Financial problems may keep Illinois from economic healing

There are signs indicating that the economy is beginning to heal. Illinois residents that are still struggling with financial problems may find this hard to believe. However, it seems clear that toward the end of 2012, people started to spend money again.

What this means is that people are borrowing money again. Consumer credit rose ever so slightly in the last quarter of 2012. Even though it wasn't by much, it was enough to show that people are increasing their total debt for the first time since 2008. There may be reason to be optimistic, but there is still a need for caution. With the increase in defaults of student loans, any recovery could be stalled once again.

There has been an upturn in the housing market, and there are indications that people are making on time payments on their debts. In addition, the average credit card balance has also risen for the second quarter in a row; even though balances are still lower than they were pre-recession. The slight rise in credit card delinquencies in 2012 was still lower than in years past. Consumers seem to be slow to take on more debt and are still not sure that the economy is actually on the rebound. The events of the last four years have spurred consumers to pay off their debts in a way that hasn't happened for a long time.

What all of this means in terms of economic recovery remains to be seen. For those that are still experiencing financial problems despite this optimism, recovery may seem a long way off. Illinois consumers that are having trouble paying their debts may want to consider filing for bankruptcy protection. Having the opportunity to start fresh financially could be the key to financial recovery for some consumers.

Source: Fox Business, "Consumer Debt Market Shows Signs of 'Healing'," Kelly Dilworth, March 5, 2013

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