U.S. Consumer Credit at Risk of Default Exceeds $33 Billion, According to Kaulkin Ginsberg Consumer Finance Report

Rockville, MD – The amount of U.S. consumer credit at risk of default jumped to $33.02 billion in March – representing a nearly 35 percent increase from the $23.52 billion estimated in February, according to Kaulkin Ginsberg, a leading strategic advisor in the accounts receivable management (ARM) industry.

“The amount of consumer credit at risk of default increased rapidly in the month of March as deteriorating economic factors pushed consumer bankruptcy filings up sharply during the month,” said Dimitri Michaud, Kaulkin Ginsberg Consumer Finance Analyst. “The March ’09 total of $33.02 billion in consumer credit at risk is an increase of nearly 140 percent from March of last year.”

This sharp rise in potential default was due to increases in both consumer bankruptcy filings and in adult unemployment levels from the prior month, factors that are weighted in Kaulkin Ginsberg’s calculations.

Although many factors play a role in what eventually leads to default, employment and bankruptcy rates show a decided cause and effect. Unemployment and “underemployment” numbers have a direct consequence on consumer liquidity, but they also represent a gauge of potential bankruptcy. In turn, bankruptcy filings have a direct impact the recovery of outstanding credit.

Kaulkin Ginsberg publishes two proprietary indices to track consumer liquidity. The Consumer Default Risk Index (CDRI) provides a monthly barometer of how bankruptcy and unemployment levels are likely to impact debt collection and is used to calculate the dollar amount of consumer credit at risk.  The Credit Card Performance Index (CCPI) is a monthly index tracking the performance of securitized credit card receivables for the ten largest credit card master trusts in the United States.

Findings are published in the Kaulkin Ginsberg Consumer Finance Report. For more information, visit: www.insidearm.com/go/research/consumer-finance-report.

About Kaulkin Ginsberg
Kaulkin Ginsberg is the leading boardroom-level advisor to the Accounts Receivable Management Industry (ARM). Since 1991, credit and collection professionals, owners, and investors worldwide have relied on the company for the insight, access and information needed to make well-informed decisions. Consulting and M&A services cover almost every stage of a company’s lifecycle, from strategic analysis to growth and exit strategies. Kaulkin Ginsberg’s media division – publisher of insideARM.com – is the leader in providing timely news and perspective on the recovery of debt in all industries. For more information, visit www.kaulkin.com.