Tag Archives: Consumer Bankrtuptcy Data

BK Filings – A Tidal Wave on the Way?

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So far, a surge of personal bankruptcies has been avoided during 2020 and to date, bankruptcy filings are trailing last year’s numbers.

Even though the federal stimulus payments and other government programs most likely have a lot to do with 2020’s decline in consumer bankruptcies, it could also be attributed to people borrowing less. However, consumer bankruptcies are likely to rise if unemployment and income loss continue.

Some industry experts forecast a “tidal wave” of filings starting in the fourth quarter of 2020 and gaining momentum after the first of 2021.

Mortgage forbearance nearing its end could also be the start of a significant bankruptcy filing surge. You remember that part of the CARES Act allowed homeowners with federally backed mortgages to stop making payments for periods of six months, with a possible extension of six additional months. Starting as soon as October 1, affected homeowners will not only have to resume payment, but banks could demand immediate make up of all missed payments.

Depending on how lenders work with those who exercised the deferral, a wave of Chapter 13 bankruptcies could begin. Chapter 13 allows debtors to set up a repayment plan usually allowing three to five years to catch up on payments.

Bankruptcy booms have happened in the past but it’s unlikely that even Covid-19 could produce anything like the historical peak of filings in 2005. In October of 2005, a new law, the Bankruptcy Abuse Prevention and Consumer Protection Act, went into effect. Because it was seen as less favorable to borrowers, people rushed to court before the law’s effective date resulting in a short-term surge of filings. Soon after, filings dropped (significantly) and stayed low until the housing bubble began to collapse in 2007. The next peak was seen in 2010 as foreclosures skyrocketed.

In any case, looking for trends in this unprecedented time may be futile, as nothing is normal during the “new norm”. We will continue to keep you abreast of current trends as they unfold and share industry analysis and forecasts through our weekly blog.

Carbon Fiber Car Construction

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The trend in construction of new vehicles using lighter weight substrates continues. According to an article by MPower, much of the focus is placed on aluminum but many automakers are turning to carbon fiber not only for exterior components but also complete inner body structures. Some of Volvo’s hybrids inner structure are primarily carbon fiber. This reduces weight and enhances rigidity. Carbon fiber is also in the  Silverado/Sierra trucks where GM is using carbon fiber in the construction of new bed assemblies.  Industry analysts predict a compound annual growth rate of the automotive carbon fiber market between 7.9 percent and 10.6 percent for the coming five years.

AVS Confidence Stalling

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According to the 2019 Global Automotive Consumer Study conducted by Deloitte, consumer interest in self-driving vehicles lags the pace of investment in advanced vehicle technology.  In this study, they examine consumer interest in advanced automotive technologies, including autonomous vehicles, and compare and contrast automotive consumer trends in markets worldwide.

In the United States, 50 percent of survey respondents do not believe Autonomous Vehicles – AVs will be safe—nearly the same as last year’s 47 percent but drastically different from 2017, when 74 percent voiced safety concerns. Consumer confidence in AV safety also plateaued in China, Japan, South Korea, India, and Germany.

Dodd-Frank Act, What Is It?

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The Dodd–Frank Wall Street Reform and Consumer Protection Act was signed into federal law by President Barack Obama on July 21, 2010.  The ACT was a response to the financial crisis of 2007–2008, and brought the most significant changes to financial regulation in the United States since the regulatory reform that followed the Great Depression.

It was designed to promote the financial stability of the US by improving accountability and transparency in the financial system, to end “too big to fail”, to protect the American taxpayer by ending bailouts, and to protect consumers from abusive financial services practices.

The Act changed the existing regulatory structure, and created a streamline to the regulatory process. Agencies that were previously not required to do so, were compelled to report to Congress on an annual (or biannual) basis and present results of current plans and explain future goals

Some of the important new agencies created included the Financial Stability Oversight Council, the Office of Financial Research, and the Bureau of Consumer Financial Protection.

As a practical matter, prior to the passage of Dodd–Frank, investment advisers were not required to register with the SEC if the investment adviser had fewer than 15 clients during the previous 12 months and did not hold itself out generally to the public as an investment adviser. The act eliminated that exemption, thereby rendering numerous additional investment advisers, hedge funds, and private equity firms subject to new registration requirements.

Certain non-bank financial institutions and their subsidiaries were supervised by the Fed in the same manner and to the same extent as if they were a bank holding company.

To the extent that the Act affected all federal financial regulatory agencies, eliminating one (the Office of Thrift Supervision) and creating two (Financial Stability Oversight Council and the Office of Financial Research) in addition to several consumer protection agencies, including the Bureau of Consumer Financial Protection, this legislation in many ways represented a change in the way America’s financial markets would operate in the future. Few provisions of the Act became effective when the bill was signed.

Major reform to the Dodd-Frank Act is underway in Washington today.  We’ll keep you posted!