U.S. households seek credit counseling as debt stress rises

For people like Maria Gonima, who built up the debt while trying to keep her public relations firm afloat during COVID-19, the difference came from structured counseling rather than apps or artificial intelligence. Money Management International said it reviews finances, contacts creditors and helps clients secure lower interest rates, a process that can turn unsecured balances into a realistic repayment plan.

Counselors say the demand is increasingly coming from millennials, many of whom are leaning on buy now, pay later products and credit cards to bridge living expenses. That fits a broader picture of consumer caution, with household debt pressures surfacing across markets and sectors even as headline employment data remains stable.

The backdrop also matters for lenders and credit investors. High-yield credit spreads remain contained at about 2.67 percentage points, but persistent household strain can still feed higher delinquencies and heavier loss reserves for card lenders, auto financiers and other consumer-credit names if borrowing costs stay sticky.

For investors, that means the health of consumer finance remains a stock-specific and macro risk. Shares of Ally Financial and Synchrony Financial have moved around recent earnings and credit trends, and further evidence of stressed borrowers would keep focus on charge-offs, provisioning and the durability of consumer spending.

The next test is whether easing inflation and steadier rates actually reach households quickly enough to reduce dependence on debt counseling, or whether more families follow Gonima’s path and seek outside help before balances become unmanageable.