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Study: Americans grow deeper in debt in post recession recovery

A new report shows that one out of five American households owe more on unsecured debt than they have in savings. The debt-load that many Ohio residents carry can make it difficult to keep up with the bills as they come due.

The recent study suggests that more American households have no savings to cover unexpected financial setbacks. The research, conducted in our neighbor to the north at the University of Michigan says that 23.4 percent of American households have no savings at all. That is a significant increase from 2009, when 18.5 percent of Americans reported a lack of savings.

The research includes a variety of unsecured debts, including student debt, which is typically not a debt that can be discharged in bankruptcy. However, many unsecured debts, such as credit card debt and medical debt, can generally be discharged in a chapter 7 bankruptcy.

Secured debts, such as a home mortgage or car payment, may be discharged but, depending on the circumstances, the owner may elect to continue paying on the obligation and retain the home or car. An experienced Cincinnati bankruptcy lawyer can help an Ohio resident to understand how the bankruptcy code works in specific circumstances.

The recent Michigan research seems to indicate that, although many economists say that the country is in recovery, many Americans continue to struggle under high debt loads with little or no savings. One of the c-authors of the research says that, "The people who were down and out, without much money, in the recession have ended up staying there or even worse."

Not all of the data from the research is negative. The economists say that 14.6 percent of Americans have more than $50,000 in savings accounts or other forms of liquid investments. That percentage is an increase from the 11.8 percent of households with significant savings reported in 2009. Nearly half of the households responding to the survey have no unsecured debt. That percentage remains unchanged from 2009.

The discrepancies between the current number of households with no savings versus significant savings, and the percentage of households carrying high debt loads coincides with an increase in the number of Americans hanging on by a thread. The research shows that 10 percent of households are carrying more than $30,000 in unsecured debt. That is an increase from the 8.5 percent of households reporting that amount of outstanding bills in 2009.

Source: USA Today, "Recession added debt, drained families' savings," Christine Dugas, May 14, 2012

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