt. When that level becomes too high, payments for households become unsustainable and defaults begin to occur. That then leads to the rise in consumer filings. This is exactly what we saw in the 2007 time period. Revolving debt and house expense became more than families could afford and the housing market collapsed, taking jobs, banks and anything else connected to the housing market down.

In 2019 the amount of consumer spending has continued to rise. The below chart shows that consumer spending has been on an upward trend for several years. This is tied to a growing economy and the continued cost of living increases for the last several years.

Consumer debt levels, closely tied to consumer spending, have also continued to increase in 2019. The following link shows that consumer debt levels increased for the 21st consecutive quarter (over 5 years of time) in the third quarter of 2019. Student loans, auto, credit card and all other types of non-household debt have increased dramatically over that time period.

https://www.newyorkfed.org/microeconomics/hhdc.html

The Federal Reserve has also started to note an increase in delinquency rates associated with all debt types in 2019. Overall default rates stood at 4.8% of all loans outstanding in the third quarter of 2019, an increase of .4%. Mortgage default rates appear to have kept this default number artificially low. Currently, mortgage default rates are near 1%, while default rates for credit cards, autos and student loans are typically in the 5-10% default rate range.

In 2019 our office continued to see increases in bankruptcy filings. The filings in the Jacksonville division have topped 4700 total so far this year. In 2018 the total filings were just over 4600 total filings. This is a modest increase, but indicative of the upward trend that we expect to continue over the next year based on debt levels and consumer spending.

At Mickler & Mickler, we attend Court and see the bankruptcy trustees and judges in action several times a week. We have the experience to guide you to the right decision about whether to file a case, and if so, what Chapter to file.   When you contact our office, we can help you in your case with sound legal advice.

Please contact Mickler & Mickler at 904.725.0822 or bkmickler@planlaw.com. We will be happy to set you up a free appointment to discuss your situation and potential solutions.

Bryan Mickler

EDUCATION UNDER ATTACK IN BANKRUPTCY FILINGS

EDUCATION UNDER ATTACK BY THE BANKRUPTCY CODE It seems that families trying to educate their children can’t catch a break with the Bankruptcy Code. In 2005, the Bankruptcy Code was amended to add a means test to Chapter 7 and Chapter 13 cases. One of the biggest changes to expenses allowed to a potential 7 […]

Continue reading...

HAVEN ACT: Military Disability Proposed to be Excluded from Means Test in Bankruptcy

In March of 2019, a new Bill was introduced in the United States Senate to exclude military disability benefits from the means test in Chapter 7 and Chapter 13 Bankruptcy cases. A summary of the proposal is at the link below: https://www.baldwin.senate.gov/press-releases/haven-act The proposed bill would treat military disability the same as Social Security Disability. […]

Continue reading...

CHAPTER 11 FOR SMALL BUSINESS LOANS EXPLAINED – USING CHAPTER 11 TO RESTRUCTURE BUSINESS LOANS AND CONTINUE YOUR OPERATIONS

Running a small business is tough. You have a constant balance of obtaining new business and serving the current customers that you have at the level that both parties expect. Often, a small business will need additional capital. This can be to weather a downturn or to expand if business is going well. A quick […]

Continue reading...

WHY CAN’T PEOPLE AFFORD SUMMER VACATIONS

WHY CAN’T PEOPLE AFFORD SUMMER VACATIONS? It is almost Summer vacation time for most people. However, it seems that the traditional Summer vacation is becoming increasingly rare. The below article found that 39 million people in the United States won’t be able to afford a Summer vacation in 2019. https://www.usatoday.com/story/money/2019/04/30/millions-of-americans-wont-take-a-summer-vacation/39400659/ According the article, the reason […]

Continue reading...

MEDICAL DEBTS AND TAX REFUND SEIZURE

MEDICAL DEBTS AND TAX REFUND SEIZURES About 4 years ago I wrote a blog about the impending ability of debt collectors to seize federal tax refunds as a form of debt collection. It seems that the State legislatures have been moving rapidly to make that form of debt collection a reality. Here is my article […]

Continue reading...

SMALL BUSINESS CHAPTER 11 FOR 2019

SMALL BUSINESS CHAPTER 11 FOR 2019 A recent Bloomberg article revealed a potential dramatic change for small business chapter 11 cases starting in 2019. The complete article is below with the link to the story. Currently, Chapter 11 is a time consuming, needlessly expensive proposition for small businesses. The additional administrative costs and burdens of […]

Continue reading...

RENTAL THEFT – A GROWING ISSUE IN CONSUMER BANKRUPTCY

RENTAL THEFT – A GROWING ISSUE IN CONSUMER BANKRUTPCY I recently have begun to notice a growing trend in consumer financing: leasing small personal property items such as beds, sofas, toys and other items normally financed as a sale. As the trend became more common, I began to wonder why such finance arrangements were suddenly […]

Continue reading...

WHAT CAUSES DIVORCE AND BANKRUPTCY? – PART TWO

DIVORCE AND BANKRUPTCY – PART TWO I recently wrote a blog examining the impact of divorce on productivity and the tendency of divorced individuals to file for bankruptcy. That blog link is here: https://planlaw.com/causes-bankruptcy-big-three/ Now it’s time to examine the prior period of time – the time period prior to the divorce and see if […]

Continue reading...

BANKRUPTCY AND OLDER AMERICANS

OLDER AMERICANS GREATLY INCREASING BANKRUPTCY FILINGS A recent New York Times article highlighted an area of concern in bankruptcy that our office has been seeing for many years – older individuals filing bankruptcy at a greatly increased rate: https://www.nytimes.com/2018/08/05/business/bankruptcy-older-americans.html?rref=collection%2Ftimestopic%2FBankruptcies&action=click&contentCollection=timestopics&region=stream&module=stream_unit&version=latest&contentPlacement=1&pgtype=collection As in the article, our office has been seeing an increasing number of older bankruptcy filers. […]

Continue reading...