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ABI Executive Director Samuel J. Gerdano on why fewer people are filing for bankruptcy, even in a recession.
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After climbing steadily for more than five years consumer bankruptcies are beginning to -- -- at a rapid pace stand your -- out of the American Bankruptcy Institute joins us now.
And Sam why are we seeing a falling consumer bankruptcies as the economy continues to struggle it seems -- cute as the economy gets worse bankruptcies will get worse.
Well it's part of the same story you've been talking about.
With respect to consumers that deleveraging.
-- reducing their spending for an economy that runs on consumer spending when.
Consumer slowdown that that spending it it does improve their household balance sheet so there less in danger of needing to seek bankruptcy protection that's the good news.
The bad news is that our economy is stuck in neutral and that's where we are now.
-- -- all your research.
And you found I -- you see these commercials from Bonnie is seen and is well bankruptcy isn't an end it's a new beginning.
It's almost as if personal bankruptcy.
Is no longer a frowned upon the way it was in previous years certainly previous generations have you found that as well the people just find it easier.
To file for bankruptcy of that of the ads to them.
Well by and large we are long past the same kind of stigma associated with personal bankruptcy from my prior generation as you back identified.
And for some people.
Depending on their circumstances bankruptcy is the right solution.
To get out from under there repressive.
Unsecured debt and to get a fresh financial start that's why a -- exist.
And it's been in a part of our lives since the eighteen -- -- bankruptcy -- with us for a long time and for some people it is the right solution.
Stand this whole trend that we're looking at is quite complicated in the sense that on a big picture bases in here really want fewer people to be in fewer Americans to start.
Claiming bankruptcy but.
With the reversal of that trend in the end of fewer number of bankruptcies being have filed.
At the same time we're seeing then.
-- and they're not spending they're saving and that has a ripple effect on consumer spending explained backpack that part of this situation for us.
Well -- -- where an economy that runs on consumer spending as you've identified.
Many times more than two thirds the economy.
GDP is based on consumer spending so we need.
Consumers to to spend -- -- crash head and to help drive -- that sustain the US economy the earlier report about auto sales as.
Indicative people don't have the confidence in their own economic.
Future to make those kinds purchases to help the economy expand.
At the same time when they when they reduce their spending.
They also improve their own household balance sheets so they are less vulnerable.
When -- adverse economic event occurs which which pushes them over the edge needing to seek bankruptcy really.
Thanks -- injured on have the American Bankruptcy Institute thanks filling all that stuff out for us could be with -- exam.
Well -- apple lawyer is getting pretty -- and I'll look at the new products.
Hitting store shelves next right now can't find --
