Jakarta, CNBC Indonesia – Bankruptcy filings in the United States (US) will jump by 18% in 2023. Based on data published on Wednesday (3/1/2024), this situation is supported by higher interest rates, tighter lending standards, and continued shutdowns funds in the pandemic era.
According to data from bankruptcy data provider Epiq AACER quoted by Reuters, total bankruptcy filings in the US, which includes commercial and personal bankruptcies, rose to 445,186 last year from 378,390 in 2022.
Commercial Chapter 11 business reorganization filings jumped 72% to 6,569 from 3,819 a year earlier, the report said. Consumer applications rose 18% to 419.55 from 356,911 in 2022.
In December 2023, total applications fell to 34,447 from 37,860 in November, although the number was up 16% from the previous year.
The number of bankruptcy cases is expected to continue to increase in 2024, although there is still some distance from surpassing the 757,816 bankruptcy cases reported in 2019, the year before the pandemic hit.
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US flags are seen at former US President Donald Trump's 2024 election campaign rally in Waco, Texas, March 25, 2023. – Trump held the rally at the site of the deadly 1993 standoff between an anti-government cult and federal agents. (Photo by SUZANNE CORDEIRO / AFP) (Photo by SUZANNE CORDEIRO/AFP via Getty Images) |
“As anticipated, we see new filings in 2023 picking up momentum compared to 2022 with a large number of commercial filings leading the expected increase and normalization back to pre-pandemic bankruptcy volumes,” said Michael Hunter, vice president of Epiq AACER, as per Reuters.
“We expect the increase in the number of consumer and commercial filers seeking bankruptcy protection to continue in 2024 given the pandemic stimulus runoff, rising costs of funds, higher interest rates, rising delinquency rates, and household debt near historic levels.”
In fact, according to data from the New York Federal Reserve, household debt in the US reached a record high of US$17.3 trillion at the end of the third quarter. Data shows that the level of delinquency is also increasing, but this figure is still below the pre-pandemic figure.
Financial conditions for businesses and households have tightened significantly over the past two years thanks to the Fed's aggressive interest rate increases to control inflation. Mortgage interest rates, for example, in the second half of last year jumped to their highest level since the beginning of the century.
Nonetheless, borrowing costs and overall financial conditions eased during the fourth quarter of 2023 after the Fed signaled it would soon end its rate hike cycle. Last month Fed officials themselves indicated that they expected to lower interest rates this year.
[Gambas:Video CNBC]
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