"Bankruptcy Problem" No Surprise - Part II
If you find yourself in a financial bind that seems irreparable and are considering bankruptcy, you're far from alone.
- In 2004, the last year for which we've seen statistics, 45% of U.S. credit card holders were making only minimum payments.
- 70% of low and middle-income households reported using credit cards to cover necessary expenses such as car repairs, rent, and medical care during 2005.
- The average student loan debt for graduating college students increased by 74% between 1997 and 2004.
The 2005 bankruptcy reforms made it more complicated to file for bankruptcy protection, and the filing rate dropped off initially. However, those numbers are climbing steadily, and it's no surprise. The bankruptcy reform provisions, after all, did nothing to alleviate the problems in the U.S. economy that force people into bankruptcy.
The one provision of BAPCPA that might have done so-the directive to the Federal Reserve Board to study the role of the credit card industry in creating the problem-was effectively gutted by a report that glossed over the industry's active solicitation of the consumers most likely to make only minimum payments, fall behind in their payments, and face late fees, over-the-limit fees and balance escalation.