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Delinquencies drop but overwhelming debt is still a possibility

The recent recession has caused many people to reformulate how they think about their relationship to debt. Prior to the recession, consumers in Texas and elsewhere had accumulated large amounts of credit card bills. This caused overwhelming debt, which turned into a sharp rise in delinquencies on credit card accounts. However, after the recession, consumer credit card debt has dropped dramatically for a variety of reasons.

One reason which credit card delinquencies have declined is that banks have made it more difficult for consumers to qualify for a line of credit or a loan. However, some experts believe that as the economy begins to recover, the banks will eventually resume lending in order to appease investors and keep their stock prices high. This will result in a loosening of lending standards, according to some financial experts and economists.

Another reason that delinquencies are down is that banks have aggressively increased their efforts in collecting delinquent debts. Banks increased their collections departments in the last few years and have also worked with consumers to renegotiate their debts owed, which resulted in a decrease in delinquencies. These efforts also made a significant number of loans current.

Lastly, after the recent recession, consumers in Texas and elsewhere have decided to use credit cards less often than in the past. Although this has decreased the number of people in debt to credit card companies, it is still common for many people to find themselves with overwhelming debt. The economic recovery is still sluggish and some experts believe there will be another financial crash in the near future. These factors may make bankruptcy for some people a viable option to get back on their financial feet.

Source: policymic.com, "Credit Card Debt At 18-Year Low: Have We Learned Our Lesson?" Charles Wendel, April 14, 2013

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