Debt Free News

Credit card debt to blame fro higher bankruptcy rates

January 2, 2007

According to a new news topic that our debt free site’s news department has received today, a higher number of US citizens people are predicted to file a  bankruptcy due to overwhelming credit card debt

We have learned that the latest information being released to us from a major bankruptcy watchdog the amount of personal bankruptcies arose by twenty percent recently. This statistic is based on watchdog findings from the past 3 months.

According to the new watchdog report, most of these new filings are being directly linked to out of control credit card debt, unemployment and divorce.

The debt report says that lower income individuals and families are the most effected by these new figures. Due to the inability to cope with inflation, no new income and economy, this demographic has accrued credit card debt to pay everyday expenses. This group is having a difficult time getting debt consolidation approval thusly causing an insolvency.

The new debt report statistics are very significant and show that a slowing national economy in many country (not just the US) is the main reason this is happening.

The report clearly states that in its opinion we are headed record levels of personal insolvencies – which will in no way help the economy that id for sure. The numbers will even surpass the amount of insolvencies filed during the recession of 1998-99.

In fact, credit card debt has more than doubled over the past 5 year period of time.  As many of our debt free readers have already read in our news section, the past Holiday shopping season has much to do with the predicted future numbers of bankruptcies.

Honestly, we see that credit card companies are still driving hard to acquire new customers and this is bad fro those who are desperate to get out of debt. Consumers are being seduced by companies offering more credit – credit that many consumers cannot afford when you think about debt to income ratios involved.

Debt levels have surged tremendously in the past few months due to the report we received today in our news department.

The easy availability of credit and increasing competition in the non-banking sector to sell credit cards has resulted in a surge in debt levels.

Because too many US citizens (and all over the world for that matter) are turning to new credit card debt as a way to pay off other bills. It simply compounds the problem. Many consumers think getting another credit card to help pay bills is a wise decision – many simply acquire new debt in desperation to pay old debt off – this only creates a vicious cycle. What happens is that the new credit card bill comes in and consumers cannot afford the payments and they file for bankruptcy in most cases. Debt consolidation is a much better avenue to travel, but many times it is simply too late when people figure their debt out.

Here is one last compelling fact we read in today’s report - Over 70% of bankruptcies filed in recent months owed less than fifty thousand dollars to credit card companies.

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