Data from the Federal Reserve Bank shows some promising figures regarding American debt: Household debt fell $74 billion in the third quarter of 2012 and mortgage debt fell $120 billion. In fact, mortgage debt is at its lowest level since 2006 and foreclosure numbers continue to drop.
Furthermore, economists have noted an increase in new debt, including auto loans and credit cards. Student loan debt has also risen — 4.6 percent in the third quarter. The increase in debt may show that consumers are more confident in the economy, but it may also reflect the job market — people feel they should invest in education in order to find jobs.
Unfortunately, the decision to go back to school carries some risks. Many students currently find themselves facing significant debt and nowhere to go with that debt. Unlike other forms of debt, student loans are not dischargeable in bankruptcy.
Moving forward
The third quarter economic figures show some progress. Yet, among the positive numbers, there are still people facing foreclosure (banks foreclosed upon 242,000 loans in Q3) and a large percentage of the debt reduction in the last four years was caused by foreclosures.
While Americans as a whole appear to be doing better, individuals and families are still struggling to pay their bills. If you find yourself overwhelmed with debt, you may be able to get a fresh financial start through Chapter 7 or Chapter 13 bankruptcy. Learn more by visiting our pages on bankruptcy.
Source: The Washington Post, “Americans continued paring household debt in third quarter,” Danielle Douglas, Nov. 27, 2012