Bankruptcies Increase in 1Q, But Lenders Continue to Offer Loans
Personal bankruptcies continue to increase in quantity in 2009, according to the American Bankruptcy Institute, but dealers are still able to get quality loans on fresh bankruptcy deals.
PHOENIX — Personal bankruptcies continue to increase in quantity in 2009, according to the American Bankruptcy Institute, but dealers are still able to get quality loans on fresh bankruptcy deals.
“We expect this upward spike in personal bankruptcies to continue throughout 2009,” said ABI executive director Samuel Gerdano.
The Administrative Office of the United States Courts confirmed the rise in personal bankruptcies as high as 41 percent in the first quarter 2009, compared to the year-ago period.
The courts discharged 167,183 personal bankruptcies and 202,824 additional households filed for bankruptcy between January 1 and March 13, 2009. Filed chapter 7 bankruptcies rose 41 percent while filed chapter 13s rose 20 percent.
“Dealers are working with lenders like Tidewater, Capital One, 722 Redemption, Prestige Financial, Wachovia and many others to offer quality loans. These lenders are looking for the fresh bankruptcies. What they are avoiding are the consumers heading toward bankruptcy,” said Robert Davies, president of www.OnlineBKmanager.com.
“We have been booking fresh bankruptcy deals since the year 2000, and historically they are by far our best-performing loans,” explained Dedra Muffley of Tidewater Motor Credit. “We are looking to do away with the non-bankruptcy paper or customers who look like they are on their way down. We want the customers that have their problems behind them.”
As of March 13, 2009, there are nearly one million open bankruptcies being processed for discharge by the U.S. bankruptcy courts.
“In 2009, bankruptcy marketing will continue to prove its value to automotive retailers throughout the U.S.,” concluded Davies.
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