Nov 03, 2012 Walt Wojciechowski
Assessing the situationMuch of what is occurring in this area has to do with banks charging off older accounts, skewing consumer debt reporting numbers and making it hard for entities of all kinds to keep track of what is really occurring. As millions of dollars in charge-offs are written out of existence by banks, passed along to debt collection facilities, shoppers continue to rack up fees. According to The Daily Beast, that means while individuals are seeing reports that there is less consumer debt on credit, what's really happening is that there is less of an active balance. Large financiers regularly shuttle tens of billions of dollars to collectors, counting only active debt in the system. It may therefore be more difficult for these entities as well as consumers to determine whether the economy is truly recovering.
The real debt factorDiscerning how much money is currently outstanding in the United States can help companies and individuals make smarter decisions with the money they have. What's more, failing to grasp the full scenario could cost businesses when it comes to deciding who is safe to lend to or partner with. The Federal Reserve showed in its most recent release regarding consumer credit that this outstanding balance continues to go up. The current amount is much higher than what the Census Bureau projected for 2012, yet these figures fail to outline how much is in default. Such a discrepancy could make future financial decisions difficult for businesses and individuals, as this lack of transparency could have a significant impact on the overall economic health of the country.