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Family Debt
increased and more may be forced into Bankruptcy
February 26th, 2006
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Bankruptcy Court |
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Debt in the United
States has increased dramatically from 1994 through 2004. More families
have more credit card debt and owe more money for their mortgages.
According to a CBS
News Sunday report there is a 2.1 trillion dollars of debt in the United
States, not including mortgages. The average American has went into
debt more, in 1994 there was and average credit card debt of $4,301
compared to $9,312 in 2004.
Another trend that
CBS News Sunday reported was that people are not paying off their
mortgage, but instead are using it as a cash cow. In the old days
mortgage burning parties were something to look forward too. Today they
say that is not the case. There was approximately $8.8 trillion in
mortgages in the United States in 2004.
To make the
matters worst is that more and more mortgages are interest only and
adjustable rate. This means that many home owners are at the brink of
financial disaster if they are not able to make the payments to begin
with and the interest rates go up.
Cardweb.com said
that a recent survey of 61,355 financially troubled individuals said
that “97% were unable to repay any debts and that 79% were forced into
dire financial straits by circumstances beyond their control.” The new
bankruptcy laws hurt these individuals even more because they are
already in financial trouble. The new bankruptcy law was supposed to
dissuade the unscrupulous individuals who make debt to make a profit.
The scenario of the increased payments, increase interest rates can
cause potential financial disaster for bankers if too many individuals
foreclose on their homes and default on their credit cards. This
could mean that even the people that have their finances in order could
become affected if the economy crashes.
By
Nicole Wilson
Best Syndication Staff Writer
Books on
Lending
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