U.S. Consumer Debt Up $15. 4 Billion in November
Massive credit card debt may often be a precursor for some people to turn to filing bankruptcy to seek a fresh financial start. With that in mind, recent statistics for U.S. consumer debt, in combination with the collapse of the subprime mortgage sector, a struggling economy and a lack of jobs, could very well mean even more bankruptcy filings in the coming year.
Click Here For Free 2 Minute Evaluation Recent Federal Reserve statistics show that Americans used credit cards and auto loans to add to a record amount of debt this past November. While consumer debt was expected to rise by $8 billion during November, it actually increased $15.4 billion for the month to $2.51 trillion overall. In comparison, credit debt rose $2 billion in October.
What accounted for this rise in consumer debt in November? In addition to this month being the start of the holidays, a variety of factors entered into play, including the collapse of subprime lending and an increase of only 133,000 U.S. jobs in November and December, the lowest such increase in jobs for those two months since 2002.
So what do all of these figures seem to suggest?
Well, with disposable incomes struggling to keep up with inflation, consumers are simply relying on more credit cards and other short-term financing to maintain spending.
In a Bloomberg.com story, economist Chris Rupkey described this situation in which people rely on more credit and thus get in more debt with their personal incomes already lacking as possibly being just the tip of the iceberg.
Filing Bankruptcy in 2008: Some Predictions
While 2007 may have come and gone, we are constantly being reminded of the surge in bankruptcy filings last year.
Bankruptcy filings were up 40% last year as compared to 2006 and if you pick up a paper locally, you are likely to see how your area saw a dramatic increase in bankruptcy filings.
Here are just some of the headlines that Total Bankruptcy has encountered in the last couple of days:
- Bankruptcy filings up 60 percent in Arizona (East Valley Tribune)
- Number of Maine personal bankruptcies grows in 2007 (Foster's Daily Democrat)
- Bankruptcies, Home Losses Up (Kansas.com)
- After drop, bankruptcy filings soar again (Buffalo News)
- Oklahoma bankruptcy filings up but remain below previous levels (AP)
- 6284 Utah bankruptcies last year - a rise of 25% (Deseret News)
- South Florida bankruptcy filings up 68 percent (Sun-Sentinel.com)
- Tri-state area bankruptcy rates rise in 2007 (Dubuque (Iowa) Telegraph Herald)
- Washington bankruptcies rebound here after 2006 dip (Spokane Journal of Business)
As these headlines demonstrate how bankruptcy filings rose in 2007, some have estimated even more filings in 2008.
University of Illinois Law Professor Bob Lawless has predicted 1.19 million bankruptcy filings this year, with a 95% confidence interval of .96 million to 1.43 million filings. Lawless' prediction is based on the assumption that there will not be any dramatic changes affecting filing rates in 2008.
However, with an additional $362 billion in subprime loans expected to reset this year and the possibility of legislation encouraging people to file Chapter 13 bankruptcy, some experts are expecting bankruptcy filings to double in the next year!
