Personal bankruptcy filings in the U.S. totaled a whopping 165,459 in March, reportedly the largest number on record, but so far credit card ABS performance trends have remained stable and are expected to stay that way, according to Fitch Ratings. The spike represents an 8.5% increase over March 2004, but is only 0.2% higher, year-to-date, than last year. The March increase is largely due to the enactment of the Bankruptcy Reform Act, signed by President George W. Bush on April 20.
"The rise in bankruptcy filings will result in a near-term increase in charge-offs for issuers, as they are required to recognize such filings within 90 days of notification," according to Fitch. The rating agency said it maintains its stable outlook for the prime credit card sector and expects stable performance trends with "some seasonal volatility in the short run." In the long-run, credit card ABS performance is expected to benefit as more people are forced to pay off portions of their credit card debt.