Last year brought new financial burdens to businesses and private citizens alike. Financial uncertainty stemming from the Covid-19 pandemic threw many household’s finances into disarray. 63% of people who reported that their financial situation declined last year, cited the loss of a job as the reason why. Even the government went further into debt as it combatted the recession caused by the pandemic. In fact, the budget office anticipates the federal deficit will exceed $2 trillion in the 2021 fiscal year.
However, there is a light in the distance. Demand for jobs is on the rise and the economy is expected to recover as people receive their vaccinations, and return to work. The budget office found that the U.S. economy is recovering faster than anyone could have anticipated. Over the past decade, the average median income has increased by nearly 41%. It’s likely that will once again become the standard. The U.S. economy is expected to recover as people start paying down debts. Once people have more discretionary income to feed into the economy, the U.S. may even experience a boom. Below are some of the most common debts in the U.S. in 2021 that need to be addressed to make this happen.
Credit Card Debt
The average American has about $6,194 in credit card debt. As of September 2020 outstanding credit card debt hit $915 billion. Typically, middle-aged people who earn more have higher amounts of credit card debt. This is likely because they have higher spending limits, and aren’t living on a fixed income yet. However, demographics like college students and retirees are operating on a less flexible income. They have less income and are more likely to have a less desirable income-to-debt ratio.
Most student borrowers owe between $25,000 and $50,000. The national student debt average is currently around $32,731. Student debt hit $1.67 trillion at the beginning of 2020. Federal student loans have been suspended until September 30, 2021. However, students are still responsible for privately held student loans.
Mortgages are one of the top contributors to debt in the United States. A single household typically owes an average of $150,000. The mortgage debt total in the U.S. currently sits at approximately $16.56 trillion according to Statista.
Before the pandemic started people were already struggling to pay down outstanding medical bills. 137 million American adults reported medical-related financial hardships even before the rapid contraction of Covid-19 started in the United States. The Coronavirus brought further health scares and bills as millions of people across the United States contracted the deadly virus. 20 million Americans are currently responsible for nearly $45 million in medical debt collections.
Last year, federal debt grew larger than the nation’s economic output. This was largely due to the pandemic, and the resulting recession. The Federal deficit is projected to hit $2.3 trillion in 2021, which is an all-time high.
Southwest Recovery Services
SWR can help business owners operating in any of these industries. If you’re struggling to collect outstanding debts contact us right away. We are an ethical collection agency with an excellent track record. We collect debts without sacrificing the relationship between you and your customers. Our methods are likely to offer a return on outstanding debts because we’re compassionate and offer payment plans to people who’ve been struggling. Southwest Recovery agents will utilize an arsenal of resources and technology to resolve outstanding debts. Let us take care of this so you can focus on your business, which is what’s really important during these trying times.