As we saw earlier, consumer debt in Florida comes in the form of credit card debts, mortgage debts, student loan debts and auto loan debts. The recent market crash has worsened mortgage balances and student loans are still on the rise despite still being under the national averages. Auto loan debts also add to the consumer debt in Florida with an average outstanding balance of $15,500.
Effects of Consumer Debt in Florida
The consumer debt in Florida has led to an unparalleled number of problems that we shall now examine.
Poor Credit Scores in Florida
The credit scores of Floridians are slightly less than those of other people in the whole nation. The credit scores of Floridians are a little lower than average even as scores fall across the nation. In March of 2012, the average credit score for Floridians was 654 compared to the nationwide score of 660. This figure is lower than the 657 score that Floridians had in 2011 but lower than the national average of 665 at the same time. The FICO scoring model provided these scores and it rates scores from 300 as the worst score to 850 as the best score. Miami, Jacksonville and Tallahassee cities which have the highest credit card debt in the state of Florida also have the lowest credit scores. While credit scores are not necessarily affected by huge debt levels, the trend can indicate that there are other financial problems that need to be sorted out. It is only when those who borrow cannot afford to repay debts that the high debts lower their credit scores. Falling behind on debt payments is what actually lowers credit scores and also increases consumer debt in Florida.
Figures for bankruptcy in the state of Florida are largely similar to that of the nation apart from a few key differences. In 2005, personal bankruptcies across the nation reached an all time high as more than 2 million married couples and individuals in America filed for bankruptcy. In the same year, the number was more than 106,000 in Florida. The figures were less the next year as it seemed that many people had already filed for bankruptcy. In the whole country in 2006, the figure for those who personally filed for bankruptcies was less than 600,000. This was less than a third of the number filed the previous year. The figure for Florida drastically dropped as only a fourth of Floridians who filed for bankruptcy the previous year did the same in 2006. However, bankruptcy figures across the nation and in Florida went back up until 2011 when they slightly dropped. Personal bankruptcies in the U.S.A were 25% lower in 2010 than the high figure of 2005. In Florida, however, the number of bankruptcies went up so high between 2006 and 2010 and the figure for 2010 even transcended that of 2005 by around 2,000. This means that the state of Florida has higher rates of personal bankruptcy overall than the whole nation as a whole. This is not encouraging when you consider consumer debt in Florida as for every 139 adult Floridians, one bankruptcy was filed in the state in 2010. The figure across the nation was one personal bankruptcy for every 155 adults.
Consumer Fraud and Identity Theft
The highest rate of identity theft in the U.S.A is in the state of Florida. In 2010, 21,600 cases of identity theft were reported which equates to 115 complaints per 100,000 people. This figure rose from the 2005 rates of 96 identity thefts per 100,000 residents. When you look at consumer fraud which is a larger category that covers identity theft in addition to grievances such as false advertising and scams, Florida ranked almost as high as it did in the consumer fraud. In 2010, the state ranked fifth in the nation, in a study that looked at consumer fraud and identity theft rates. The results indicated that around 70,000 cases of consumer fraud affected 377 per 100,000 Floridians. This explains why consumer debt in Florida is a big problem as some cities in the state had even higher rates.
Deceptive and Unfair Trade Practices Act
The Deceptive and Unfair Trade Practices Act in Florida was passed in 1973 to protect the rights of consumers. However, this law is vague in describing which practices are unlawful. According to Florida’s law, it is unlawful when there are unconscionable acts or practices, unfair methods of competition or deceptive acts or practices in the conduct of any trade or commerce. This law is meant to prevent identity theft and fraud but it is intentionally ambiguous and has stirred controversy as it is open to interpretation by the courts. The law needs to be clearer if consumer debt in Florida has to be successfully tackled.