Rising living costs, including new and higher taxes are pushing more consumers into defaulting on their debts.
New data from DistressedPro shows that banks have seen borrowers increasingly default on their credit cards, auto loans, and unsecured business loans. That reached a new two year high in the third quarter of 2022.
What can you do to get your finances back under control, and avoid repossessions, more damage to your credit, or even losing your home or business?
Crippled By Rising Costs & Taxes
Real inflation in food, gas, insurance, and heating costs have compounded the financial burden on both small businesses and consumers.
This comes right when most major companies appear to be slashing their workforces and freezing hiring.
At the same time, those who are employed are seeing less money coming in due to rising taxes. Along with additional inflation in taxes on the things that they spend money on.
On Long Island this has included property tax hikes in a number of areas as new budgets are created with even more spending.
Three East End towns have also just passed an additional half percent real estate transfer tax, which will hit buyers and sellers, right as it has become far more expensive to buy, and harder to sell, as home prices decline.
To compound these issues, Nassau County taxpayers continue to be hit with erroneous and flawed bills. Such as one parish which received a $677,000 property tax bill, even though it should have been exempt.
The Debt Bubble Could Be About To Pop
To keep up it appears many have been increasingly turning to debt. On which payments have frequently been rising due to the Fed’s rate hike spree.
According to a new survey, 70% of millennials now hold over $100k in non-mortgage debt. With consumers now having racked up nearly $1T in credit card debt.
Banks report that more borrowers are falling behind or are unable to pay these debts, along with their vehicle loans, and unsecured business loans.
Without a massive amount of new stimulus or debt forgiveness, it seems only a matter of time before this bubble pops. Which in turn could well mean a lot more spending and taxes to clean up the mess.
What To Do
Debt cycles can be hard to get out of.
One smart money move here is to be sure you get help appealing your annual property tax bill.
Then use those cash savings to knock down debt. Consider using the snowball method. Focusing on paying off one card or debt at a time, and erasing that monthly payment from your bills. Then using that extra money each month to repeat the process.