Individual Chapter 13 Filings Increase 32 Percent in Calendar Year 2022​​​

Individual chapter 13 bankruptcy filings during calendar year 2022 (Jan. 1-Dec. 31) increased 32 percent to 149,072 from the 2021 total of 112,913, according to data provided by Epiq Bankruptcy, the leading provider of U.S. bankruptcy filing data. While representing a substantial year-over-year increase, individual chapter 13 filings remain lower than the pre-pandemic total of 272,451 recorded in calendar year 2019. Overall individual filing totals for calendar year 2022 were down six percent to 356,930 from the 378,918 individual filings the previous year. Individual filings are at their lowest levels since the 341,233 filings registered in 1985. The 378,326 total bankruptcy filings in calendar year 2022 also registered a six percent decrease from the 401,479 filings during calendar year 2021. Annual bankruptcy filings last registered a similar total in 1984, with 348,521 total filings. Commercial filings also declined, as the 21,396 filings in calendar year 2022 represented a 5 percent drop from the 22,561 filings recorded in calendar year 2021. Read more. 

Unemployment Claims Fell During Holiday Week​​​

U.S. jobless claims fell in the final week of 2022, signaling continued historic tightness in the labor market, the Wall Street Journal reported. Initial jobless claims, a proxy for layoffs, fell by 19,000 to a seasonally adjusted 204,000 last week, the Labor Department said Thursday. Claims had mostly trended higher since hitting their lowest levels in over a half-century last spring, but they continue to hover near their 2019 pre-pandemic levels. Seasonally adjusted jobless-claims figures tend to be volatile around holiday periods. The most recent data captured the week between the Christmas and New Year’s holidays. The four-week moving average of weekly claims, which smooths out volatility, fell to 213,750, a decrease of 6,750 from the prior week. Continuing claims, which reflect the number of people seeking ongoing unemployment benefits, ticked down to 1,694,000, a decrease of 24,000, in the week ended Dec. 24. While continuing claims remain at low levels, they moved somewhat higher during the fall months, which could indicate that it is taking unemployed Americans longer to find new positions. (Subscription required.) Read more. 

Heavy Discounts Drive Record U.S. Online Holiday Spending​​​

U.S. online spending during the 2022 holiday season rose by a better-than-expected 3.5%, a report by Adobe Analytics showed, as retailers used hefty discounts to lure inflation-weary consumers into spending on everything from toys to electronics, Reuters reported. Shoppers spent a record $211.7 billion online over the holiday season, which typically starts in November and ends in December, compared with an earlier forecast of $209.7 billion, the report showed on Thursday. Adobe Analytics, which measures e-commerce by tracking transactions at websites, has access to data covering purchases at 85% of the top 100 internet retailers in the U.S. While U.S. online holiday sales rose, they grew at the slowest pace as consumers felt the brunt of rising prices. In the 12 months through November, the consumer price index climbed 7.1%. Read more. 

Report: Delinquency Rates on Commercial Mortgage-Backed Securities Rise for Three Consecutive Months​​​

KBRA reported that the delinquency rate on KBRA-rated U.S. commercial mortgage-backed securities (CMBS) rose 8 basis points (bps) in December 2022 to 2.97%, up from 2.89% in November and a low of 2.76% in September 2022, the ABL Advisor reported. The rate has now increased for three consecutive months; however, it remains below the year-end (YE) 2021 rate of 4.06%. By property type, multifamily (1.83%; +27 bps), retail (5.73%; +20 bps) and office (1.58%; +13 bps) reported delinquency rate increases for the month, while mixed-use properties declined 20 bps to 3.61%. In this report, KBRA provides observations across the $319.6 billion rated universe of U.S. private-label CMBS, including conduits, single-asset single borrower and large loan transactions. A total of $1.3 billion in newly delinquent loans was reported in the final month of the year, the same level as last month. More than three-quarters of the delinquencies were reported as nonperforming matured balloons — up from 50% in November. In addition, of the $819.6 million transferred to the special servicer this reporting period, over 80% identified imminent or actual maturity default as the reason compared to 70% last month. Read more. 

Mortgage Rates Climb for Second Straight Week, Hitting 6.48%​​​

The average for a 30-year fixed loan was 6.48%, up from 6.42% last week and the highest since early December, Freddie Mac said today, Bloomberg News reported. Seesawing loan costs aren’t likely to inspire confidence in would-be homebuyers, who have been pulling away from the market for months. With demand in a slump, sellers also are holding back, reluctant to accept discounts or to give up cheap mortgages they locked in before the Federal Reserve started hiking its benchmark interest rate last year. “Mortgage application activity sunk to a quarter century low this week as high mortgage rates continue to weaken the housing market,” said Sam Khater, Freddie Mac’s chief economist. With inflation still running hotter than the central bank would like, policymakers last month affirmed their commitment to monetary tightening and signaled that rates will probably stay elevated for some time, according to meeting minutes released yesterday. Read more. 

Car Owners Strain as More Loan Payments Soar to $1,000​​​

The percentage of U.S. consumers paying at least $1,000 a month for their cars soared to a record, adding to concerns that borrowers may be getting in over their heads, Bloomberg News reported. Almost 16% of consumers who financed a new car in the fourth quarter have monthly payments reaching that level, up from 10.5% a year earlier, according to data collected by Edmunds.com Inc., a provider of data on the automotive industry. The share of auto owners paying that much was just 6.7% in the fourth quarter of 2020. Used-car prices have been softening over the past few months, and banks are warning of trouble ahead in auto loans — a potential wave of missed loan payments, followed by repossessions — should consumers owe more than their cars are worth. In the meantime, auto debt continues to climb, and the average new-car price has soared to a record of almost $50,000. Outstanding U.S. auto loans rose to $1.52 trillion in the third quarter of 2022, up from $1.44 trillion a year earlier, while remaining slightly lower than student loan debt and far below mortgage debt, which totaled almost $11.7 trillion, according to the Federal Reserve Bank of New York. Read more. 

Medical Credit Cards Cause Financial Pain for Struggling Patients, Senators Say​​​

Credit cards offered by banks including Wells Fargo & Co. and Synchrony Financial intended to cover expensive health care services may be causing unnecessary financial pain for consumers, said a group of U.S. senators, who cited potentially deceptive promotions, Bloomberg News reported. Struggling patients are “lured” in by deferred-interest offers that allow the lenders to profit off of consumers dealing with high health care costs, Sens. Elizabeth Warren and Edward Markey, both Democrats from Massachusetts, said in a letter to Wells Fargo and Synchrony. Sen. Bernie Sanders, an independent from Vermont, along with Democrats Chris Murphy of Connecticut and Sherrod Brown of Ohio, also signed the letter requesting information from the lenders by Jan. 12. “Patients — often under duress because of concerns about their medical care — are being pushed into and then locked into medical credit cards despite the availability of alternative payment options that might be more beneficial and offer lower interest rates,” the lawmakers said in the letter. Read more. 

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. Read more.

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