The number of households that are unable to keep up with their debt has skyrocketed in recent years. In fact, the percentage of consumer debt that is more than 120 days past-due has doubled in the past 10 years. On June 30, the Federal Reserve Bank of New York released a quarterly report indicating a positive shift. Household delinquency rates dropped during the last quarter. It was also announced that total consumer debt has declined steadily for the past seven quarters.
Total consumer debt and the household delinquency rate are often affected by the number of bankruptcy discharges granted in a quarter. These numbers reflect how well or poorly consumers are keeping up with payments on debt such as home mortgages, credit card debt and other loans. This type of debt is can be discharged in Chapter 7 or Chapter 13 Bankruptcy. This is why an increase in bankruptcy discharges often leads to a drop in total consumer debt and the household delinquency rates.
The Federal Reserve Bank of New York also announced new numbers for the percentage of mortgage debt that is 90+ days late by state. Florida has historically had the highest percentage of delinquent mortgage debt. During the past quarter, Nevada surpassed Florida. Loan modifications and foreclosures may have contributed to the drop in past-due mortgages in Florida.
Chapter 7 or Chapter 13 bankruptcy can provide relief from debt in Florida. However, individuals should carefully consider the benefits and risks of filing for bankruptcy. Anyone who is worried credit card debt should speak with an experienced bankruptcy attorney.
Source: Catherine Rampell “Checking In on Consumer Credit Defaults” Aug 18 2010