PeerIQ, a data house for online lending platforms, reports that consumer bankruptcy filings fell sharply last year. PeerIQ notes that filings under chapter 7 were down 22%, while those under chapter 13 were down 46%.
Certain government programs have helped to mitigate bankruptcies as well as programs by private lenders that have lessened some of the worse impact of the COVID-19 health crisis when it comes to debt. While the consumer may be weathering the storm fairly well, commercial bankruptcy filings increased 29%, according to the report.
“Throughout Covid, originators and investors alike have been worried about significant downside risks to consumer loan performance. The pendulum actually swung to the other side, as stimulus payments combined with conservative underwriting led to record growth in deposits significantly outpacing loan growth, causing a scramble for whole loans, as we highlighted here.“
PeerIQ notes that they are seeing consumer loans are continuing to perform well across the spectrum of borrowers – meanwhile charge off rates are “depressed” and prepayment rates are climbing higher.