TEXT-Fitch:Belt-tightening continues for U.S. consumer;bankruptcies to drop again
Jan 23 - U.S. consumers are likely to continue being prudent paying down their debts, with personal bankruptcy filings likely to drop again in 2013, according to Fitch Ratings in a new report.
Personal bankruptcies fell by over 14% last year, exceeding Fitch's forecast of 11%. This marked the second annual decline since the Bankruptcy Abuse Prevention and Consumer Protection Act was passed in 2005. Fitch is projecting bankruptcies to fall another 6-7% in 2013.
This comes as the amount of consumer credit continues to rise. Total consumer credit reached nearly $3 trillion in November 2012, up 6% over 2011. Of that number, nearly $2 trillion came from non-revolving credit sources such as auto and student loans.
'Though consumers are taking out a record number of car and student loans, they continue to do a commendable job of paying that debt off,' said Managing Director Michael Dean. 'Momentum in both the housing and equity markets should also help drive personal bankruptcies lower.'
This continues to bode well for ABS collateral performance, which has been stellar for both credit card and auto ABS. That said, credit card delinquencies and chargeoffs will begin inching up toward historical norms in the coming months. The same historical leveling off will also hold true for auto loans. Nonetheless, Fitch expects asset performance to remain strong. Fitch's rating outlook for core consumer ABS sectors will remain stable to positive.
'Personal Bankruptcy Filings to Decline Again' is available at 'www.fitchratings.com or by clicking on the below link.
Link to Fitch Ratings' Report: Personal Bankruptcy Filing to Decline Again