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U.S. consumer debt reaches all-time high

Families in South Carolina and around the country now owe more money to banks and credit card companies than ever before. A report released on May 17 by the Federal Reserve Bank of New York put total U.S. household debt at $12.73 trillion at the end of the first quarter of 2017. The previous high was $12.68 trillion, which was reached at the outset of the 2008 financial crisis.

The spiraling consumer debt figures were played down by a FRBNY research officer who said that investors had no cause for alarm. While he conceded that debt levels were rising, he pointed out that underwriting standards are far stricter today than they were in 2008. Banks have become reluctant to lend to individuals with poor credit histories, and older Americans, who are seen as less risky by lenders, now hold 22.5 percent of all loans.

While mortgage balances and credit card debt have fallen in recent years according to the FRBNY data, automobile loans have soared by 44 percent since the subprime mortgage crisis. Americans now owe $1.17 trillion on car and truck loans. Student loan debt has also increased, and the figures suggest that more than 10 percent of student loans are at least 90 days overdue.

Individuals and families who carry large amounts of debt are vulnerable to unexpected setbacks like injuries, illnesses or layoffs, and debt collectors are rarely sympathetic when bills are past due. Attorneys with experience in this area could explain the advantages and disadvantages of the various forms of debt relief available to those in unmanageable financial situations. Attorneys may also dispel the many myths surrounding personal bankruptcy and explain how filing a Chapter 7 or Chapter 13 petition prevents creditors from garnishing paychecks and puts an immediate halt to harassing telephone calls from bill collectors.

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The Huggins Law Firm, PA

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