Banks wrote off record amount of credit card debt
With unemployment high and personal wealth diminished, how was it that strapped consumers were paying down their credit card debt last year?
It turns out they probably weren’t. The bulk of 2009’s drop in credit card debt instead came because banks were forced to write off loans consumers failed to pay, according to an analysis of Federal Reserve data instant credit report.
Loans are typically charged off by banks once they’re 180 days past due, under the assumption that the debt won’t be repaid.