Consumer Debt Now at Record-High Level

When consumer debt rises, rates of consumer bankruptcy filings frequently will follow — especially when Americans are taking on more debt than their income and assets will allow them to repay. According to a recent report from CNBC, consumer debt has now reached an all-time high, and delinquencies are also rising. As consumer debt and delinquencies go up, foreclosure and bankruptcy rate increases certainly could follow. Our Oak Park consumer protection lawyers want to discuss the data with you and provide you with more information about how bankruptcy can allow you to discharge common types of consumer debt.

New Record High for Consumer Debt Combined with Rise in Delinquencies

Consumer debt has now reached an all-time high, as CNBC reports. Indeed, by the end of 2022, “debt across all categories totaled $16.9 trillion, up about $1.3 trillion from a year ago.” Mortgage debt increased while refinancing rates declined. Mortgage delinquency rates also rose, suggesting that more foreclosures could be in the near future.

In addition, credit card debt rose significantly. Commentators indicate that credit card spending is back to “pre-pandemic levels.” With inflation, more consumers are using credit cards to pay for necessities, which will likely result in defaults due to the inability to repay the debt in full. For many of these consumers, it may soon be time to consider the possibility of Chapter 7 or Chapter 13 bankruptcy, depending upon their individual circumstances.

How Bankruptcy Can Result in the Discharge of Certain Consumer Debts

What can bankruptcy do for you when you are struggling with large amounts of debt? The answer to that question will depend upon the type of consumer bankruptcy filing you are considering. Chapter 7 bankruptcy cases can allow debtors to get a fresh start, receiving a discharge of eligible debts, which means that the debtor will no longer be liable for those debts. In a Chapter 13 bankruptcy case, debtors can reorganize debt to make payments over some time — usually three to five years — and can be eligible for a discharge of the remaining debt at the end of that period. Chapter 13 bankruptcy also comes with the added benefit of being able to stop a foreclosure and catch up on mortgage payments.

What types of debts are dischargeable? Most kinds of consumer debts can be discharged in bankruptcy, including but not limited to the following:

  • Credit card debt;
  • Medical debt;
  • Mortgage loan debt; and
  • Personal loan debt.

Contact an Oak Park Consumer Protection Attorney

Struggling with debt is never easy, and in many cases, consumers consider bankruptcy options. It is important to know that consumer bankruptcy can provide relief and can, in some cases, have additional benefits, like being able to stop a foreclosure while allowing the debtor to remain in their home. If you have any questions about debt or considerations for consumer bankruptcy, one of the experienced consumer protection lawyers in Oak Park at our firm can help you. Contact the Emerson Law Firm to learn more about how our firm can help you with your debt options and to find out more about consumer bankruptcy cases.



See Related Blog Posts:

Checklist for a Chapter 7 Bankruptcy

Learning About Recent Consumer Bankruptcy Trends







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