Americans Are Currently Late On More Than $600 Billion In Bills

Americans Are Currently Late On More Than $600 Billion In Bills

If you are in debt, you are not alone. America is a nation that was literally built on debt, and whose citizens continue to rely on debt to improve their lives. The most recent data on debt shows American citizens are $13.15 trillion in debt, and that over $600 billion of that debt is delinquent.

Debt has been a part of our country’s fabric from the start. It was Alexander Hamilton’s idea to bind the former colonies, now states, to the new nation they created after the American Revolution by having the states’ war debt transferred to the fledgling federal government. And bankruptcy laws were some of the first laws passed by Congress.

After the Revolutionary period, debt became an important tool for our nation’s growth. It was hard to purchase property or start a business without going into debt. The same remains true today. Few people can make large purchases or chart a new course for their life without taking on debt.

The Federal Reserve Bank of New York’s Center for Microeconomic Data keeps a close eye on consumer debt and uses it as an indicator of how well the nation’s economy is doing. The latest data goes through the end of the 2017 calendar year.

It reveals, “Aggregate household debt balances increased in the fourth quarter of 2017, for the 14th consecutive quarter, and are now $473 billion higher than the previous (2008Q3) peak of $12.68 trillion. As of December 31, 2017, total household indebtedness was $13.15 trillion, a $193 billion (1.5%) increase from the third quarter of 2017. Overall household debt is now 17.9% above the 2013Q2 trough.”

This means that consumers are taking on debt at pre-recession levels. This is a good thing because it shows that consumers are hopeful about the future, and that banks are willing to lend people money again.

The New York Fed also breaks the debt out into different categories: mortgage debt, home equity lines of credit, student loan debt, auto loan debt, and credit card debt. Another thing the Fed does is look at the amount of debt that is delinquent.

“As of December 31, 4.7% of outstanding debt was in some stage of delinquency. Of the $619 billion of debt that is delinquent, $406 billion is seriously delinquent (at least 90 days late or “severely derogatory”).” This just goes to show once again, that if you have debt you are struggling to pay off, you are not alone.

And you don’t need to face the consequences alone if you fall too far behind on your debt. Our firm helps people and businesses take advantage of the bankruptcy laws, helping prove that debt, bankruptcy, and the recovery process are all perfectly normal.

Is the Milwaukee Area a Hotspot for Bankruptcies?

Milwaukee Area Still A Hot Spot For Bankruptcies

The number of bankruptcies filed across the country continues to decline, but in the Milwaukee area, a lot of families and businesses are still in distress.

Thanks to the Great Recession, more bankruptcies were filed in 2010 than in any other year. Since that year, the number of bankruptcies filed each year have declined, including in 2017. The latest data from the Administrative Office of the Courts reveals 789,020 cases were filed in 2017, compared with 794,960 in the previous year. This number of bankruptcy filings is the lowest for any calendar year since 2006, and the seventh consecutive calendar year that filings have fallen. However, this is a decline of just 0.7 percent from 2016, the smallest year over year decline since the 2010 peak.

The tables below provide a snapshot comparison of 2017 and the previous few years, and a breakdown of filings by Chapter by year. Remember, Chapter 7 is a “clean-slate” bankruptcy for individuals, families, and businesses, where debts are wiped away. Chapter 11 gives businesses the opportunity to restructure their businesses, while Chapter 12 is for farmers. Chapter 13 is a repayment plan bankruptcy for individuals and families that allows many filers to get caught up on their bills over a period of 3 to 5 years.

BUSINESS AND NON-BUSINESS FILINGS,
YEARS ENDING
DECEMBER 31, 2013-2017
Year Business Non-business Total
2017 23,157 765,863 789,020
2016 24,114 770,846 794,960
2015 24,735 819,760 844,495
2014 26,983 909,812 936,795
2013 33,212 1,038,720 1,071,932

 

TOTAL BANKRUPTCY FILINGS BY CHAPTER
YEARS ENDING
DECEMBER 31, 2013-2017
Year Chapter
  7 11 12 13
2017 486,347 7,442 501 294,637
2016 490,365 7,292 461 296,655
2015 535,047 7,241 407 301,705
2014 619,069 7,234 361 310,061
2013 728,833 8,980 395 333,626

Personal bankruptcies continue to outpace business bankruptcies, and there are still more Chapter 7 cases than any other type of case despite the fact that Congress attempted to push people toward Chapter 13 the last time they made changes to the bankruptcy code.

Although the number of bankruptcies are falling across the country, there are still a disproportionately large number of cases being filed in the Milwaukee area.

The table below summarizes the data on bankruptcies in the Milwaukee area and statewide in 2017 by chapter.

TOTAL BANKRUPTCY FILINGS IN THE MILWAUKEE AREA
FOR THE YEAR ENDING

DECEMBER 31, 2017 BY CHAPTER

County Chapter Total
  7 11 12 13
Milwaukee 3,935 3 0 2,646 6,584
Ozaukee 109 1 0 48 158
Racine 447 1 0 265 713
Sheboygan 204 0 0 46 250
Waukesha 508 2 1 334 845
Statewide 12,041 37 45 5,006 17,129

As you can see, almost half of the bankruptcies filed in Wisconsin are filed in the Milwaukee area. Our area is just not recovering as quickly from the Great Recession as the rest of the state and the country as a whole. This is frustrating, but it should also be viewed as a sign to people in the area that are struggling with financial issues that they are not alone – our entire region is struggling.