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Family Debt increased and more may be forced into Bankruptcy

February 26th, 2006

Family Debt increased and more may be forced into Bankruptcy

Bankruptcy Court

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.

 
 
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By Nicole Wilson
Best Syndication Staff Writer

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Copyright 2005 Best Syndication                                     Last Updated Saturday, July 10, 2010 09:49 PM