Households continued to reduce their debt levels into the start of the summer, the Federal Reserve Bank of New York said Tuesday in a report that offers a broad overview of the challenging financial conditions of the average American.

The bank reported that by the end of June, "households steadily reduced aggregate consumer indebtedness" for seven straight quarters. At the end of the second quarter, total consumer debt was $11.7 trillion, down 1.5% from the prior quarter and 6.5% from its peak in the third quarter of 2008. Total household mortgage and housing finance-related debt was down 6.4% from its peak, also in the third quarter of 2008.

When mortgage and home equity-related factors were taken out of the equation, indebtedness fell by 1.5% from the prior quarter and was 8.4% below the peak of the fourth quarter of 2008. As consumers have shed debt, the amount of money borrowed that is in arrears has fallen. The New York Fed said that for the first time since early 2006 total consumer debt under some form of delinquency fell, from 11.9% in the first quarter to 11.4% in the second quarter. At the end of the second quarter, $1.3 trillion of consumer debt was deemed delinquent, and $986 billion was "severely derogatory."

Still, it was a mixed picture, as the report said "the number of people with a new bankruptcy noted on their credit reports rose 34% during the second quarter, considerably higher than the 20% increase typical of the second quarter in recent years."

The New York Fed said in the report that there are distinct variations in credit across the nation. "Arizona, California, Florida and Nevada all show markedly higher delinquency and foreclosure rates than average," the report said, with Nevada having the highest foreclosure rate. Total consumer debt loads are highest in California and Nevada, with a per capita level of $78,000 in California and $73,000 in Nevada. The national per capita average is $49,000.

The drawdown in consumer debt loads caused the number of open credit card accounts to fall, with 272 million accounts closed in the second quarter, versus 161 million accounts that were opened. However, in a positive sign, credit account inquiries rose in the recently ended quarter.

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