Fed: U.S. Household Debt Jumps to $16.90 Trillion in 4Q 2022​​​

U.S. household debt jumped to a record $16.90 trillion from October through December last year, the largest quarterly increase in 20 years, as mortgage and credit card balances surged amid high inflation and rising interest rates, a Federal Reserve report showed on Thursday, Reuters reported. Household debt, which rose by $394 billion last quarter, is now $2.75 trillion higher than just before the COVID-19 pandemic began while the increase in credit card balances last December from one year prior was the largest since records began in 1999, the New York Fed's quarterly household debt report also said. Mortgage debt increased by $254 billion to $11.92 trillion at the end of December, according to the report, while mortgage originations fell to $498 billion, representing a return to levels last seen in 2019. Meanwhile credit card balances increased by $61 billion in the fourth quarter while auto loan balances rose by $28 billion, the report said. Read more.

CFPB: 18% Drop Since 2020 in People with Reported Medical Debt​​​

The number of people with medical debt on their credit reports fell by 8.2 million — or 17.9% — between 2020 and 2022, according to a report Tuesday from the U.S. Consumer Financial Protection Bureau (CFPB), the Associated Press reported. White House officials said in a separate draft report that the two-year drop likely stems from their policies. Among the programs they say contributed to less debt was an expansion of the Obama-era health care law that added 4.2 million people with some form of health insurance. In addition, local governments are leveraging $16 million in coronavirus relief funds to wipe out $1.5 billion worth of medical debt. There has also been a persistent effort by the CFPB to reduce medical debt. The major credit rating agencies said last year that they will no longer include in their reports medical debts under $500 or debts that were already repaid. The agencies will also extend the time it takes to add medical debt to reports from six months to one year, possibly giving families more time to repay before being penalized with lower credit scores. While economic measures such as the unemployment rate and inflation can swing up and down, the decline in medical debt shows that steady progress is being made. Some 13.5% of the 279 million people with credit reports had at least one medical debt, down from 16.4% in 2020 and 19.4% in 2014. Still, unpaid medical bills account for more than half of all debt in collections, according to the White House report. As a result, medical debt exceeds credit cards, personal loans and utilities and phone bills combined. There is also evidence that the decline predates the Biden presidency. The amount of medical debt on credit reports fell to $111 billion from $143 billion between 2018 and the first half of 2021, according to a March 2022 report by the CFPB. Read more.

Higher Bills Are Leading Americans to Delay Medical Care​​​

Rising out-of-pocket health care costs are weighing heavily on consumers, who are pushing aside tests or procedures when troublesome symptoms emerge, the New York Times reported. While some people avoided seeking medical care during the worst of the pandemic, worried about the risk of infection or unable to get an appointment because hospitals and doctors were overwhelmed, many are now finding that inflation and the uncertain economy have thrown up another barrier. “We are starting to see some individuals who are putting off some care, especially preventive care, due to the costs,” said Dr. Tochi Iroku-Malize, the president of the American Academy of Family Physicians and the chair of family medicine for Northwell Health in New York. When having to choose between going to the doctor or paying for rent and food, “the health issue is no longer the priority,” she said. The inability to afford medical tests and treatment, a perennial concern in the U.S., began emerging as a much more striking issue last year. Nearly four in 10 Americans said they had put off care in 2022 because of cost, the highest number since Gallup started asking people about delaying care more than 20 years ago. The percentage reporting that they or a family member delayed health care because of cost rose to 38 percent from 26 percent in 2021. Read more.

A key panel at ABI's Annual Spring Meeting will examine the juxtaposition of failing health care systems with consumer patients driven into bankruptcy by medical debt. Be sure to register to attend this panel and other engaging programming at the Annual Spring Meeting! 

Next ABI "Look Ahead for 2023" Discussion on Feb. 22 to Focus on Business Reorg!

ABI's "Look Ahead for 2023" half-hour online programs continue on Feb. 22 at 5:00 p.m. ET with experts providing perspectives on business reorganization. Register for free! 

Miss any of the previous "Look Ahead for 2023" discussions? Watch replays here!

U.S. Labor Market Still Tight; Monthly Producer Inflation Accelerates​​​

The number of Americans filing new claims for unemployment benefits fell last week, offering more evidence of the economy's resilience despite tighter monetary policy, Reuters reported. Other data on Thursday showed monthly producer prices increasing by the most in seven months in January as the cost of energy products surged. Even stripping out energy and other volatile components, underlying producer inflation rose at its fastest pace since last March. Initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 194,000 for the week ended Feb. 11, the Labor Department said. Unadjusted claims dropped 9,280 to 224,727 last week, reflecting a sharp decrease in applications in California. There were also significant declines in claims in Illinois and Pennsylvania, offsetting increases in Ohio and Michigan. Claims remain low despite high-profile layoffs in the technology sector and in interest-rate-sensitive industries. Some of the laid-off workers are likely finding new work or are delaying filing for benefits because of severance packages. Government data showed this month that there were 1.9 job openings for every unemployed person in December. Read more.

​​​​​​​​​​​​
Don't Miss the Feb. 28 abiLIVE Webinar Looking at Student Loans!

Join our panelists on a special abiLIVE on February 28 as they discuss the DOJ’s new student loan guidelines and provide context on how the guidelines will impact debtor attorneys, trustees and other entities in the bankruptcy process. Register for FREE!

Mutual Fund Industry Says Proposed U.S. SEC Rules Would Harm Retirement Savers​​​

The mutual fund industry is warning the U.S. Securities and Exchange Commission that new proposed rules aimed at better preparing open-ended funds to weather distressed market conditions would harm investors saving for retirement, Reuters reported. A November proposal from the SEC would require mutual funds, and some exchange-traded funds, to ensure that at least 10% of their net assets are highly liquid. It would also require a hard daily close of 4 p.m. Eastern time for mutual funds, and the use of “swing pricing.” Such pricing, which involves adjusting a fund’s value in line with trading activity so that redeeming investors bear the costs of exiting without diluting remaining investors, is an attempt to prevent liquidity issues during market disruptions, such as at the beginning of the pandemic, when many investors tried to exit funds at the same time. SEC Chairman Gary Gensler argued at the time that the tweaks would ensure that such funds are resilient and protect investors. But industry groups and fund managers criticized the proposal in public comments, describing them as misguided and harmful. The hard close creates several problems, including for shareholders who own funds through defined contribution plans, which are not able to send in orders by 4 p.m. and may be stuck with the next day’s price for their orders, independent trustees of Fidelity’s equity, high-income and fixed-income allocation funds said in a letter. Read more.

Podcast Companies, Once Walking on Air, Feel the Strain of Gravity​​​

When celebrity-backed media company Religion of Sports — founded by Tom Brady, Michael Strahan and Gotham Chopra — debuted in 2018, getting into the rapidly expanding podcast business seemed like a no-brainer, according to a New York Times report. After producing a handful of film documentaries, it launched its first podcast, “Now for Tomorrow with Deepak Chopra,” hosted by Gotham’s father, in 2020. It hired more than a dozen audio producers and developed a broad slate of shows ranging from talk programs to scripted drama. But after a faltering advertising market and fears of a looming recession began battering the media and technology sectors in 2022, executives at Religion of Sports made an about-face. Early last month, the company’s podcast employees were informed that they had been laid off and that the audio division would shutter. The demise of Religion of Sports’s audio ambitions is the latest sign of frost settling over the once-sizzling podcast industry. Spotify has spent more than $1 billion in recent years acquiring production companies and signing exclusive deals with celebrities like Joe Rogan and Kim Kardashian. But in January it reduced podcast staff for the third time in five months, and the company’s chief content officer, Dawn Ostroff, resigned. “The dumb money era is over,” said Eric Nuzum, a podcast strategist and co-founder of the independent studio Magnificent Noise. “People had been throwing money at things just to see if they could get in and scale up [an] audience quickly, but now everyone’s being a little bit more conservative.” Two other prominent podcast publishers, Vox Media and Pushkin Industries, also announced layoffs last month. And Amazon, SiriusXM, NPR and Spotify have all curbed podcast budgets in the last year, sometimes allowing expensive deals to sunset or canceling others before they closed. Although many companies continue to invest in podcasts, and overall downloads continue to rise, interviews with a dozen current and former podcast producers and executives indicate an increased reluctance among publishers to fund projects with no obvious path to short-term profitability. Short-run or seasonal narrative podcasts, which have a limited window to build audiences and attract advertisers, are under especially sharp scrutiny. Read more.

Volunteer Today to Become a Preliminary-Round Judge for the Duberstein National Bankruptcy Moot Court Competition!

The Duberstein National Bankruptcy Moot Court Competition, now in its 31st year and widely recognized as one of the nation’s preeminent moot court competitions, will be held in New York on March 4-6, 2023. Fifty-three teams from law schools across the country will compete through written briefing and oral argument. Volunteers are needed for preliminary-round judges for the Competition on Saturday, March 4th, and Sunday, March 5th. To find out more and to volunteer, please click here.

Latest Segment of ABI’s Industry Viewpoints Examines the Intersection of Cryptocurrency and Bankruptcy​​​



The latest segment of ABI's #IndustryViewpoints is now available! Don't miss Evan Miller of Bayard talking with ABI Editor-at-Large Bill Rochelle about the intersection of crypto firms and bankruptcy. Watch here! 

Don't Miss Kenneth Feinberg on Special Panel at ABI's Annual Spring Meeting!​​​

Kenneth Feinberg served as the Special Master following 9/11, tasked with the seemingly impossible job of determining the value of a human life; his work was later the subject of Worth, a 2020 film starring Michael Keaton. A legendary mediator and expert at alternative dispute resolution, Mr. Feinberg will be a featured panelist at April’s Annual Spring Meeting exploring “The Many Roles of a Neutral in Bankruptcy." Are you registered?

USTP to Resume Debtor Audits in March 2023

Effective March 13, 2023, the USTP will resume its designation of individual chapter 7 and chapter 13 cases for audit. These audits had been suspended in March 2020 due to public health concerns associated with the COVID-19 pandemic. As authorized in section 603(a) of Public Law 109-8, the USTP established procedures for independent audit firms to audit petitions, schedules and other information in consumer bankruptcy cases. Pursuant to 28 U.S.C. § 586(f), the USTP contracts with independent accounting firms to perform audits in cases designated by the USTP. Click here for more information.

Sign up Today to Receive Rochelle’s Daily Wire by E-mail!
Have you signed up for Rochelle’s Daily Wire in the ABI Newsroom? Receive Bill Rochelle’s exclusive perspectives and analyses of important case decisions via e-mail!

Tap into Rochelle’s Daily Wire via the ABI Newsroom and Twitter!