How to Help Members With Consumer Debt

A man holding a credit card

Since bottoming out after the Great Recession ended, consumer debt has come roaring back with a vengeance. This will lead to challenges in diaconate budgets in the next recession…

Some articles recently reported on the declining financial health of American households. They have been increasing their debt levels, which is a sign that Americans have become increasingly confident in the economy’s ability to sustain its consistent year-over-year growth since it last shed much of its vigor during the Great Recession of 2007-2009.

The Bible reports on this tendency of humans to forget their recent troubles. Like Pharaoh, we get scared and repent when the hand of the Lord is around our throat, but as soon as the imminent danger has abated, we can so quickly return to our old ways: “Like a dog that returns to his vomit is a fool who repeats his folly” (Prov. 26:11).


Our tendency is to lean more heavily on God when we are in financial duress, but then forget that it was He who lifted us up out of our depressed state. The good times make us forget the bad times, and they also make us forget God. Unless the financial burn was of the third degree, we don’t remember that we should be saving a substantial portion of our income in order to save up for the next day of financial calamity that comes our way. Moses issued this warning to Israel. It remains applicable to us even today:

Be careful that you do not forget the Lord your God, and that you do not neglect his commandments, his ordinances, and his statutes that I am commanding you today, otherwise, when you eat and are full, and when you build good houses and live in them, your heart will be lifted up. Be careful when your herds and flocks multiply and when your silver and gold increase, and all that you have is multiplied, then your heart becomes lifted up and you forget the Lord your God, who brought you out of the land of Egypt, out of the house of bondage. Do not forget him who led you through the great and terrifying wilderness, with its fiery serpents and scorpions and thirsty ground where there was no water, who brought you water out of the rock of flint. He fed you in the wilderness with manna that your ancestors had never known, so that he might humble you and test you, to do you good in the end, but you may say in your heart, ‘My power and the might of my hand acquired all this wealth.’ 

Deuteronomy 8:11-17

Americans have forgotten the last financial calamity. Households have forgotten just how stressful it is when they find themselves in debt up to their eyeballs at the same time that they lose their jobs. But they are positioning themselves to repeat the ordeal.

We live in a cyclical economy. There are boom times, and the boom times are inevitably followed by a bust. For as long as central banks like the Federal Reserve and the Bank of England remain in control of the central economic institution–the money supply–then this cyclicality will continue.

In April of 2018, the expansion became the second longest on record, at eight years and 10 months. In July of 2019, it officially became the longest economic expansion in history, exceeding even the great expansion from 1991 to 2001 (120 months).

The average expansion period lasts 59 months. The economy was in due for a reset. The expansion ended abruptly on March 26, 2020, when 3.28 million jobless American filed for unemployment insurance.

To bookend the longest economic expansion in history, the US government reported by far the largest, most dramatic increase in claims in history as governments around the country shuttered their economies in a political response to an epidemiological problem.

Some optimists predicted a quick economic recovery based on the pandemic’s swift end and the $2.2 trillion stimulus package passed by Congress and signed into law. Others weren’t so hopeful.

Church diaconates will be hit hard when requests for financial support begin rising, both from within the church household and from the outside world at large. It will be a great opportunity for outreach, but diaconates need to start preparing sooner rather than later.


So how bad has consumer debt become? It is worth evaluating the trends since the Great Recession.

Total consumer credit was at about $4.2 trillion by the beginning of 2020. This is up from a previous peak of about $2.6 trillion just before the financial collapse of 2008 triggered the Great Recession. In the wake of that massive economic undulation, total consumer credit fell to about $2.5 trillion in 2010. But after taking a short breather, consumers didn’t wait long before piling back into the SS Debt Destroyer.

In the second quarter of 2018, total consumer credit stood at $3.87 trillion—an increase of over 48% since 2008. The breakdown of the dominant components of that debt was as follows:

  • $1.13 trillion in auto loans & leases
  • $1.0 trillion in credit card debt and other revolving credit—which is the level where credit card debt peaked between 2007 and 2008
  • $1.53 trillion in student loans 

An article at Wolf Street draws some conclusions about the steady rise in student loan debt. Total debt is up, year after year, but total college enrollment has been declining since 2010. This means that even though fewer people are going to college, those who remain are taking on even greater student loan balances.

Car loans suffered a reasonable decrease following the recession’s beginning, but they have experienced the most dramatic increase of these three major debt components since the economy went into recovery. Car loan balances dropped by about 15% once the recession started, but they came roaring back by 37% in 2018 since peaking out in 2007– even worse, they soared by over 61.8% since hitting rock bottom in 2010.

By the beginning of 2020, car loan balances (about $1.19 trillion) were up about 44% since their 2007 peak of $825 billion.

Credit card and other consumer debt fell by about 20% following the recession, dropping from $1 trillion at its peak to about $800 billion in 2011. Credit levels held steady for about 3 years, increasing only slightly to about $825 billion, but about halfway through 2014 credit card balances began a steady climb upward. By 2020, the outstanding consumer credit had returned to the pre-recession levels exceeding $1 trillion. 


ValuePenguin has done a good job examining the demographics of those who hold consumer debt. 

Their key finding is that the average American household has a debt of $5,700. Median household debt stood at $2,300–half have more than this, half have less.

It is the least financially stable households who have the most debt in proportion to the net worth. Households that have a zero or negative net worth have an average credit card debt of over $10,000. Those with a net worth of up to $5,000 have about $4,000 in debt. At the high end of households with a net worth of half a million dollars or more, they carry an average credit card debt of $8,139. They are probably not the people that churches will have to worry about providing assistance to in the next recession.

Also, those with lower incomes have larger proportions of debt compared to their income level. Households making $45,000 or less carry an average credit card debt of between $3,000 and $4,000–up to 8.9% of their income. Households at the median income level between $45,000 and $70,000 have about $4,900 in credit card debt–up to 7% of their income.

To drive the point even deeper, older people have more credit card debt than younger people. People age 35 and under have an average of $5,800 in debt, while those 65 and older carry between $5,600 and $6,800. The difference isn’t very large, but younger people have more opportunities and more time ahead of them to pay off their loans. One website offers this chart of average salary by age:

Older people tend to experience declining incomes and become less capable of paying their debts. They are more vulnerable to financial shock. 


One major problem created by high debt levels is stress. When people get stressed out, their performance struggles. Their relationships become strained. 

Their psychological condition also declines. A psychological study published in 2016 surveyed over 33,000 households and determined that households that experienced greater unemployment had a greater tendency to purchase over-the-counter pain killers. 

Worrying about debt leads to mental health problems

Dr. John Gathergood of the University of Nottingham studied the correlation between carrying debt and any depression and anxiety associated with it. In that study, Gathergood found that those who struggle to pay off their debts and loans are more than twice as likely to experience a host of mental health problems, including depression and severe anxiety.Anxious feelings can arise with an array of triggers, such as constant worry about money, experiencing immense feelings of being overwhelmed with no end in sight, and hopelessness. The study also reported that 29% of people with high debt stress also report severe anxiety.

Meanwhile, Social Science & Medicine did a study on household financial debt and its impact on mental and physical health. No surprises here: That study also found that high amounts of debt are associated with higher rates of stress and depression.

Likewise, the Royal College of Psychiatrists collected and examined the findings of more than 50 research papers over time, and found that men and women with higher risk credit behavior were more likely to report depression symptoms.

And I think it is no secret that married couples who argue over money are more likely to get divorced:

Even the healthiest relationships include arguments, but the topic of the argument could predict risk of divorce, according to a Kansas State University researcher.

“Arguments about money is by far the top predictor of divorce,” said Sonya Britt, assistant professor of family studies and human services and program director of personal financial planning. “It’s not children, sex, in-laws or anything else. It’s money—for both men and women.”

Britt conducted a study using longitudinal data from more than 4,500 couples as part of the National Survey of Families and Households. The study, “Examining the Relationship Between Financial Issues and Divorce,” is published in Family Relations, an interdisciplinary journal of applied family studies.

“In the study, we controlled for income, debt and net worth,” Britt said. “Results revealed it didn’t matter how much you made or how much you were worth. Arguments about money are the top predictor for divorce because it happens at all levels.”

The assistant professor, Sonya Britt, also is quoted as saying that the more financial arguments couples have, the more unsatisfied they become with their relationship.


Americans are increasing the debt levels, and have been since the economy began recovering following the Great Recession. Rising household debt levels breed discomfort when times are good. But when disaster strikes, or when the fear of losing your job takes hold, this worry about debt can become a crippling sickness.

The world experienced this fear with the outbreak of the COVID-19 coronavirus pandemic in early 2020.

Diaconates are going to need to be prepared to help congregants and strangers who come looking for assistance. The volume of requests is likely going to be much higher than they are dealing with.

You can see what sorts of dilemmas people will be facing: late car payments, defaulting on student loan debt, and potential bankruptcy in the face of years of escalating credit card debt that has produced payments they can no longer keep up with.

When people have jobs, they can make their debt payments. But this changes rapidly when they become unemployed, especially if they have little to no savings.

Financial stress and debt will erode marriages. Christians are not biblically justified in filing for divorce because they are having arguments over money. The church should make it a priority to counsel couples who they identify as struggling financially, especially if they have children. They need to get their budget under control immediately, and they might need some financial assistance to do that. But you will need to coach them into a better financial position. 

When more requests come in than the church has money available, the deacons will have to decide who to help, and why. It is best to start thinking about this beforehand. No Christian should default if they can avoid it: “The wicked borrows but does not pay back, but the righteous is generous and gives” (Psalm 37:21).

The church’s diaconate should help responsible members develop a repayment plan. They may even justify making certain payments on behalf of the member if it will allow them to get back on their feet. Such a payment is earnest for the grace that God dispenses to His people.

But with that grace comes increased responsibility. The person receiving the financial aid had better repay, and the diaconate had better make sure to within the limits of its ability that they do. Otherwise, they are wasting precious limited resources that could help families who have been more responsible.