Banks writing off more consumer debt, Wall Street Journal reports

09/23/2010

Americans had nearly $806 billion in credit card debt in the second quarter of 2010, according to the Federal Reserve. Although this number is 9 percent less from the same period last year, analysts say not all of the news is positive when looking closely at the statistics.

Banking rules have made balance sheets appear more optimistic than they really are, according to the Wall Street Journal. Many Americans may be working harder to pay down their credit card debt, but banks are also writing off more debt that they don't expect to see repaid. Outstanding balances that are more than 180 days late are considered noncollectible by lenders.

There are options for individuals struggling with debt, however. Experts encourage borrowers to immediately seek assistance from a nonprofit debt counselor and bankruptcy attorney once they fall behind on payments. Waiting longer will only increase the debt as interest accrues.

Banks may also be willing to negotiate settlements with borrowers. Between 30 and 90 days that a payment is past due, a lender will call the borrower to offer a settlement deal.

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