What does debt look like during the time of a global pandemic?
Everyday, the world looks to find silver linings in the global pandemic known as Coronavirius or COVID-19. While the world has been in lockdown for most of 2020 with no foreseeable end in sight until a vaccine can be adequately tested and put to good use, the economy continues to stumble and crumble.
The GDP dropped 35.2% in the second quarter of 2020, which set a dubious record. It’s quite obvious that there’s no comparison to any horrific event such as COVID-19 for destroying the U.S. economy. But, because jobs have been lost and people are shuttered at home, the good news is that credit card debt is quickly decreasing.
The Federal Reserve reported in May 2020, that revolving credit card debt in the U.S. has dropped by at least $100 billion since February 2020 and is actually below the $1 trillion threshold. That’s the lowest credit card debt that has been tallied in well over three years. That’s good news for consumers who were previous treading water trying to avoid harassing debt collectors.
Consumer Behavior Changing Dramatically
There are many socio economic reasons for this change during these financially insecure times.
First off, with the closure of so many “non-essential” businesses, consumers are no longer shopping for that which they cannot have. Concerts, museums, bars, restaurants, sporting events, shopping malls and so on no longer have a viable brick-and-mortar option. Thus people are forgoing the day of a casual meal out followed by a leisurely stroll through the mall to find a new pair of shoes or jacket that they probably didn’t need anyway.
And while incomes have subsided for so many millions now living off unemployment, those previously frivolous dollars are now being spent to curtail and cut down the previous debt.
In so doing, Americans are experiencing less threats of a debt lawsuit related to climbing credit card bills.
The Rise in Other Debt Areas
- Medical Debt
- Private Student Loan Debt
While American have shown an aggressive uptick in paying down credit card debt, some other areas of debt are sadly increasing.
By the of 2019, over 137 million Americans were faced with daunting medical debt. That was before the Coronavirus was widely recognized and started to spread. Now as we enter the second half of 2020, medical debt is on the rise as sudden – and often long – hospital stays cripple families trying desperately to stay afloat. Many of whom have lost a regular income.
“Medical debt can quickly sneak up on a family when their sole focus is doing everything possible to keep that family member alive,” explains Chantel Grant, a debt lawsuit specialist and Senior Partner at the GM Law Firm in Boca Raton, Florida. “Medical bills cascade quickly and before you know it, there’s a mountain of insurmountable debt to climb. It’s important to speak with a legal debt advisor to plan a course of action if a loved one gets sick.”
There are ways to fight back against soaring medical debt. Always look over each bill with a microscopic eye. Never fear to question a line item as billing fraud is always a threat in the medical field where procedures that are being billed for were never actually performed.
Beyond actual fraud, the medical system is obviously taxed to its limits during these tragically unusual times. That means errors are bound to occur when it comes to billing. A professional legal service can assist pouring over the minutiae of your bills and act as an intermediary to discuss with the billing companies the nature of each expenses and get detailed information as to what each item means and what the exact costs associated with each listing should be.
In many cases, even if a procedure was performed or a medicine was prescribed, there are often mistakes with the actual cost of that instance. Overbilling within the medical industry is a common “scam” that can be fought. Even if you don’t get total debt resolution in a medical debt lawsuit, you may be able to get that debt greatly reduced.
Private Student Loan Debt
Another disturbing trend is a rise in non revolving credit, which shows its ugly head in things like auto loans and private student loan debt. Those areas actually increased by over $6 billion in May alone.
Out of the total student loan debt, $124.65 billion is for private student loan debt. In fact, other than mortgage debt, student loans beat every other form of debt in the United States including credit card debt.
While many concepts have been floated by Presidential candidates and other politicians to provide for student loan forgiveness or other student debt resolutions during this time of pandemic, nothing has stuck thus far.
Meaning students (and their families by extension) are still on the hook for these loans.
The GM Law Firm recognizes that these forms of debt are here to stay. There are adjustments that can be made during the “new normal” of virtual learning. You can have a free consultation with a debt law firm to help you manage debt and re-calibrate your expenditures.
Again, if classes are virtual, the money saved on things like housing, meals, parking passes and so on can be filtered into the actuation to attack the debt.
Economy Continues to Take a Hit
So while there’s some encouragement that credit card debt is seeing a reduction even while other areas increase, the more disturbing news is the economy and unemployment rates keep going in the wrong directions.
If the U.S. – and the world – can’t fight its way out of this nightmare pandemic soon, the economy could take years to recover. So while debt might go down, the prosperity of the country won’t go up until we have a cure – or even a response – to the virus.
The goal of every individual and family during these precarious times should be to stay on a tight budget. Only spend on necessary things like food, home bills and gas. It’s time to tighten all of our belts to make it through this together.