Total Bankruptcy Filings Decline in July

Despite the overall decline, commercial filings continue to increase, according to the American Bankruptcy Institute.

Total bankruptcy filings declined in July compared to July 2015 as well as to figures in June this year, according to a news release from the American Bankruptcy Institute and data provided by Epiq Systems, Inc.
The total bankruptcy filings declined 15 percent to 61,308 in July this year, compared to 71,875 in July 2015. There were 53,386 consumer filings in July, a 16 percent from 69,214 in July 2015.
Total commercial bankruptcy filings, however, increased 10 percent to 2,922 in July 2016 compared to 2,661 in July 2015.“July is the ninth consecutive month with a year-over-year increase in commercial filings. However, total commercial chapter 11 filings decreased in July 2016, as the 355 filings were 45 percent less than the 645 commercial chapter 11 filings registered in July 2015,” according to the news release.
“Businesses facing financial headwinds continue to turn to the financial fresh start of bankruptcy,” said ABI Executive Director Samuel J. Gerdano. “Driven by distress in the energy and retail sectors, commercial bankruptcy filings for 2016 will likely total close to 40,000.”
The American Bankruptcy Institute also reports that the average nationwide per capita bankruptcy-filing rate in July was 2.53 (total filings per 1,000 per population); a slight decrease from the filing rate of 2.56 percent recorded in the first half of this year. There were 1,978 average total filings per day in July 2016, a 15 percent decrease from 2,319 per day in July 2015.
States with the highest per capita filing rate (total filings per 1,000 population) through the first six months of 2016 include: Tennessee (5.56); Alabama (5.34); Georgia (4.62); Illinois (4.21); and Utah (4.10.)

Debt Collector May Have Violated FDCPA When It Accepted Payment on Time-Barred Debt in Chapter 13 Bankruptcy Case

The Eleventh Circuit Court of Appeals affirmed the district court’s decision that the plaintiff’s complaint failed to state a claim under either the Fair Debt Collection Practices Act or the Florida Consumer Collection Practices Act because the debt the collection agency sought to collect did not arise from a consensual “consumer” transaction but, instead, arose from the negligent conduct of the plaintiff’s sister in an automobile accident.

Debt Obligation from Tort Damages is Not a “Consumer Debt” under FDCPA

The Eleventh Circuit Court of Appeals affirmed the district court’s decision that the plaintiff’s complaint failed to state a claim under either the Fair Debt Collection Practices Act or the Florida Consumer Collection Practices Act because the debt the collection agency sought to collect did not arise from a consensual “consumer” transaction but, instead, arose from the negligent conduct of the plaintiff’s sister in an automobile accident.

Which Households Have Negative Wealth?

The Federal Reserve Bank of New York finds consumers with student loan or credit card debt, for example, have “negative wealth” compared to their assets. A share of households in the U.S. have total debt that exceeds their assets, known as “negative wealth.” Researchers from the Federal Reserve Bank of New York asked consumers about their household finances in conjunction with the Survey of Consumer Expectations in August 2015. The Survey of Consumer Finances is conducted monthly and there have been two household finance surveys to supplement it, including in August 2014. The researchers, from the Fed’s Research and Statistics Group, Senior Vice President Wilbert van der Klaauw, Senior Economist Giacomo De Giorgi, Assistant Vice President Olivier Armantier and former senior research analyst Luis Armona estimated overall that “15.1 percent of the households in the U.S. population have net wealth less than or equal to zero, while 14 percent have strictly negative wealth.” More info here.

Breaking News: CFPB Releases Outline of Proposals for Debt Collection Rulemaking

The outline provides the first public glimpse of what the CFPB is thinking as it moves forward in the debt collection rule-making process. In coordination with its field hearing on debt collection being held today in Sacramento, Calif., the Consumer Financial Protection Bureau has released an outline of proposals under consideration for the long-awaited debt collection rule-making. The proposals are a core part of the materials used by the CFPB as part of the small business panel process required by the Small Business Regulatory Enforcement Fairness Act. The outline provides the first public glimpse of what the CFPB is thinking as it moves forward in the debt collection rule-making process. More info here.

Three-Month Debt Collection Complaint Average Continues to Decline

The latest Consumer Financial Protection Bureau's monthly complaint snapshot focused on credit card complaints, which increased from May to June 2016.The three-month average for debt collection complaints declined for the second month in a row, according to the Consumer Financial Protection Bureau’s latest monthly complaint snapshot released on July 27, 2016. The three-month average of debt collection complaints from April to June 2016 declined 3 percent to 7,063, compared to 7,265 in April to June 2015. The average recorded in the May report also declined. The three-month average for debt collection complaints from March to May this year was 7,415, compared to 7,442 this time last year, ACA International previously reported. According to the report, the CFPB received 7,032 debt collection complaints in June. Debt collection represented 29 percent of the approximately 24,500 complaints submitted in June–the same percentage as reported in May. Overall, the CFPB has handled a total of approximately 930,700 complaints as of July 1, 2016, according to the report; the CFPB has received a total of 248,278 complaints on debt collection. More info here.

Consumers’ Credit Market Experiences Improve; Expectations for Future Credit Approval Dip

The Federal Reserve Bank of New York’s latest survey on credit access shows credit card application rates increased over the last several months while rejection rates declined. Consumers’ overall experiences in the credit market, including applications for credit and acceptance rates, improved since February. Application rejection rates for all credit types, except housing-related debt, approached the series low of 19.2 percent reached in June 2015. The per applicant rejection rate for all credit types, including credit cards, auto loans and mortgages, dropped from 20.9 percent in February 2016 to 19.3 percent in June 2016. 

For credit cards, the application rate increased from 28.5 percent in February to 30.6 percent in June, marking the highest result since the Fed started the survey. The rejection rate for credit card applications also declined from 17.3 percent in February to 15 percent in June. More info here.