The economy in the United States has been rough lately, and it appears that people are turning to debt more and more often to try to make things work. Specifically, reports in the last few months show that credit card debt reached $1 trillion. This is the highest that it has ever been in the U.S.
A lot of this debt came very quickly. In the second quarter of 2023, there was an increase in credit card debt of about $45 billion. That is what finally pushed the total over the trillion-dollar mark. In fact, studies looked all the way back to 2019 and found that there has been a massive increase in debt starting all the way back then. The recent change is just a continuation of this process, as debt levels get worse for many people.
Will this make it harder to collect?
This massive increase in personal debt could cause a spiderweb of related issues.
People are going to have to make decisions about what they can and cannot pay. With credit card debt increasing, does this mean that consumers are going to be more likely to fail to pay auto loans? Are they going to start missing mortgage payments or not paying the rent?
It’s not just that these individuals do not want to pay what they owe, but simply that they owe more than they may be able to afford. A lot of people are living paycheck to paycheck, as their credit card debt slowly creeps upward. But they may eventually reach a point where they have to start missing some of their obligations, and those lenders are going to have a harder time collecting.
This is a complex issue that has been building for years. When it is difficult for lenders to collect on what they are owed, they need to know exactly what legal steps they can take.