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Household debt continues to rise in the U.S.

A recent report by the Federal Reserve Bank of New York indicates that the third quarter of 2018 saw increases in practically all types of borrowing, making it the 17th consecutive quarter that America’s debt load has increased.

Household debt rose yet again to $13.51 trillion, most of which was mortgage debt at $9.14 trillion. The report, which was based on data from Equifax, also revealed that:

  • Car loan debt jumped from $809 billion in 2008 to $1.27 trillion
  • Student loan debt doubled from $611 billion in 2008 to $1.44 trillion

For the most part, people appear to be maintaining their debt payments, but there has been a slight increase in serious credit card delinquencies. In the second quarter of 2018, 7.88% of credit card balances were over 90 days delinquent: in the third quarter, that number climbed to 7.94%.

Auto loan delinquency has also gone up, with the number of accounts at least 90 days in arrears increasing from 4.17% to 4.27%. Younger people had a more difficult time keeping current with their car loan payments: the rate of delinquency among the 18-29 age group jumped from 4.13% to 4.18%.

The mortgage debt outlook was slightly better: serious mortgage delinquencies dropped from 1.11% to 1.06%.

With debt continuing to climb and serious delinquencies slowly but surely increasing in number, personal bankruptcies may eventually follow suit. In 2016, there were 781,123 cases filed. The following year, the number dropped slightly at 767,721. Although 2018 statistics are not available yet, bankruptcy continues to present indebted Americans with a clean financial slate (Chapter 7) or allow them to repay their debts at a much more affordable rate (Chapter 13).

Although bankruptcy can provide you with debt relief, how do you know if it’s the solution for you? Here are three potential indicators:

You’re being sued by creditors or debt collectors

If you’ve been unable to make payments on your credit card bills and other obligations, then you may be sued by the creditors or debt collectors who have purchased rights to the debt. Fighting these lawsuits can be expensive and, if you lose, leave you deeper in debt than before. If you file for personal bankruptcy, then the automatic stay protects you from further collection actions.

Your wages are being garnished

If a creditor or debt collector wins a lawsuit against you, then they may obtain an order to garnish your wages. The bankruptcy automatic stay will also stop all wage garnishments except those ordered for alimony or child support.

You’re being foreclosed on

Thousands of homeowners struggle to maintain their mortgage payments. If you’ve gone so far in arrears that your lender has announced its intention to foreclose, then Chapter 13 bankruptcy can help you repay any outstanding balance and keep your home.

If bankruptcy appears to be a possibility, then consult a New York bankruptcy attorney to discuss your options. Jayson Lutzky handles personal bankruptcy cases in the Southern and Eastern Districts of New York. Set up a free in-office consultation with Mr. Lutzky at his Bronx office. You’ll get the right advice and assistance in putting that debt behind you and moving forward. Call 718-329-9500 or visit www.MyNewYorkCityLawyer.com to learn more.

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