Consumer Debt Falls, but Debt Consolidation Need Remains |

With the current U.S. economy, news is rarely all good or all bad. That’s the case when it comes to consumer debt, the need for debt consolidation and the number of personal bankruptcy filings hitting the country. It’s a bit of an odd mix, but consumer debt is filing at the same time that such negatives as housing foreclosures and bankruptcy filings are either at record highs or nearing them. This means that despite the fact that consumers are working hard to pay down their credit card debt, many of them will still need to take out debt consolidation loans.

Good News on Consumer Debt

A report by Bloomberg said that the ratio of household debt obligations compared to household disposable income fell in the first quarter of 2010 to its lowest level in nearly a decade. The data, compiled by the U.S. Federal Reserve Board, showed that payments on mortgage loans, home rentals, auto leases, consumer debt, homeowners insurance and property taxes accounted for an average of 17.4 percent of consumers’ household disposable income in the first quarter. That’s an improvement. According to the Bloomberg story, this ratio stood at more than 18 percent from 2005 all the way through the second quarter of 2009. The ratio hit its high point in the first three months of 2008, when it stood at 18.9 percent.

Bankruptcies, Foreclosures on the Rise

At the same time, though, some more negative numbers were slowing the economy. Bankruptcy filings and housing foreclosures are both high. This shows that while many consumers are able to cut down on their debts, many others are still struggling financially. This isn’t surprising; with unemployment near 10 percent across the country, many people are still struggling to find jobs. Their annual incomes, then, are either flat or falling. These are the people who might need to work with a debt consolidation company to get their spiraling debt levels under control.

Debt Consolidation Option

Working with a debt consolidation company is a good choice for consumers whose unpaid debts are keeping them up at night. It’s a good choice, too, for those who are tired of the phone calls from collection agencies. Consumers, though, should do some debt consolidation reviews before working with any company. They should research these companies to make sure that they don’t have an inordinate number of complaints filed against them. They should also ask for their interest rates and fees in writing before signing anything. It’s the only way to prevent working with a debt consolidation company that overcharges.