It’s no surprise that Americans are struggling with debt, but recent reports have put some numbers to just how severe the debt crisis has become.
As Business Insider reported, new data reveals that the average debt an American consumer holds is $104,215. That figure includes mortgages, auto loans, credit cards, student loans, personal loans, and other types of debt. It’s nearly double the national average salary, which is $59,428 – and it’s an overwhelming number for too many debtors.
Breaking down Americans’ consumer debt
According to Business Insider, most Americans’ largest debt is mortgage debt; the average balance is $244,498. Home equity lines of credit (HELOC) are the second largest, with an average balance of $42,139. Student loan debt weighs in with an average balance of $38,787, followed by auto loans at $23,792. Finally, the average credit card balance is $6,501.
Debt tends to peak around middle age. Currently, Gen Xers (age 43 to 57) have the highest average debt, closely followed by Millennials (age 27 to 42). In addition, people with higher credit scores tend to have more total debt – most likely because they are more able to qualify for mortgages, which have much higher balances than other types of debt.
Business Insider also broke down average debt by state. Here in South Carolina, we’re actually doing a bit better than the national average, with an average debt of $93,167 per person. However, it’s worth noting that Business Insider’s analysis excludes medical debt, and South Carolina regularly ranks among the states with the highest rates of medical debt.
For some, bankruptcy is a way out of overwhelming debt
With the high amount of debt that Americans have, bankruptcy filings have likewise increased in recent years. As of the end of the first quarter this year, bankruptcy filings were up 16% over the previous 12-month period, with over 447,000 non-business bankruptcies. Chapter 7 remains more common than Chapter 13, with 271,825 Chapter 7 filings to 187,539 Chapter 13 filings in that 12-month period.
For individuals struggling with overwhelming debt, bankruptcy offers a fresh start. Chapter 7 bankruptcy allows you to get most types of debt discharged (eliminated), giving you the opportunity to rebuild your finances and your future. Chapter 13 bankruptcy reorganizes debt and gives you a single affordable monthly payment; keep up with those payments throughout the repayment period, and the rest of your debts will normally be discharged afterward.
Whether it’s credit card debt, medical debt, personal loans, auto loans, or other types of debt, if you can’t keep up with your payments and don’t know what to do next, we would be honored to listen to your story and explain your options. Contact us today to schedule your free consultation with Benjamin R. Matthews & Associates.