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US credit card and consumer debt rises in fourth quarter

Economists say that consumer confidence in the economic recovery is on the upswing. The Federal Reserve recently released numbers that track consumer debt, and those numbers show that Americans are taking on more debt. The Fed indicates that credit card debt jumped 4.5 percent in the fourth quarter of 2011, while overall consumer credit, including automobile loans, rose by 7.5 percent in the fourth quarter.

Economists, however, also say that wages have remained stagnant for years-suggesting that the rise in consumer confidence and any gains in economic growth may be primarily based upon new debt. The nation's economy only grew at an annual rate of 2.8 percent during the final quarter of 2011. Sources say that much of that growth can be attributed to the jump in credit card spending.

At the same time that consumers took on more debt, banks are reporting that fewer consumers are falling behind on servicing their debt and bank write-offs of consumer debt saw dramatic declines in 2011. At the same time U.S. personal savings saw a drop in 2011.

That is a lot of numbers. However, many economists say that looking at the data as a whole suggests that consumers are using up their savings to service increasing debts. The bottom line, according to the economists, is that the economic recovery may be an unsustainable credit-card based recovery.

Increased consumer debt, combined with lower personal savings, can lead to financial distress for many households. Cincinnati bankruptcy lawyers are aware that many Ohio residents have worked hard to maintain their household budgets during the troubled economy.

National data from the Federal Reserve and banking industries may show overall trends suggesting the national economy is growing or retracting or even possibly sitting stagnant at various times. Those snapshots of an overall trend are less important to many people who are dealing with their own finances.

The truth of the matter is-filing for consumer bankruptcy protection is a personal choice made by an individual, or husband and wife, within an individual household. Ohio residents who are facing foreclosure, wage garnishment, bank account seizures, automobile repossession and a host of other financial setbacks may wish to consider bankruptcy as a viable option to find meaningful debt relief.

Cincinnati area residents suffering under a mountain of debt, or receiving frequent calls from aggressive bill collectors should consider speaking with an experienced bankruptcy attorney to learn how the bankruptcy laws work in providing consumers with a fresh start.

Source: CBS Money Watch, "Consumer debt skyrocketed in 4th quarter," Constantine von Hoffman, Feb. 8, 2012

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