Household Debt Shrinks – Is It a Sign for Debt Relief?

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Critics argue that the falling indebtedness is largely as a result of defaults rather than repayment. In 2006 to 2008, credit card debts rose significantly and reached their highs in January 2009 before the financial crisis struck and unemployment rate ranged across the US. During this time, defaults began in earnest and it was reported that from 2009, average debt load took a sharp downward trend and bowl-shaped way down below the 2006 levels as at mid 2010.

There have been questions as to why indebtedness declined in 2009 and 2010 and why it plateaued since then. Although debt levels could have fallen as a result of newly frugal Americans paid their credit card balances, there are other factors, which might have contributed to this.

In 2010, credit card companies made a record high write off on seriously delinquent debts in earnest. This aspect lowered the total amount of revolving debts in credit cards. The charge off rate rose to 10.9 in second-quarter of 2010 and when compared to the same period of 2006, there was a representation of more than 300% increase.

A charge off rate is the percentage of dollars, which have been cited as noncollectable and have been written off by issuers. It is expected that the overall consumer borrowing could get back to its long-term norms by late 2013 and this may spark a late 2013 rebound in the aspect of consumer spending.

If Congress and the president are to resolve the contagious fiscal cliff bill issue without creating recession, then things may get better for consumer and this could boost consumer spending that may grow up to 3.5 % by late 2013.

However, for the consumers struggling with debt problems, there is still much to be learned and more so to be done. Practically, it may not be easy to eliminate debts and there are a number of things that need to be checked. However, depending on the kind of debt, whether credit card or mortgage, there are different options that could help borrowers ease their state of indebtedness.

If you are struggling with a credit card debt, you may consider 0% percent transfer card where you transfer your amount to another card with lower interest rates. In addition, if you have multiple loans, you may consider consolidating them in order to have one loan that is easily payable.

Moreover, for mortgage loan borrowers, perhaps refinancing may be an option if you want to get a loan with lower interest rates and extended repayment term. When seeking for debt repayment plans, you should consider the cheapest. Owing to the number of people struggling to repay their debts, a wave of debt management companies have sprung up and this could be detrimental to the borrower.

People are desperate to get assistance in resolving their debt issues but opting for debt management companies that offer paid services may be a trap that could get you deeper into a state of indebtedness. There are free debt counseling companies that may help you come up with viable repayment plans designed to eliminate your debts fast.

The following article was provided by the finance and editorial team with online short term loans and lenders, a leading portal to help consumers find information on loans, credit and debt reduction in 2013.