Credit card debt rises alongside delinquencies

Household debt has been quietly increasing in the years since the 2009 recession, and the amount collectively owed in one category has passed a record set in 2008. Credit card debt has again become a serious problem for many Florida consumers. Unfortunately, it is a problem that often goes unaddressed until the consumer becomes a statistic in the rising rate of delinquencies.

In April 2008, the Federal Reserve calculated the total revolving debt held by consumers at $1.02 trillion. During the recession and its aftermath, that total fell as lenders tightened standards and consumers practiced more fiscal discipline. However, loosening standards and other factors have contributed to a total of $1.021 trillion in the second quarter of 2017. Credit card debt makes up about 75 percent of this total.

With growth seen in other categories as well, from auto to student loans, there is concern that many individuals are only a minor setback away from defaulting on outstanding unsecured debt. This can, of course, have serious consequences, such as putting a pause on retirement savings, sinking credit scores or collections lawsuits. Fiscal discipline with debt counseling or a Chapter 13 repayment plan could help protect consumers from some of the worst outcomes.

Consumer bankruptcy can offer several advantages to suffering the burden of crushing debt over years. It can protect a family’s most important assets from creditors. The Chapter 13 process may also reduce interest payments, stop debt-related lawsuits and result in the discharge of some unsecured debt. Consumers could benefit from the assistance of an experienced lawyer before their financial situation goes from bad to worse.