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Household Debt at Historic Levels

Mikal J. Kruger Author Photo
Mikal Krueger
Aug 22, 2022
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According to an August 2, 2022 report by the Federal Reserve Bank of New York, US household debt exceeded $16 trillion for the first time in history during the 2nd quarter of 2022.

Although the overall rate of household credit default remains historically low, confirmed by the nationwide historically low rate of bankruptcy filings, revolving credit card debt ballooned by over $46 billion during the second quarter. Americans collectively have over $890 billion in outstanding revolving credit card debt, which is closing in on the $930 billion all-time record set in the final quarter of 2019 – the last quarter prior to the COVID-19 pandemic.

One of the more concerning aspects is that the rate of increase in credit card debt was the largest in over 20 years. As households have to contend with not only rising prices on gas and groceries, but also rising interest rates, many appear to be turning to credit cards to make up the difference. Americans opened an astonishing 230 million new credit cards in the 2nd quarter, a number last reached in 2008. The US population is approximately 332 million; on a per capita basis, nearly 70% of Americans opened a new credit card in the 2nd quarter.

The rate of default for lower-income and subprime borrowers is increasing noticeably according to an article in The Wall Street Journal.  Historically this segment is the first to default, as was the case with the great recession and the dot-com bubble. Household credit defaults typically occur in phases – the first monthly bills most consumers stop paying are the maxed out credit cards, followed by unsecured installment/personal loans. Next up are housing costs (rent or mortgages) as it takes months for an eviction and over a year to foreclose on a home. The last default is usually vehicle loans since repossession can occur as soon as the first missed payment and vehicles are taken without any advance notice to the borrower.

Another trend is the rapid pace of rent increases occurring nationwide. Rochester had an astonishing 45% increase in rent rates since March 2020.  The foreclosure and eviction moratoriums enacted during the pandemic greatly distorted both markets. For landlords, there was no ability to evict non-paying tenants and move in paying tenants. For mortgage servicers, there was no ability to sell homes at foreclosure and recoup their losses. The lack of homes coming up for sale due to foreclosure over the last 2 years has significantly limited the supply stock, although numbers are increasing. Nationwide, about 270,500 homes are in foreclosure as of August 2022, which is an increase of 25% from 2021.

Most of the pandemic stimulus has run its course, so an increase in struggling households is to be expected. Whether or not this is simply a return to pre-pandemic default rates or something more concerning will become clear over the next several quarters. One thing that has always been clear – the sooner a financial difficulty is addressed, the better the outcome. Whether you are an individual consumer or a business owner/operator, the lawyers at MCCM have guided clients through difficult financial times with the expertise that comes with decades of proven results.     

If you would like to schedule a consultation to talk about bankruptcy or debt relief, please feel free to contact Mikal Krueger at or give him a call at 585-512-3546.

MCCM is has three of the most preeminent attorneys in Western New York for bankruptcy mattersLucien A. Morin, II, Douglas J. Lustig and Mikal J. Kruger are available for consultation for personal or business related debt relief.  Contact them today at 585-546-2500 to schedule a consultation.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

This publication is intended as an information source for clients, prospective clients, and colleagues and constitutes attorney advertising. The content should not be considered legal advice and readers should not act upon information in this publication without individualized professional counsel.

About MCCM

McConville Considine Cooman & Morin, P.C. is a full-service law firm based in Rochester, New York, providing high-quality legal services to businesses and individuals since 1979.  With over a dozen attorneys and a full paralegal support staff, the firm is well-positioned to right-size services tailored to each client. We are large enough to provide expertise in a broad range of practice areas, yet small enough to devote prompt, personal attention to our clients.

We represent a diverse range of clients located throughout New York State and New England.  They include individuals, numerous manufacturing and service industry businesses, local governments, and health care professionals, provider groups, facilities and associations. We also serve as local counsel to out-of-state clients and their attorneys who have litigation pending in Western New York courts.  For more information, please contact us at 585.546.2500.