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For some, income continues flat and bankruptcy looms ahead

Lower-income Americans in Florida and nationwide are entering a financial downturn due to their inability to keep up with mounting consumer debt. Undramatic earnings growth has stymied their ability to meet steadily growing prices and debt. They are financing more of their spending by taking out new credit and loans. Creditors are squirming also as they view the specter of consumers taking on increasingly unaffordable debt loads. The question on the minds of many nervous creditors is to what extent the bankruptcy boom of earlier years will step in to mediate the expected problems.

The percentage of household debt that is overdue has risen for two consecutive quarters. The current administration is raising the rates to borrow, making the crunch come full circle. In effect, those with lower incomes who have been willing to incur consumer debt for survival, which is of course pretty much a losing proposition.

Credit card lenders are vocalizing their fears of impending bad loans and are setting up reserves to cover the losses ahead. Even vendors of consumer products are showing slow sales revenues in the United States. The gains in household debt since 2012 are from student loans, auto loans and credit cards.

Now that the Federal Reserve is hiking rates, the conditioning of consumers to keep borrowing to close the gap caused by lower incomes is ending. This spells a segment of the population being pushed to the breaking point financially. In such times, the federal bankruptcy remedy has served the country and its consumers well. If an individual or married couple are qualified for relief, great amounts of debt can be wiped out quickly and permanently. The best way for consumers to know what to do in such circumstances is to take advantage of the free consultations offered by consumer bankruptcy attorneys here in Florida and nationwide.

Source: The Boston Globe, "Trump's America faces a $13 trillion consumer debt hangover", Matt Scully, June 6, 2017

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