News
American Bankruptcy Institute 2/4/25 newsletter reports Direct Lenders Face Rising Default Risks, Analysis Firm KBRA Says
Direct lenders face rising default risks in 2025, with 5% of middle-market borrowers struggling under heavy debt and worsening business performance, according to a quarterly report by credit rating analysis firm KBRA, WSJ Pro Bankruptcy reported. The prolonged high-interest-rate environment has put pressure on certain sectors, based on KBRA’s analysis of 1,903 private-equity-owned middle-market companies in the U.S. and Europe that hold a collective $922 billion in debt. Housing, construction, discretionary retail and physician practices are among the industries most susceptible to inflation and elevated borrowing costs, said John Sage, one of the lead authors of the report. Specifically, highly…
California Bill—if passed by California state legislature and if signed into law by Governor Newsom–Would Provide a Year of Mortgage Relief to Fire Victims
[as reported in the Credit & Collection e-newsletter of 1/29/25] The proposed legislation which has been introduced in the California Legislature, after the Palisades and Eaton fires of January 2025, if passed by the California Legislature, and signed into law by the Governor, would block foreclosures and allow homeowners who’ve suffered financially due to the L.A. fires to freeze payments without penalty. Several major lenders have already reached agreement with Gov. Gavin Newsom to provide voluntary relief. If it becomes CA law, this CA state legislation that would make it easier for victims of the Los Angeles County fires to…
California Emergency Declaration: Impact on Collection Operations
Credit & Collection e-newsletter of 1/9/25 at 11:59 pm suggests credit collection agencies may want to make accommodations for borrowers, such as payment accommodations, such as deferrals or extensions, and loan modifications to the rate or term, due to state of emergency declared in Los Angeles county due to wildfire damage, but it appears giving borrowers accommodations is not mandatory: Gov. Gavin Newsom declared a state of emergency as wildfires rage. ACA members should have plans in place to modify consumer outreach strategies and monitor areas with disaster declarations. The Los Angeles-area wildfires, expected to cause $50 billion in damages…
US Credit Card Defaults Surge To $46B In First 9 Months Of 2024
Credit & Collection e-newsletter of 1/3/25 says that US credit card defaults have reportedly surged to $46 billion in the first 9 months of 2024, which is said to be the highest since 2010. Credit card defaults are now up more than 50% year-over-year. And defaults of seriously delinquent credit card loan balances have more than doubled during the past 2 years. Notably, the bottom-income consumers were hit the hardest “due to years of elevated inflation and interest rates.” In addition to this, the savings rate of the bottom third is now 0%, according to the latest update from Moody’s.…
Reuters Bankruptcy Trends to Watch in 2025
American Bankruptcy Institute reports that the same industries that made increased bankruptcy filings in 2024 year, can be expected to keep filing bankruptcy at increased rates in 2025 year: Rising interest rates, inflation, higher labor costs, and post-pandemic shifts in consumer spending were common factors cited by companies that filed for bankruptcy in 2024, Reuters reported. Business bankruptcy filings rose 33.5 percent in the 12 months ending Sept. 30, 2024, according to statistics from the Administrative Office of the U.S. Courts. Bankruptcy experts expect those factors to continue to drive companies over the brink next year. Several particularly hard-hit industries…
The Bank Behind the Fintech Revolution Stumbles After Customer Funds Go Missing
American Bankruptcy Anstitute (“ABI”) 12/27/24 e-newsletter reports as much as 96 million dollars may have gone missing from customer accounts at Evolve Bank, a bank holding customer funds of many “fintech” firms: The Bank Behind the Fintech Revolution Stumbles After Customer Funds Go Missing Scot Lenoir turned a sleepy farming bank in Arkansas, Evolve bank, into one of Silicon Valley’s top financial partners. Now it is in crisis mode, and some clients have started pulling funds after a business partner failed and thousands of customers couldn’t access their money, the Wall Street Journal reported. Evolve Bank at its peak managed…
Soaring Costs for Home Insurance and Property Taxes
American Bankruptcy Institute (“ABI”) 12/26/24 e-newletter reports that soaring costs for home insurance and property taxes are busting homeowners’ budgets, according to a Wall Street Journal analysis. Insurers have pushed big rate increases because of losses from natural disasters and rising costs to repair homes. Surging home values in recent years, meanwhile, have lifted property taxes for many homeowners. These ballooning expenses are rewriting the math of homeownership. In September, 32% of the average single-family mortgage payment went to property taxes and home insurance, the highest rate ever for data going back to 2014, according to Intercontinental Exchange. The analysis…
The American Bankruptcy Institute e-newsletter of 10/24/24 reports that the so Called “Sandwich Generation” Is Stressed Out, Low on Money and Short on Time:
More Americans shoulder a double load of caring for their children and at least one adult, often a parent. The “sandwich generation” has grown to at least 11 million in the U.S., according to one estimate, and shifts in demographics, costs and work are making it a longer and tougher slog, the Wall Street Journal reported. People are having children later, and they are living longer, often with care-intensive conditions such as dementia. That means many are taking care of elderly parents when their own kids are still young and require more intensive parenting — and for longer stretches of…
France Is Experiencing an Unprecedented Budgetary Crisis
Credit and Collection 10/14/24 e-newsletter reports that the Country of France has such serious financial problems that France may have to file bankruptcy, which would push the whole European Union of countries into financial turmoil: France is experiencing an unprecedented budgetary crisis. The deficit is at risk of exceeding 6% in 2024. France now risks bankruptcy, which would drag the entire eurozone into the abyss. The French government is facing a troubling financial situation. The deficit could exceed 6% in 2024, forcing the executive to plan a budgetary effort of 60 billion euros for 2025. Despite this drastic measure, public…
Credit Card Debt in the U.S. Hits an All-Time High
The Credit & Collection e-Newsletter of 9/9/24 reports that Credit Card Debt in the U.S. hits an all-time high of $930 Billion. Banks and other credit card issuers will fail, if a substantial part of that $930 billion in credit card debt defaults on paying that credit card debt.