As 2024 draws to a close, we at Leiden and Leiden are taking the time to reflect on how the financial landscape changed over the last year. While the economy seems to have recovered from the long-term effects of the Covid crisis, global conflict, trade wars and inflation stepped in to create new sources of turmoil. Locally, the residents of the CSRA had to deal with Hurricane Helene and its aftermath. All of this led to many distressed consumers seeking assistance from our office.
Our office saw a significant increase in consumers who had been sued for defaulted debts, especially related to vehicles that had been repossessed and sold at a loss. While many of these consumers consulted our office as soon as they had received the lawsuit, there were others who did not know how to respond, or failed to respond, and had to endure a wage garnishment. While Covid had slowed down the prosecution of debt collection lawsuits, the dockets in the courts in which those suits are most commonly filed have since disposed of the backlog and suits filed now are more quickly proceeding to judgment, and eventually wage garnishment.
Foreclosures in Georgia have also increased significantly, as many of the Covid – related protections have expired. Foreclosures that were previously averted due to loan modifications offered by the lender are now moving forward with no assistance available to the homeowner. Some homeowners have already exhausted their loan modification opportunities over the past few years, while other homeowners are determined to be ineligible for loan modifications based on standards imposed by the bank. The significant increase in home values throughout Richmond County, Columbia County and the other surrounding counties means that mortgage companies that foreclose are almost always guaranteed to receive the full balance of their loans. After Covid, it was not uncommon for a mortgage lender to wait 12 – 16 months to commence a foreclosure. Foreclosures now are starting after a delinquency of 3 – 6 months, which was the standard default timeframe prior to 2020.
Vehicle repossessions did not seem to increase in 2024, compared to the most recent prior years. Unlike real estate, which accelerated in value, many vehicles are worth less than the amount owed either because the consumer was upside down on a trade in or has financed it for an extended period of time beyond the traditional 60 months. The exception is for vehicle lenders that see a default on a vehicle purchased within 6 months or less. Also, many vehicle lenders are requiring cosigners on high – risk vehicle loans, and the cosigners are stepping in if the loan goes into default. Fortunately, we have seen a decrease in vehicles subject to a title pawn, especially since a bankruptcy filing in the Southern District of Georgia does not presently offer any meaningful assistance for relief for title pawn debts.
Going forward in 2025, we expect to lawsuits, garnishments and foreclosures to continue to rise. Nationally, household credit card debt has risen although defaults on that debt have remained fairly consistent. But it does not take much for a consumer that is juggling multiple debts to fall into default on their credit cards. As we have always recommended, it is best to seek the advice of a bankruptcy attorney when you are worried about defaulting on your debts, as opposed to waiting until you are facing a wage garnishment, foreclosure or repossession. If you feel that you’re getting to the point where your household income is not sufficient to maintain your debt payments, it is always better to find out what your options are instead of waiting until your options may be limited due to the actions of your creditors.