Not since July 2011 have consumers spent more money on non-revolving debt than they did in February of this year. Even as revolving debt around the country -- including here in New Jersey -- is dropping, the number of loans for items such as automobiles and student loans is on the rise. This new pattern of spending could lead to more people filing for bankruptcy.
Concerns about the economy since the recession have made consumers hesitant to spend money on revolving debt such as credit cards. There is speculation that people are waiting for increases in job opportunities and wages could be the reason. The way that millions of Americans look at spending changed during the recession.
Data indicates that in Jan. 2015, revolving debt dropped by $1 billion. In February, the decrease in revolving debt grew to $3.7 billion. On the other hand, non-revolving debt grew in January by $11.8 billion, and it increased by another $19.2 billion in February. Where many personal financial planners would applaud the reduction in revolving debt, the dramatic increase in other types of debt could be disconcerting.
Here in New Jersey, residents continue to struggle to recover financially from events out of their control such as the housing market and unemployment, among other issues. People can easily become overwhelmed by debt under these circumstances. Harassing phone calls from creditors, garnishments and threats of lawsuits can make the situation even more stressful. Filing for bankruptcy could provide some much needed relief from the helplessness and stress that often accompany financial problems. The U.S. Bankruptcy Code offers the opportunity for consumers to obtain a fresh start financially.
Source: Bloomberg Business, "Consumer Credit in U.S. Increases on Jump in Non-Revolving Debt", April 7, 2015