Credit Card Woes Join Hands With Foreclosures to Make Life Miserable for Americans
Credit card woes joining hands with foreclosures are set to make life miserable for Americans. Foreclosure related bankruptcies have already ruined lives. Now another tragedy is surfacing – people are losing everything swallowed up by credit card dues.
The total credit card debt of Americans is $1 trillion as per the data of Federal Reserve. In 1968 it was $10 billion. The whole nation has been addicted to it causing many books to be written on this subject – one being Credit Card Nation. There have also been documentaries on it like Maxed Out. According to TransUnion LLC on an average the individual credit card debt amounts to $6,000.
Till couple of years ago the citizen could erase the debt in easy manner by bankruptcy filing. But since 2005 the conditions for filing have been made more stringent. The individual is no longer able to transfer the credit card remuneration to their mortgages. According to New York Fed (member bank of Federal Reserve) this was one of the prime reasons for the triggering of the foreclosure crisis.
The staggering debts on credit card have led some pundits to opine that the present recession was because of this consumer debt. According to Robert Manning of Responsible Debt Relief Institute, the banks tipped off house owners to clear credit card dues by taking equity loans on their properties. So long as the real estate market was in a rising mood, this strategy paid off. Professor Barry Mishra of Graduate School of Management said, “Banks make huge amounts of money on credit-card fees. Credit-card companies want to trap you and then suck you dry. They are playing a game they cannot lose.”
The economy in Riverside County is particularly fragile as it stands exposed to the credit card mayhem. From 2008 June to 2009 June bankruptcy filings (small businesses) increased across the nation by 81% as per the findings of Equifax. The top numbers came from Riverside, San Bernardino, Los Angeles and Sacramento. It is of special concern because another wave of foreclosures is poised to break with the resetting of Alt-ARM and Option ARM loans. Riverside County is the foreclosure capital of the nation.
Across USA nearly one third of the Option ARM mortgages are in default reported the federal General Accounting Office. Bankruptcy attorney Ivan Trahan said, “More people are filing. People cannot pay off their credit card debt, and they have no equity left in their house to borrow.”
