Revolving Debt Continues to Decline

Recently data was released showing that revolving credit debt, which is mostly comprised of credit card debt, has continued to decline.  At its peak in 2008, there was in excess of one trillion dollars in debt.  In July of this past year the amount has decreased to 850.7 billion (for those of you that remember, a few months back student loan debt surpassed credit card debt as the largest area of debt held by consumers). 

Some may suggest that these numbers reflect that consumers are paying their credit card debt on time.   However, for the past few years credit card companies have taken a significant hit on charge-offs. A charge-off occurs when a lender no longer expects to collect the amount due by borrow and changes its books to reflect the same.  According to, credit card companies have charged off $226 billion since 2009.  If after 90 days of not receiving payment in a credit card account, most lenders will consider it unlikely that they will be repaid in the debt and issue a charge off.  In most cases, these charge-offs get sold to a collection company for a fraction of the amount owed by borrows.

Thus, although it may seem that with the decrease in the amount of debt is a sign of a recovering economy, it may not be so clear.  Had the credit card companies not charged off such a large amount of bad debt, there would be significantly more credit card debt, and much of it uncollectable.  However, the good news is that credit card companies are reducing the amount they are charging-off which may indicate a small recovery for the credit card companies. 

If you are being sued for outstanding credit card debt, my law office may be able to help.  The Law Offices of Shaya Markovic, P.A. fights South Florida credit card debt.  Contact my office for a free case evaluation.  My office handles cases in debt defense, FDCPA claims, personal Injury, and traffic ticket defense.

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