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Household debt hits record levels

An increasing number of people in Kentucky are carrying record amounts of debt, raising concerns that there may be an uptick in the number of bankruptcies that might be filed. The previous peak was at the start of the recession in the fall of 2008.

According to the Federal Reserve Bank of New York, U.S. household debt reached $12.73 trillion during the first three months of 2017. During the fall of 2008, the household debt level was as high as $12.68 trillion. One difference between now and then is that today's borrowers appear to be more able to repay their debts. Interest rates are also lower than they were in 2008. The percentage of the economy that is made up of household debt is 67 percent. By contrast, the percentage of the economy that was made up of household debt in 2008 was 85 percent.

Troubling areas include student loans. Many young people owe thousands of dollars in student loans, making them less able to pay their other debts. They may also be unable to qualify for mortgages because of their heavy debt loads.

People who are overwhelmed by high levels of debt may be able to get financial relief by filing for bankruptcy. An experienced attorney might discuss the options that might work the best for individual clients. With Chapter 7 bankruptcy, debtors may obtain discharges of most of their unsecured debts other than student loans, child support, taxes and other such obligations in a few months. Chapter 13 bankruptcy may give people a longer period of time to catch up on certain categories of debts through repayment plans that last three or five years, but a steady and dependable source of income is necessary.

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