ABA Chief Economist James Chessen explained that, “The number one driver of delinquencies is job loss…..When people lose their jobs, they can’t pay their bills. Delinquencies won’t improve until companies start hiring again and we see a significant economic turnaround.” The unemployment rate is currently at a 26-year high of 9.5 percent. Even when not cutting jobs, many employers are still cutting hours, cutting wage rates, or forcing furloughs.
The announcement doesn’t really surprise most of us. Job losses equal less money for consumers to pay their bills. As a result, many consumers are taking the usual measures to finish riding out the recession. The Federal Reserve announced that more consumers are spending less and saving more. According to the Feds, the savings rate has increased to 6.9 in May. Most of us are doing what we can to make it through the recession, as reflected by the savings rate. In addition, the administration has promoted several programs to help people keep their homes, improve practices in the credit card industry, and increase jobs. Unfortunately, most of these measures are projects in the works. They are designed to “take effect” later, but the problems that many consumers are experiencing is now.
Bankruptcy may not be the right option for you right now. You may be able to get through the remainder of the recession by simply spending less and paying your debts down. The important thing to remember though is not to jeopardize your home or car. Many people utilized home equity lines of credit and are now struggling to keep their homes because of the increase in delinquencies. Before making drastic decisions that could affect your financial security, talk to a qualified bankruptcy attorney about the options available to you.