What Role Does Mortgage Debt Play in Consumer Debt?

When consumer protection advocates and debt experts are looking at types of consumer debt, where does mortgage debt come into play? What, if any, is the link between mortgage debt and the likelihood of filing for consumer bankruptcy? A recent article in M Report discusses the role that mortgages and housing more generally play in consumer debt. In short, the article suggests that mortgage debt tends to be treated differently by consumers than other types of debt, and in many cases, it is not a hindrance to consumers. The following is some additional information from that article.

Mortgage Debt is Not Typically Counted as Consumer Debt
One of the first things to know, according to the article, is that mortgage debt is not usually counted as consumer debt when analyzing whether amounts of debt are likely to lead to financial trouble. Indeed, as the article clarifies, “mortgage debt specifically is not counted as consumer debt” in most contexts. While many consumers do list mortgage debt along with other consumer debt, even consumers with mortgages tend to think of the debt differently. For example, consumers who are surveyed often include mortgage debt in the category of consumer debt, yet they think about that mortgage debt differently than other types of debt.

A large number of consumers with mortgage debt do not see that debt as something to be concerned about. Rather, many of those consumers describe the mortgage debt as “contributing to their financial future.” Much differently, however, consumers with credit card debt and/or student loan debt do worry about having the debt burden. What happens when consumers with credit card, student loan, and medical debt also have mortgage debt?

How Other Types of Debt can Affect Repayment of Mortgage Debt
Even when consumers have a significant amount of credit card debt, student loan debt, and other types of debt in addition to a mortgage, they worry about the non-mortgage debt in a way that they do not worry about the mortgage debt. Yet having a mortgage on top of other forms of debt can make it more difficult for those consumers to repay their mortgages and, ultimately, to deal with risk of foreclosure or personal bankruptcy.

When non-mortgage consumer debt is high, that consumer may be unable to repay the debt. According to the article, nearly 90% of Americans currently have credit card debt and/or medical debt, and 80% of them have more than $1,000 in outstanding credit card or medical debt. The highest percentage of consumers cite medical debt as the top reason for debt (about 24% of those carrying non-mortgage debt). Student loans account for the highest amount of debt for more than 15% of the Americans who reported having more than $1,000 in debt.

A large percentage of American consumers report that they “feel burdened by their debt.” That is true for about 60% of debtors. However, only about 12% of Americans with debt reported that they felt burdened by a mortgage.

Contact an Oak Park Consumer Protection Lawyer
If you have questions about consumer debt or bankruptcy, an experienced Oak Park consumer protection attorney at the Emerson Law Firm can help. Contact us today for more information.



See Related Blog Posts:

Student Loan Debt and Consumer Bankruptcy: How a New Startup Plans to Help

10 Things You Should Know About Consumer Bankruptcy





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