Bankruptcies Increased 32 Percent in 2008, Expected to Rise in 2009
According to the American Bankruptcy Institute, personal bankruptcies increased in 2008, and are expected to rise this year.
PHOENIX – According to the American Bankruptcy Institute, personal bankruptcies increased in 2008, and are expected to rise this year.
"Consumers are under great financial stress, with no immediate end in sight," said ABI executive director Samuel Gerdano. "We expect the upward spike in personal bankruptcies to continue in 2009."
The Administrative Office of the United States Courts confirmed the number of bankruptcies rose by 32 percent to 1.06 million in 2008. In 2007, 801,840 American consumers filed for bankruptcy.
"We have been monitoring the steady growth of personal BK cases," said Robert Davies, president of www.OnlineBKmanager.com. "The good news is our dealer clients are working with lenders like Tidewater, CapOne, AmeriCredit, Wachovia and many others to offer quality sub-prime loans to these individuals."
In today's volatile economy, subprime lenders see the advantage in lending to those consumers who have a fresh bankruptcy and can not file again for many years.
"We have been booking fresh BK 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."
"Currently, chapter 7 bankruptcies represent over 75 percent of all cases being filed with the courts," said Davies. "This fact contradicts previous thoughts that the 2005 law change would force more people into filing a chapter 13 over a chapter 7."
As of January 6, 2009, there are nearly 1 million open bankruptcies being processed for discharge by the United States bankruptcy courts. "In 2009 bankruptcy marketing will continue to prove its value to automotive retailers throughout the United States," concluded Davies.
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