American household debt surpasses financial crisis peak

Many Florida residents struggle with overwhelming debt, and figures released by the Federal Reserve Bank of New York on May 17 suggest that Americans now owe more to credit card companies and banks than they did at the outset of the 2008 recession. Total U.S. household debt peaked at $12.68 trillion in the months following the 2008 financial crisis, but Americans now owe a worrying $12.73 trillion according to the report.

Fears of another banking crisis run deep, and a research officer at the FRBNY acted quickly to calm markets and play down the contents of the report. He said that the household debt figures were not something for investors to be particularly concerned about, and he pointed out that banks have tightened their lending practices considerably since 2008. Lenders generally consider older Americans to be less risky, and the percentage of loans held by individuals aged 60 or older has increased from 16 percent in 2008 to 22.5 percent today.

However, there are signs that debt may be reaching unsustainable levels. Automobile financing is an area where consumers with sub-par credit can still obtain a loan, and the amount Americans owe on car and truck installment plans has increased by 44 percent to $1.17 trillion since 2008. Student loan debt is also a worry, and the data reveals that almost 11 percent of the $1.3 trillion owed on student loans is currently at least 90 days past due.

The anxiety caused by carrying large amounts of debt can strain relationships and rob individuals of many of life’s simple pleasures, but there are ways to escape unmanageable financial situations. The nation’s bankruptcy laws were written to give Americans the opportunity to start again, and lawyers with debt relief experience could explain the differences between Chapter 7 and Chapter 13 bankruptcies and how pursuing either of these options puts a stop to collection efforts and harassment from bill collectors.