August 27, 2007
-- by Dave Johnson
US consumers are defaulting on credit-card payments at a significantly higher rate than last year, raising the prospect of problems in the stricken US subprime mortgage market spreading to other types of consumer debt.Ripples.
Credit-card companies were forced to write off 4.58 per cent of payments as uncollectable in the first half of 2007, almost 30 per cent higher year-on-year. Late payments also rose, and the quarterly payment rate – a measure of cardholders’ willingness and ability to repay their debt – fell for the first time in more than four years.
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You have to admire the business sense of the banking industry; they picked a very wise time to ram through the Barriers to Bankruptcy Act... while many people will still be eligible for Chapter 7's discharge, many more will not...an especially galling whammy will be "forgiveness of indebtedness" income tax on foreclosed homes...
In short, while the financial misery that's on its way isn't unprecedented (think "before New Deal", kind of like the rest of the Republican program)... yanking out the legs from those who might get a fresh start in bankruptcy... that's new.
Maybe even revolutionary. There may come a point when the money men question whether yanking every single social safety valve away... wasn't the greatest of ideas.
Posted by: the talking dog at August 28, 2007 5:14 PM
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