Interest Rate Increase Could Mean More Debt For Some

Grand Law Firm

According to at least one nonprofit credit counseling service, the number of people seeking help with debt has increased. Some Louisiana consumers could be among those who have mounting debt. Unfortunately, Americans have a pattern of feeling good when the economy is strong and loading up on debt that they then struggle to pay off during leaner times.

In 2017, spending on credit cards increased more than 9 percent to reach a total of $3.5 trillion. In the last quarter of 2017, household debt climbed at the highest rate in a decade.

Along with that spending, credit card delinquencies are on the rise. Federal Reserve rates are also increasing, although fixed rate debts, like student loans and mortgages, are unlikely to be affected. The adjustable-rate mortgages that were so widespread during the financial crisis 10 years ago and caused so many problems are much rarer and usually held by those who can handle the fluctuation in rate.

However, it could be a different story for credit card holders. Their rates might go up, and this could cause issues over the long term. In many cases, people's incomes are not increasing to match their expenses.

Some people may be overwhelmed by debt. They may be considering bankruptcy, but they might be concerned about losing assets including a home. In fact, a bankruptcy filing puts a stop to all creditor actions including lawsuits and foreclosures. Furthermore, with a Chapter 13 bankruptcy filing, a debtor may be able to keep a home. There are a variety of eligibility requirements that an attorney can outline.

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