Credit card chargeoffs and bankruptcies will always be synonymous, and August 2011 was no exception. August consumer bankruptcies fell 11% from the year ago period with an overall consumer filing total having dropped to 113,432, from the August 2010 figure of 127,028 consumer filings. This correlates positively with credit card defaults ticking up eight bps from July to sit at 6.41%. Ending a four-month free-fall, current chargeoff levels are 35% lower since the year ago period and nearing the 6% historical average.
So far, each month of 2011 has recorded fewer bankruptcies than in 2010 (knock on wood). These findings, according to the American Bankruptcy Institute (ABI), also shows August 2011 filings indicated a less than a 1% decrease from the July 2011 consumer bankruptcy total of 113,470 filings while the percentage of chapter 13 filings for August was 30% for a 1% increase from July. Chargeoffs improved for the third consecutive month, while breaking below the 9% mark for the first time in nearly three years, having declined 61 bps from the previous month to 8.84% and are 25% lower year over year. The 60+ day delinquency rate dropped again for the 19th straight month by another 31 basis points (bps) to settle at 2.15%. Consumer spending is clearly more frugal, which will indefinitely keep us from seeing another 2007(CardFlash Library 2011-09-13, 2011-09-06).