US consumer debt under management at one of America’s largest nonprofit credit counselling agencies has passed $1 billion for the first time in 13 years, as living costs squeeze households. The consumer debt milestone, reported on 27 October, comes from Money Management International (MMI), which says it is now managing more than $1 billion in consumer debt on behalf of its clients.
Living costs are up 30%, according to the report on MMI’s figures, while many clients face interest rates around 28%. MMI’s principal consumer finance analyst, Ted Rossman, said the current environment mirrors some of the most difficult conditions seen during the 2007–2009 financial crisis, though with a distinct K-shaped divergence in which lower-income households bear the brunt of the strain.
Essentials are outpacing incomes
Rossman said rising expenses for essentials such as medical care, vehicle repairs, home maintenance, gasoline and groceries are outpacing stagnant or modestly growing household incomes. That is the core of the squeeze: it is not luxury spending driving people to counselling, but the cost of keeping a car running, a home maintained and a family fed. When essentials rise faster than pay, borrowing fills the gap — until interest charges make the gap wider.
The pattern matches the latest J.D. Power findings, which show only 36% of Americans classified as financially healthy in September and 48% saying monthly expenses were less affordable than six months earlier. Two different measures, from a counsellor and a survey firm, are pointing the same way: pressure is rising, and it is concentrated at the lower end of the income scale.
What credit counselling actually does
Nonprofit credit counselling is not a quick fix and it is not the same as a for-profit debt settlement firm. A counsellor reviews income, spending and debts, helps build a workable budget, and may negotiate a debt management plan with creditors — often with reduced interest rates and a single monthly payment. MMI’s $1 billion figure counts debt being managed under such plans, not debt written off. Clients still repay, but on terms they can sustain.
Anyone considering help should check that an agency is nonprofit, ask about fees upfront, and avoid any firm promising to erase debts or telling them to stop paying creditors without explanation. A legitimate counsellor will start with a full budget review, not a sales pitch.
Early help beats late help
The lesson of a 13-year high is timing. People often wait until a payment is missed before seeking advice, by which point options narrow and fees mount. If minimum payments are eating into grocery money, or a card balance is growing despite regular payments, that is already the moment to ask for a free review. MMI’s milestone is a national warning sign, but for an individual household it is also a reminder: the earlier the conversation, the more choices remain.
