The Numbers Don’t Lie: Automotive Lead Opportunities Available for Dealerships Targeting Open and Closed Bankruptcies

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The American Bankruptcy Institute reported 107,918 non-commercial Chapter 7 and Chapter 13 bankruptcy filings for January and February 2017. U.S. filings increased 5 percent year-over-year in January. February consumer filings declined 10 percent. March statistics might just be a pivotal moment for 2017 filings.

ABI Executive Director Samuel J. Gerdano predicts, “More financially distressed consumers and businesses may reach for the lifeline of bankruptcy as interest rates increase.” The US Federal Reserve voted for an interest rate hike in response to an improved US economy. “The average rates in 2016 have been in the low 4s (new cars) and high 4s (used cars). In 2017, I expect the average rates will rise to 4.5 percent on new cars and 5.2 percent on used cars,” shared Greg McBride chief financial analyst at Bankrate.  Click to see current rates.

Bankruptcy Breakdown By State

The breakdown of cumulative filings per state showcases available opportunities for dealerships. Alaska and Vermont ranked the lowest with just under 100 opportunities available. Alabama, New Jersey, New York, Ohio, Tennessee and Texas were a few of states that fell in the middle (3,000 up to 5,000 opportunities). California, Illinois, Georgia and Florida ranked the highest (7,000 up to 10,000 opportunities). Click to see full list.

2017 CUMULATIVE FILINGS PER STATE (JAN-FEB)
States Filings
Alabama 4,256
Alaska 72
California 10,401
Florida 6,572
Georgia 7,229
Illinois 7,792
New Jersey 3,994
New York 4,574
Ohio 5,024
Tennessee 5,487
Texas 5,371
Vermont 74           Click to see full list.

*Data courtesy of American Bankruptcy Institute.

The numbers don’t lie. For those dealers with the proper lenders and programs in place, this is a niche market that offers plenty of room for sales opportunities. It is common misconception that once an individual files for bankruptcy no bank will offer automotive financing for seven to ten years. This is false. People with bankruptcies are in desperate need of rebuilding their credit and purchasing a vehicle is the best way to start rehabilitation. In most cases, they are willing to travel further to find a dealership that will work with them. Dealers targeting individuals throughout every stage of the bankruptcy process have a leg up on competitors that only market to freshly discharged individuals.

INVEST IN BANKRUPTCY LEADS