There are a lot of different indicators out there that economists use to try to assess the general state of the economy. The housing market is one that we hear about often, and most Florida readers know that things are still tough with many mortgages still underwater. Credit card debt is another indicator of the general economic climate, and reports have recently indicated that the amount of overall credit card debt has declined.

However, looking beyond the basic number reveals that it may actually be increasing and that consumers are still struggling to make ends meet. The Federal Reserve reports data each month that shows how much consumer debt is still out there, and recently that report indicated that debt levels were declining. Unfortunately the numbers reported by the Federal Reserve leave out how much debt banks have written off each month, and that number can sometimes be just as large as the overall debt amount.

Write offs don’t let consumers off the hook, though, but rather shift the debt that is hard to collect to a different balance sheet for the bank. Consumers may still be culpable for that debt for anywhere from 3 to 15 years, depending on state laws. This means that while reported debt may be going down, consumers are still burdened with payments and collections actions just as though it had not been written off.

For many Florida consumers, this large personal debt burden means that families are making difficult choices to keep their homes and cars and avoid collections. At the same time, the loss of a job or the decreasing value of a home may make it difficult or impossible to manage the debt in the long run. This is why some Florida families turn to a bankruptcy filing to reorganize their debt and create a court-supervised plan to pay it off.

Source: The Daily Beast, “American Consumers Aren’t Really Paying Down Credit-Card Debt,” Odysseas Papadimitriou, Oct. 21, 2012.