Consumers in Virginia and across the U.S. have been increasing their debt over the last few years, according to a new analysis by LendingTree. The loan comparison website said that consumer debt has been rising since 2012 and is expected to hit an all-time high of $4 trillion before 2019.
LendingTree examined data from the Federal Reserve on credit cards, auto loans, student loans and other types of nonmortgage debts. It found that U.S consumers now owe over 26 percent of their yearly income to such debts, compared to 22 percent in 2010. Auto loans and credit card balances are the types of debts increasing the fastest, with each jumping more than 7 percent each year. Meanwhile, consumer credit has been climbing between 5 and 6 percent each year, and housing debt has been increasing by just over 2 percent annually.
However, all is not lost. Americans are currently using around 10 percent of their monthly income to make debt payments, while credit card delinquency rates are at just 2.4 percent. According to financial experts, this is because the level of debt is still fairly manageable for most people. To make sure debts stay under control, consumers are encouraged to keep track of where their money is going and be mindful of debts with higher interest rates, such as credit cards. Meanwhile, the Federal Reserve is expected to raise interest rates multiple times this year, so consumers may benefit by refinancing some of their loans. Finally, it is recommended that consumers living beyond their means cut out unnecessary spending and try to pay down their debts.
Individuals who are having difficulty managing their debts could obtain a fresh financial start by filing for Chapter 13 bankruptcy. An attorney could explain the process and help prepare the proposed repayment plan.
Source: CNBC, "Consumer debt is set to reach $4 trillion by the end of 2018", Lorie Konish, May 21, 2018