Debts owed by consumers in Texas and across the U.S. are expected to hit $4 trillion by the end of 2018, but the chief economist from LendingTree says it's not a reason to worry. While total consumer debt is a big number, he said, the economy is more stable and income is also increasing. Through September 2018, American consumer debt totaled $3.93 trillion, $1 trillion of which was from credit cards. The other $2.93 trillion was from things like auto loans and student loans.
According to LendingTree, holiday shopping in 2018 is likely to increase total consumer debt by 5 percent at least, or $600 million in new debt. Delinquency rates are below average and individual incomes have been rising faster than debts, says the economist. Consumer deposits and real estate values have also increased more than debt. Specifically, deposits have outpaced debt by $2.5 trillion and home equity has increased by almost $10 trillion in the past 10 years.
Interest rates, though, are expected to increase, which would make borrowed money more expensive. Credit card annual percentage rates have already risen by more than 3 percent since 2016 to an average of 16.6 percent. Rising APRs can make it harder for consumers to make their credit card payments, as 57 percent of people in the U.S. have $1,000 or less in savings.
People in Texas who are struggling to make payments might have options to reduce or eliminate debts. A lawyer who practices bankruptcy law might be able to help by analyzing the client's finances and attempting to negotiate with creditors. Legal counsel could help the client complete pre-bankruptcy counseling or draft and file a petition to begin a bankruptcy action. People who file for bankruptcy may be able to pay off their debt while still keeping their important assets.