The Federal Reserve Bank of New York reports that U.S. consumers ended 2019 with record-high debt. In the 4th quarter of last year, household debt climbed $193 billion, to a total of $14.15 trillion. Mortgage debt accounted for about $120 billion of the increase and 68% of the total. The remainder was attributable to:
- Student loan debt – 11%
- Auto loan debt – 9%
- Credit card debt – 6%
- Home equity lines of credit – 3%
The remaining 3% was a mix of other types of debt. Keep in mind that these numbers were calculated before our nation was impacted by the Coronavirus. I am certain that household debt figures are now significantly higher.
Across all household credit types, more than 200 million new accounts were opened in 2019.
Delinquent Debt in the U.S.
If you’re one of the many Americans who is struggling with debt and feels like everyone around you is doing better, think again. As the year closed, 4.7% of outstanding household debt was delinquent. That’s more than $665 billion in past-due debt. About ⅔ of that debt, or $444 billion, is at least 90 days in arrears, including more than 11% of student loan debt.
The percentage of other types of debt 90+ days delinquent:
- Credit card debt – about 8% of the total outstanding balance
- Auto loan debt – about 5% of the total outstanding balance
- Home equity revolving credit – about 1% of the total outstanding balance
- Mortgage debt – about 1% of the total outstanding balance
During the last quarter of 2019, 71,000 consumer credit reports showed new foreclosure actions and about 202,000 new bankruptcy filings.
Of course, delinquency rates vary by demographics. For instance, the share of the total debt balance broke out approximately equally among those in the age brackets 30-39, 40-49 and 50-59, with the oldest and youngest consumers carrying a smaller share. And, what type of debt made up the largest portion of this burden shifts with age, too. For younger consumers, student loan debt makes up a larger chunk of the whole–nearly 40% for those aged 18-29. In every other age group, mortgage debt makes up the majority of debt.
Debt burdens and delinquencies also vary by state. A study published earlier in 2019 put both Alabama and Mississippi among the ten worst states for debt in the United States. In fact, the south didn’t fare well overall. Georgia, Texas, South Carolina, Kentucky, Florida and Louisiana were also ranked among the 15 states with the biggest debt problems.
Consumer Debt in Alabama
Alabama came in at # 8 on Fabric’s list of states with the most serious debt problems. While the state’s mortgage delinquency rate was on par with the rest of the country, 90+ day delinquency rates for other types of debt were higher, including 6.2% of auto loan debt. The study also cited a student loan delinquency rate of 15.2%, a poverty rate of 15%, and an average credit score about 40 points below the national average in ranking Alabama as a debt-troubled state.
Still, Mississippi fared far worse in the rankings.
Mississippi Has the Biggest Debt Problem in the Country
By the metrics applied in the Fabric study, Mississippi is the worst off of all U.S. states when it comes to debt. Here are the state’s stats:
- Auto loan delinquency – 6.6%
- Credit card delinquency – 8.4%
- Mortgage delinquency – 1.7%
- Student loan delinquency – 18.3%
Each of these rates is higher than the national average, and some are considerably higher. Notably, mortgage delinquency in Mississippi is about 70% higher than the national average. Student loan delinquency also far outstrips the national average.
According to the report, the state also posted an 18.3% poverty rate.
The Bottom Line on Delinquent Debt
The aggregate household debt in America is so large that it’s hard for most people to get their minds around what that number might mean, and the amount of delinquent debt isn’t far behind. As a country, we’re struggling with debt, and that means a great many individuals and families are struggling with debt. If you’re part of that group, beating yourself up isn’t the answer. Neither is juggling minimum payments from month to month and hoping that your situation improves on its own.
Too many people suffer from financial stress for years before taking solid steps to reclaim their financial security. Sometimes, it’s because they’re too optimistic about how a coming raise or the spring tax refund will impact the budget. Sometimes, it’s because they’re too overwhelmed to look at the big picture and work out a solution. Sometimes, embarrassment or feeling like a failure keeps people in debt from seeking help.
Whatever the reason for inaction, it’s not a good one. People who feel like they’re drowning in debt find solutions and rebuild every day, and you could be one of them. At Bond & Botes, we’ve been helping people get out of debt for decades, and we know that reliable information is the first step toward taking charge of your finances. That is why we offer free consultations to help you get started. In fact, in response to the current pandemic situation we all face, we now offer complete debt relief over the phone or by video from the comfort and safety of your home or office.
If you’re ready to let go of overwhelming debt, call 877-581-3396 or fill out the contact form on this page right now.
Brad Botes is a principal of each of the Bond & Botes Law Offices throughout Alabama, Mississippi, and Tennessee. He holds a Bachelor of Science from the University of North Alabama, and a Juris Doctorate from Cumberland School of Law at Samford University. He and his team of bankruptcy lawyers have spent over 30 years guiding people through financial challenges. Read his full bio here.