American consumers now have a total debt balance of $12.84 trillion according to a report published by the Federal Reserve of New York. The report covered the second quarter of 2017, and it represented a $552 billion increase from this time last year. Higher levels of mortgage, auto and credit card debt were cited as factors for the overall increase. It was noted that there was a jump in credit card delinquency rates.
The overall debt delinquency rate was 4.8 percent, which was unchanged from the previous quarter. A loosening in lending standards has resulted in individuals with lower credit scores being given access to credit cards. According to some, this is the reason why credit card delinquency rates are starting to increase. This may also be important as it may also be a signal of distress in the overall consumer debt market.
Filing for Chapter 13 bankruptcy may have a variety of benefits for those struggling to pay their debts. It may make it possible to reorganize their debts into more manageable payments that are made over three or five years. It may also make it possible to protect property such as a house or car from creditor collection actions. Debtors themselves may also be spared from harassing creditor phone calls or letters.
In some cases, a debtor may be able to work out new payment terms with a secured creditor such as rolling over missed payments back into a loan. However, it is important to point out that a creditor is under no obligation to renegotiate loan terms, and it could still repossess a property after the bankruptcy case is resolved.