California leads the nation in household debt. According to the Federal Reserve’s most recent Quarterly Report, the average level of debt in California for an individual with a credit history is over $70,000. Most of this debt consists of home mortgage loans, but about $10,000 per person consists of unsecured loans such as credit card debt and student loans.
Individuals and families who are struggling to make ends meet prioritize their mortgage and rent payments in order to avoid foreclosure and eviction. As a result, the amount of delinquent debt—for which payments are 30 days or more late—is closely related to the amount of unsecured debt. When workers fall behind on their unsecured debt, creditors can obtain a court order to deduct loan payments directly from a worker’s paycheck. In this weak economy, thousands of workers face such wage garnishments. (more…)