According to a recent statement by the Federal Reserve Bank of New York, household debt in Tennessee and nationwide continues to be on the decline. In the third quarter of this year, declining mortgage balances outpaced rising student and auto loans.
According to one source, the data might suggest a more long-term approach to debt management by consumers. Specifically, Tennessee households might be paying off their larger sources of debt, and/or limiting their borrowing to limited sources, like paying for post-secondary education or a new motor vehicle.
True, foreclosures continued to occur in the third quarter, with approximately 242,000 Americans losing their homes. However, that number is also a slight reduction from the previous quarter, and economists at the Federal Reserve predict foreclosures are slowly returning to pre-crisis levels.
Yet despite the apparent shift in consumer spending, the record for student loan debt is not perfect. The Obama administration eliminated private lenders from the federally guaranteed student loan program two years ago, as a budgetary measure. As a result, many loans are now made directly by the government. Unfortunately, that process may not involve adequate inquiries into a borrower's ability to repay a proposed student loan, the type of education that is being pursued, or the borrower's projected earnings upon graduation. Perhaps for that reason, delinquencies on student loans are rising, even as credit performance improves in other consumer debt categories.
If consumers are still struggling to manage certain types of debt, a consultation with an experienced bankruptcy attorney might provide some answers. For example, although Tennessee readers may have heard of debt consolidation services, an attorney will be able to review that service to determine whether it will improve your finances, instead of merely shifting your debt to another creditor. An attorney will also be knowledgeable about bankruptcy alternatives. Finally, an attorney can also advise you whether the protections of a Chapter 7 or Chapter 13 bankruptcy filing might be beneficial to your long-term financial planning.
Source: Washington Post, "Americans continued paring household debt in third quarter," Danielle Douglas, Nov. 27, 2012
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