Total 2016 U.S. personal bankruptcy filings are positioned to fall for a sixth consecutive year, according to a special report by Fitch Ratings.
Fitch projects personal bankruptcies to decline by roughly 6%-8%, with stable unemployment levels, sustained consumer discipline and continued price growth in the housing sector driving the decline. ‘The labor market remains steady, consumer confidence is up and gas prices figure to stay low for the foreseeable future, which should help keep personal bankruptcy filings trending lower,’ said Director Herman Poon.
Lower initial jobless claims and continued improvement in unemployment drove further the decline in consumer filings, falling 10.2% year over year in 2015. While consumers continued to borrow last year thanks to higher consumer confidence levels, overall macro conditions have generally supported the lower trend.
The contraction in personal bankruptcy filings helped generate positive improvement in Asset Backed Securities (ASB) collateral performance in 2015, with credit card delinquencies and chargeoffs hovering at or near record lows for much of the year. Despite a marginal increase, prime auto loan ABS losses remained well below historical levels. Subprime auto loan ABS asset performance, however, showed much volatility last year.