O'Brien Law Firm, LLC - Bankruptcy

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Consumer debt is creeping up on many households

A cautionary tale is being given to consumers after some in the financial world are looking backward to 2008. Those in Mississippi and elsewhere in the country may want to pay heed to the warning.

During the housing and financial crisis of 2008 and the subsequent recession many not only had a larger housing debt than practical, but consumer debt was also higher than ideal. With the recession, nearly 10 percent of credit cards had at least one missed payment.

But while the recession was ongoing, nearly one half of consumers with credit cards were making an effort to pay down their credit card debt. Either by force or by choice, American consumers became more frugal. Better times often lead people to return to bad habits. Some feel Americans are returning to bad credit habits. The beginning of 2018 showed that consumer debt has reached an all time high.Though credit cards are a part of this debt, the new household debt focuses more on vehicle and student loans. Payments on each of these debts have an effect on the household budget. The fear isn’t so much the present ability to pay as most are meeting obligations.

The fear is that should a downturn in the economy take place, Americans have not left themselves enough of a cushion to weather a storm. A re-evaluation of spending habits as they apply to consumer debt is warranted. Cutting back on spending by 10 percent, avoiding revolving debt for nonessential items and always making more than the minimum payment are some suggestions.

An interruption of household income, even briefly, can have a substantial effect on household finances. In some cases, the situation may not be recoverable without assistance. In these instances, a consultation with an experienced bankruptcy attorney may open up options the debtor has not considered.