If you owe on unsecured debt more than you can pay, consider self help debt negotiation. Consider the following data and then learn how to deal with it at the end of the article.
The credit card industry in the United States has placed the average American in a perilous posture. Tennessee has been particularly hard hit as will be set forth herein after. The following is a summary review of important statistics which highlight the situation. After a review of this information I request that you seriously review my posting on Debt Settlement. With this as the true state of facts, if you cannot pay your bills, do not feel sorry for the credit card industry, protect yourself.
In 2009 bankruptcy filings hit a record 1.4 million, up from 1.09 million filings in 2008. This is a staggering number. Until recently, Tennessee had the highest number of filings per capita, but Nevada now holds the top stop with Tennessee a close second. This is a record not to be proud of. (Source AACER, the American Bankruptcy Institute, January, 2010)
Let us note that consumer debt has risen from 355 billion in 1980 to 2.5 trillion in 2009 according to the Federal Reserve. This major shift in philosophy, from a conservative virtually debt free society to a debt heavy society, has been driven predominately by the credit card companies and the ease by which they place easy credit at everyone's doorstep. This, however, is a trap carefully laid out and planned. The push, predominately by the credit card industry, to a cashless society has worked and with it has come a very expensive price tag.
One of the results of this shift in philosophy is the fact that between 2 and 2.5 million Americans each year seek the help of a credit counselor to help them avoid major financial loss or bankruptcy. And more shocking is that fact that between 1990 and 2000 the number that obtained help from credit counselors doubled. Of those seeking this aid, 75% hold credit cards. (Source: Georgetown University's Credit Research Center in conjunction with the National Foundation for Credit Counseling)
In cases like this, one would normally tend to think that it is the lower class and or lower income individuals that would be hit the hardest with these brutal statistics. What is interesting is that according to the 2007 Federal Reserve Board Survey of Consumer Finances, from 2001 to 2007 families in the bottom 25% of the net worth bracket which held credit cards fell from 45.5% to 41% while the families in the top 10% net worth bracket which held credit cards rose from 22.4% to 30.3%. Now understanding this is becomes very important as we review several other statistics. But the bottom line is that the unfavorable statistics noted above and below relate to a growing number of high end holders of credit cards and a falling number of lower income individuals which is not a good indicator.
The following statistics were published on CreditCard.com by Ben Woolsey and Matt Schulz in an article dated 5/11/2010.
· Average credit card debt per household is $16,007 (calculated by dividing the total revolving debt in the US in the amount of $864.4 billion as listed in the Federal Reserve's March 2010 report on consumer credit by the estimated number of households carrying credit card debt which is 54 million)
· As of the end of 2008, the average number of credit cards held by cardholders was 3.5. (Source: The Survey of Consumer Payment Choice, "Federal Reserve Bank of Boston, January, 2010)
· Average APR on credit cards with a balance was 14.31% as of December 31, 2009 according to the Federal Reserve's G19 report on consumer credit, March, 2010.
· Total US revolving debt $864.4 billion as of January, 2010 and 96% of that is credit card debt or $829.8 billion. (See G19 Federal Reserve Report noted above)
· Total US consumer debt as of January 2010 was $2.46 trillion. (See the G19 Federal Reserve report noted above)
· The current credit card default rate is 11.37% which is the highest level to date as set forth in the Fitch Ratings, March 2010.
· In the last 12 months, 15% of American adults, or 34 million people, have been late making credit card payments and 8%, or 18 million people, have missed a payment.(Source: National Foundation for Credit Counseling, 2009 Financial Literacy Survey, April 2009)
· According to that same survey as noted in the last item, 26% of Americans, or 58 million people, admit to not paying all of their bills on time.
Now when we look at the basic statistics, it becomes clear how much profit the credit card companies are making off of this new life style called the cashless society. Just in delinquency numbers alone as noted above, one can see the inordinate profits made on the simple assessment of late fees. In fact, penalty fees from credit cards will add up to about $20.5 billion in 2009 according to R.K. hammer, a consultant to the credit card industry as reported in the New York Times, September 2009. This is a huge loss to the disposable income of the American public. With this one item out of the budget of Americans it is easy to see how consumer spending has been reduced, not to mention the normal payments of principle and interest that is paid by these credit card holders.
As of the writing hereof, I have been unable to obtain the profits of the credit card companies for 2009, but for 2008, here are the staggering numbers according to the March 2009 Nilson Report:
Chase $780 million profit Bank of America $520 million profit Citi $530 million loss American Express $850 million profit Capital One $1.0 billion profit Discover $710 million profit Wells Fargo $990 million profit HSBC $520 million profit US Bank $1.07 billion profitAs one can see, the average American is smothering under a debt load that cannot easily be sustained, and in many cases going into bankruptcy, yet the credit card company profits are beyond belief. Note here that these are profits after all of the losses from the delinquencies and bankruptcies, this is profit.
Note that the answer is not to use the hundreds of DEBT SETTLEMENT Companies out there as their fees are not justified. But there is a solution and by using the principles developed by the author hereof, there is hope. Contact us for more information.
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After a 29 year legal career practicing business law, the author now performs business consulting and specializing in debt settlement and small business start-up. Not only has he be working with business as an attorney and now as a consultant, he also was chosen as the CEO of a large international automotive supply company and served at that position until the company was sold. His education based in business, accounting, finance and law. He just published several bookshis newest book is "Guide to What Debt Settlement is and Is Not", and his other book published this year entitled "Business Start Up Essentials" which is available at the website and most book sellers. See more at www.socrossconsulting.com
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