People often associate bankruptcy with unemployment. Bankruptcy is tied to debt levels, not unemployment rates. Bankruptcy does not add money to a bank account or find an individual a job. Bankruptcy is all about debt and unless people have debt, they won’t file for bankruptcy.
Recently, the Federal Reserve Bank of New York reported that, despite unemployment rates increasing to levels not seen since the Great Depression, household debt levels are going down. Q2 credit card balances fell by the largest amount since data began being collected and the number of new credit accounts being opened also fell by a record amount. Also, consumer spending saw a sharp decline due to the pandemic stay-at-home order and ongoing social distancing requirements.
Some industry researchers believe that Chapter 13 filings, which are often submitted by individuals with stable incomes and good prospects for eventually repaying creditors, will likely decrease in favor of Chapter 7 filings that don’t call for borrowers to repay debts in the coming year.
Unlike some predictions of a tidal wave of filings, others believe that consumer bankruptcy filings don’t happen immediately following a life event such as loss of a job. Research shows that most people struggle between 2 – 5 years prior to filing for bankruptcy. As a result, the COVID-19 driven rise in consumer bankruptcy cases likely won’t be seen for months or years to come. If the economy doesn’t recover and unemployment persists, bankruptcy filings will begin to see a slow and steady increase throughout 2021
This year, the auto industry will grow 2.0% to $1.299 trillion, the slowest growth rate since at least 2011. Growth will flatten through 2022, according to eMarketer’s latest US retail forecast.
Based on an article by eMarketer, that says that US light vehicle sales have been off to a slow start this year. Cindy Liu, forecasting analyist said that will contribute to the slowdown in the overall US retail market. Auto buyers remain hesitant to purchase new vehicles amid uncertainty surrounding the economy and rising interest rates.
The auto industry represents 23.7% of all US retail sales, making it the largest retail sector. As a result, it has a large impact on the aggregate. eMarketer says that total retail sales in the US will grow 3.0% in 2019 to $5.475 trillion. Because the auto industry represents nearly one-quarter of total US retail, any growth or contraction will have an outsized effect.
According to a new LendEDU study, 32% of consumers filing for Chapter 7 bankruptcy carry student loan debt. Of that group, student loan debt comprised 49% of their total debt on average.
As of 2019, student loan debt is at an all-time high with a national total of $1.5 trillion. According to Student Loan Hero, the average student-loan debt per graduating student in 2018 who took out loans was $29,800.
The LendEDU data shows the effects of the growing burden of student loan debt. Coupled with a high cost of living and the fallout of the recession, student loans make it harder for millennials to save and put them financially behind — to the point where they may need to declare bankruptcy to be able to pay them off.
On December 22, 2018, the federal funding for certain agencies lapsed, and the United States government entered into a partial shutdown. The U.S. Department of Justice (DOJ), including the United States Trustee Program (USTP), was one of the agencies that shut down. United States Trustees (“UST”) representing the USTP appear and litigate in a multitude of bankruptcy proceedings. USTs also actively participate in out-of-court settlement discussions, plan negotiations, and the like. Pursuant to the partial shutdown, regular operations at the USTP ended, with only “excepted employees” continuing work on limited matters.
USTP excepted employees comprise a total of 35 percent of its employees. Excepted employees work without pay during the shutdown but will receive back pay after the government reopens. Remaining USTP employees who are not excepted are furloughed and will only receive compensation if Congress passes a bill allowing for it.
The contingency plan sets forth changes in the duties of DOJ employees. The contingency plan directs that civil litigation be halted except where the safety of human life or protection of property are at stake. Much of the civil litigation in which the USTP is a party does not involve such issues. The contingency plan further notes that DOJ attorneys should request stays in civil cases and reduce civil litigation staffing only to that necessary to protect human life and property. Several UST and DOJ attorneys involved in bankruptcy litigation have filed motions seeking stays of proceedings and extension of deadlines until the government reopens.
As the USTP continues to operate with its skeletal staff, certain bankruptcy processes will likely encounter delays. Although federal courts have rearranged funds to remain operational through January 18, should the shutdown extend beyond that date, bankruptcy matters such as plan confirmations and other court hearings will encounter similar delays.
Proceedings involving Chapter 7 and 13 trustees, including out-of-court discussions or negotiations, are unlikely to be delayed as these parties receive payments outside of government assistance.
Last week The House voted to give final congressional approval to a major rewrite of banking rules that would revoke key elements of Dodd-Frank Act but still leaving most of it tact.
The President is expected to sign into law the “Economic Growth, Regulatory Relief and Consumer Protection Act,” which won House approval 258-159 as 33 Democrats and 225 Republicans voted for the bill. Officials say that it recalibrates regulation and risk in the financial services sector while promoting economic growth and new jobs.
The Senate Banking Committee Chairman said that the bill “right-sizes” regulations for smaller financial institutions, allowing community banks, credit unions and mortgage lenders to grow.
Key provisions of the legislation include:
- Increasing banks’ asset threshold from $50 billion to $250 billion for extra regulatory scrutiny by the Federal Reserve.
- Streamlining capital requirements and other exemptions from mortgage-lending rules for community banks.
- Amending the Volcker rule for banks with less than $10 billion in assets in an effort to bolster market liquidity and decrease risk to the financial system in economic downturn.
- Repealing the Department of Labor’s fiduciary rule, which aimed to minimize supposedly conflicted investment advice given to retirement savers.
Although Republicans claim the bill is a deregulatory effort, GOP lawmakers weren’t able repeal Dodd-Frank in its entirety. Key provisions remain, including the Consumer Financial Protection Bureau and Washington’s authority to unwind failing large banks.
American consumers have the highest amount of revolving credit debt in U.S. history. As of June, Americans had $1.021 trillion in outstanding revolving credit, according to data from the Federal Reserve. Of the $1.021 trillion in outstanding revolving credit, $1 trillion is credit card debt. Prior to June, the record for outstanding revolving credit was $1.020 trillion, set in April of 2008.
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We’re reviewing the four things that you need to provide to a dealer in order to get a car loan if you have bad credit.
4. References – This typically should be a minimum of six people, with full names, addresses and phone numbers. They can be co-workers or friends, but some lenders prefer you to use relatives. The one rule is that they cannot live at the same address as you, and each must have a different address.
From Auto Credit Express
Check out this great article by DealerTrack
Ready or not, the reality is that Millennials are impacting every aspect of the auto industry, from staffing strategies and pay structures, to sales, marketing and even brand positioning. Millennials are even beginning to influence the type of vehicles manufactured and marketed read more…
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