With consumer credit almost back to pre-recession levels, many analysts are predicting a surging consumer bankruptcy rate for 2018. Bankruptcy filings are historically tied to the level of consumer debt; when debt becomes too high, payments for households become unsustainable, and defaults begin. That, in turn, leads to the rise in bankruptcy filings. We saw this trend in 2007 when revolving debt and mortgage payments became too much for people to bear, and the housing market collapsed.
Understanding the American Financial Climate
This past year, consumer credit has been rising. Outstanding revolving credit (i.e., credit cards) increased almost 10 percent in October alone. Non-revolving credit (i.e., student loans and auto loans) rose at over a 5 percent annual rate. Overall, household debt totals almost $13 trillion in the third quarter. Analysts note that if the increase in debt is due to lack of income, then the tipping point for many consumer bankruptcies may occur in 2018. There are also a handful of unknown factors which may accelerate the movement toward bankruptcy, such as tax reform, natural disasters, and loss of medical health insurance.
Affordable Bankruptcy Attorneys
At Half Price Lawyers, we take pride in guiding individuals and families through the process of deciding whether filing for bankruptcy is the best possible solution to get your life and finances back on track. When you contact our office, speak with one of our attorneys for sound, legal advice. The consultation is free, and we are now offering $0 down should you chose to file for Bankruptcy.
We wish you the best!