"Consumers continue to carefully manage their finances in an effort to get debt levels under control and build up a secure financial base," Chessen said.

"While this conservative approach to credit may slow economic growth in the short-term, it portends stronger, more consistent growth in the future," he said. "The sharp decline in delinquencies reinforces the notion that the economic recovery has become more self-sustaining and is on a path to increased growth."

Chessen noted that delinquencies in all three home-related loan categories – property improvement loans, home equity loans and home equity lines of credit – fell in the fourth quarter. This is the first time all three of these categories have seen delinquencies decline since the fourth quarter of 2011.

"While home-related delinquencies remain at elevated levels, even one quarter of declines could signal the start of a slow but steady improvement. Falling delinquencies are another indicator of the housing market's nascent recovery," Chessen said.

While Chessen found the continued decline encouraging, he cautioned that future challenges could make it difficult for some consumers to meet their financial obligations. 

"Make no mistake about it, a great deal of uncertainty still lingers over this economy," Chessen said. "Furloughs from sequestration, falling disposable income and increased healthcare and regulatory costs for businesses could lead to challenges in the year ahead."