The most common reason people have trouble paying their debts is that they can’t pay them on time, says a new report from the Consumer Financial Protection Bureau.
“We know from our experience over the last decade that many consumers are taking on excessive amounts of debt to meet their financial needs,” Jessica Rich, the CFPB’s acting director, said in a statement.
“They’re using their own money, they’re borrowing to make their mortgage payments, and they’re putting their savings in a risky investment vehicle.
The result: They can’t afford the interest and fees they’re paying on their debt.”
A recent report from research firm PwC found that the average American has a debt-to-income ratio of about 55% — more than double the national average of 30%.
That makes it easy for many to overpay for their mortgages.
In the past two years alone, people owe more than $2 trillion in mortgages.
Many people borrow to finance a down payment on a house, but that debt can easily balloon out of control if you don’t pay it off quickly.
And, in some cases, that debt is more than they can pay back in full.
In 2015, Pew found that nearly one-third of Americans reported having an excessive amount of student loan debt, or about $1.3 trillion.
As of March 31, PwA reported that 2.1 million people had debt that exceeded $1 trillion, an increase of 18% from last year.
That debt rose by $11 billion last year, while the total number of people who owe more now than in 2014 rose by 2.3 million.
A total of $1,055 billion in student loan and auto loan debt has been reported to PwB.