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The Bankruptcy Boom
The financial woes seem to be increasingly widespread geographically. The problems were once concentrated in areas like California and Florida, which have been hit hardest by foreclosures and plummeting home values. But bankruptcy filings are now up across the country, with sharp rises in the past few months in states like New Jersey, Ohio, and Oregon—where the number of filings has nearly doubled since January, according to AACER data.
And the numbers are expected to continue rising. The amount of outstanding consumer credit grew by $15.3 billion in March—more than double the increase a month earlier—to a staggering $2.56 trillion. A record-high $957 billion of that is revolving debt, like credit cards and home equity lines of credit. Could it be as bad as the mortgage crisis? Probably not, say experts. Though the amount of debt seems astonishing, the Federal Reserve Board's most recent Survey of Consumer Finances, published in 2006, found less than half of families (about 46 percent) carry a credit card balance, and the average owed is around $5,100. Most Americans are still able to pay their bills on time, says Liz Pulliam Weston, personal finance columnist and author of "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life." "I'm not one who thinks consumer debt could be the next subprime implosion," Weston says. Still, she cautions, "We've gotten people used to grabbing at the easiest fix … and it's very easy now to get into trouble."
Fletcher will attest to that. In the end she decided to go through a debt management program at ClearPoint, an NFCC member, instead of filing for bankruptcy. The agency was able to negotiate the interest rate down to about 9 percent on her debt, and in less than a year she had paid off more than $10,000 of the balance. Though the monthly payments were still high—she ended up carpooling with her husband, subbing regular coffee for her daily mocha and clipping coupons in order to save money—Fletcher says bankruptcy would have been worse. "This was tough," she says, "but I feel good that I'm handling it."
If economic conditions get much worse, there may be millions of others who can't.
© 2008
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Member Comments
Posted By: Donbo @ 05/28/2008 3:26:40 PM
Comment: Nins, You are soooo right on this. I'm also a Republican who will hold my nose and vote for a quasi-socialist because it is in the best interest of the American people. Capitolism is normally a good thing but when big business actually begins running things it is the American people who lose out. Like Obama says, "Business should have a seat at the table but they shouldn't own the seats."
Unfortunately, The Republican party has concluded that it cannot win a general election without selling its influence to those that can afford to pay for it. (Oil companies, Banks, Insurance and Drug Companies) McCain knew this and tried to promote campaign finance reform but the party revolted. (He doesn't speak about this anymore.) As a result we have become a nation "For, of and by the corporations". The kaos caused by our failure to address critical issues as well as the financial decine of individuals should be no surprise. The function of corporations is to maximize profits for investors, not to wisely govern a great nation in a way that promotes the best interests of it's people. A government by the people needs to be put back in charge. This can only be done when we enact laws that stop our legislators from betraying their constituents by selling influnce for money.
We need to vote for someone who actually
Posted By: Nins @ 05/26/2008 1:51:35 AM
Comment:
Oil and war, war and oil. Environmental destruction. Endless greed. US corporations getting tax breaks while shipping jobs overseas to countries that have no environmental protection laws, no workers' rights, no human rights. Countries where people are factory slaves and the air is so polluted you can hardly breathe. US military violating the Geneva convention, torturing prisoners. US government imprisoning people without charging them with any crimes, and holding them for years without trial. Working class Americans losing their homes in a mortgage banking scandal, and the government bails out the banks, not the working people.
It's simple:
If you are sickened by these things, vote for Obama. If you think these are good things, vote for McCain.
I'm a Republican and I own two corporations. I thought it would be a cold day in hell before I ever said anything like this. But the unprecedented corporate greed aided and abetted by an unscrupulous Presidential administration is now starting to take down the US economy. I have to stand up and protest.
Corporations are good only insofar as they strengthen America. When they start to weaken us, we need to re-evaluate the rules and regulations governing business.
And we need to get rid of George W. Bush, along with all of his misguided policies that have dragged our once proud nation into the mud.
Posted By: book134 @ 05/23/2008 4:59:25 PM
Comment: A similar housing crisis occurred during the mid '80's as a result of Reagan's "trickle down economics" policies.
At that time (1983 - 1987) interest rates were so sky high that few could afford a mortgage while at the same time, housing values were dropping through the floor making it near impossible for home owners to sell their property. A great many families suffered economic calamity as a result of Reagan's policies.
It would appear that a similar situation has developed visa-vee Dubya's adoption of Reagan's trickle down theory. But this time the major problem has been a collapse of housing market values which have made it economically unviable for people to continue paying a mortgage with a large principal when the value of the property is a fraction of that.
At least in the 1980's, people could escape from such punishing economics foisted upon them by forces beyond their control. But now, because of punishing new bankruptcy laws pushed forward by Dubya & the GOP, most people have few options available to them. Economic conditions now put them only a step up from debtor's prison.