PERSONAL FINANCE/JOHN NINFO: How long will bankruptcy filings be down?
I found this press release by the American Bankruptcy Institute very interesting: “Total commercial chapter 11 filings in July 2021 decreased 62 percent from July 2020, while total commercial filings decreased 39 percent from the previous year. The 32,387 total bankruptcy filings in July 2021 were down 24 percent from the 42,865 total filings in July 2020. Total consumer filings decreased 23 percent in July 2021 as well. 'Extended stabilization efforts by the federal government, lender forbearance and continued low interest rates have kept struggling families and businesses afloat during the pandemic,’ said ABI Executive Director Amy Quackenboss."
It will be interesting to see the filing rates six to 12 months out, or whenever it is that we get back to the “new normal.”
On a different subject, the Wall Street Journal estimated that the federal government has lost approximately $4.8 billion a month from the freeze on the accrual of student loan debt interest. From April 2020 through the current extension period, Jan. 31, 2022, that could be as much as $105.6 billion. As I like to remind everyone, a billion is 1,000 million.
Continuing on the subject of student loan debt, and the continued discussions by the Biden Administration surrounding forgiving a portion of student borrowers outstanding debt, it should be noted that Parent Plus Loans are not proposed to be eligible for such forgiveness. These are loans that parents take out directly for their children’s education. That said, it should be noted that these loans can otherwise be eligible for income repayment plans and public service forgiveness plans for qualifying individuals. Parents who I have spoken with who have taken out those loans don’t seem to be bothered by that. After all, they say, I decided to invest in my child’s future with my eyes wide open, and no matter what, I am responsible for those loans. That’s an interesting take on personal financial responsibility!
Following up on student loan forgiveness, I think that I have to stop reading the letters to the editor in the Wall Street Journal. It seems to me that the majority of personal finance related letters are about the possible forgiveness of student loan debt. By the way, I read them because my brother-in-law has a subscription and saves them for me. Perhaps I need to find a friend who has a subscription to The New York Times. A recent set of letters in the Wall Street Journal focused on several of the issues that we have often discussed, that could help turn around the seemingly perpetual unaffordable student loan debt cycle. They are, first, the need for colleges and universities to be more accountable for students who graduate with degrees and student loan debt that will make the repayment of those loans within a reasonable time, or ever, likely. Second, the need to provide students and families with effective tools and resources for them to make informed choices about affordability, including what programs at what colleges for that particular student could end in a viable career, given possible family financial contributions, scholarships, grants, student at school and summer potential work income, and keeping living expenses down, just to name a few.
The primary thrust of several of the letters was that colleges and universities sit on top of hundreds of billions of dollars of endowments, with “no skin in the game,” for 92% of the outstanding student loan debt in this country — so what incentive do they have to, for example, to make sure that students are in programs that could insure that they can repay and loans in a reasonable period of time?
On a different subject, people like me who are not on any social media platforms, and don’t even text, are especially sensitive to the many media reports on how much peoples’ opinions, actions, and knowledge of current events are affected by social media. That is why a recent report by creditcards.com, as reported by bankrate.com, definitely got my attention. “As social media continues to become even more integrated into our lives, a new report reveals that it also has a major influence on our spending, especially millennials (ages 25-40). 72% of millennials say that social media impacts their buying decisions, followed by 66% of Gen Zers (ages 18-24), 49% of Gen Xers (ages 41-56), and 45% of baby boomers (ages 57-75). As far as what kind of posts millennials are influenced by in their spending, 38% cited posts from friends and family, 31% said advertisements, and 20% reported being swayed by posts from celebrities or influencers.”
On a different subject, according to reports in this newspaper and other New York media, health insurance premiums for many of us, are increasing, as they usually do. It looks like mine will be increasing about 4.5%. It’s just another budget item to stay on top of in this time of inflation — which we hope is, in fact, temporary, although it seems like there is some increasing doubt about that. That said, with the increase in grocery prices, in order to help keep my budget in line, I have been finding myself buying more store brand items, while still carefully checking unit prices — how much am I paying per ounce, etc. I don’t know about you, but I rarely find there to be a significant quality difference, and I know that retailers are continually trying to minimize any quality difference, because store brands can be very profitable for them.
Finally, giving that inflation is with us for a while, and supply chains are still a problem, it’s the time to look forward to the anticipated expenses in your future, and be realistic about whether they will also be increasing. For example, I am expecting and planning for this winter’s holiday expenses, for gifts, entertaining, celebrating, and possible travel, to be higher. If you started that suggested Holiday Account, formally or informally, after last year’s holidays, you might want to increase the monthly contribution!
John Ninfo is a retired bankruptcy judge and the founder of the National CARE Financial Literacy Program. Find his previous weekly columns at http://www.mpnnow.com/search?text=Ninfo.