Katherine Hamilton

speaker

654 appearances 14 recordings 1 series first heard Apr 2024 last heard Jan 2025

Katherine Hamilton’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · America's Riskiest Borrowers Are Nursing a Financial Hangover · 6 Jan 2025 podcast

A lot of folks who work in credit counseling and credit consolidation told us that they are getting a lot more clients now who are looking for help just keeping up with their debts and managing them.

There's also a lot of companies like banks and lenders who are seeing it in their bottom line.

So, for example, Citigroup.

said in their recent earnings report that they're not really able to keep up with the earnings because they're seeing this big gap in folks who are behind in paying off their debts that's eating into their revenue and similarly ally financial which is an auto lender they said in their recent call with investors that as consumers are struggling more they're having to hold on to more cash to cover those loans that people are behind on paying

Delinquencies in general are up compared to before the pandemic.

And similarly, the amount of credit card debt that people are in is larger than it was before the pandemic.

It's hard to say whether we'll see it again, but for now, it's definitely not on an upward slope.

So a lot of lenders right now are tightening their standards.

They're lending less to those lower income and non-prime borrowers.

And that's partly because during this 2020 and 2021 period, lenders did not have full visibility into borrowers' ability to pay off and keep up with loan payments.

So, for example...

student loan payments were sort of wiped off the credit profiles during this time.

And those are now coming back onto folks' profiles since October.

Student loan borrowers now have to keep up with payments or else their credit scores will go down.

But during that time, lenders weren't able to see how much that was impacting those borrowers' incomes.

And it resulted in a lot of loans being handed out to borrowers who were not able to keep up with them.

One thing a lot of borrowers can do that financial professionals sometimes will recommend is work with a credit consolidator or a debt manager who can reallocate your loans to a debt that you might be more able to pay off in a timely manner, whether that's getting a better interest rate or a different term that's more well-suited for your needs.

Beyond that, I think advisors would recommend setting up a budget, maybe getting a second job.

But I think a lot of these borrowers are already aware of those and are sometimes already doing those things.

And the reality is they took on loans that they were not able to pay off in the long term.

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