The collection agencies call at least 20 times a day. For a little quiet, Diane McLeod stashes her phone in the dishwasher.
But right up until she hit the wall financially, Ms. McLeod was a dream customer for lenders. She juggled not one but two mortgages, both with interest rates that rose over time, and a car loan and high-cost credit card debt. Separated and living with her 20-year-old son, she worked two jobs so she could afford her small, two-bedroom ranch house in suburban Philadelphia, the Kia she drove to work, and the handbags and knickknacks she liked.
Then last year, back-to-back medical emergencies helped push her over the edge. She could no longer afford either her home payments or her credit card bills. Then she lost her job. Now her home is in foreclosure and her credit profile in ruins.
Ms. McLeod, who is 47, readily admits her money problems are largely of her own making. But as surely as it takes two to tango, she had partners in her financial demise. In recent years, those partners, including the financial giants Citigroup, Capital One and GE Capital, were collecting interest payments totaling more than 40 percent of her pretax income and thousands more in fees.
More than a cautionary tale – after all, this describes an affliction affecting tens of millions of Americans.
#20…punished? You make me laugh.
They just bought better bankruptcy laws that prevent them from losing when debtors default. This industry has congress, and for that matter most of the US buying public, by the short hairs.
One thing we need is laws or consumer loan regulations that prohibit minimum payments less than 5%, or maybe higher for unsecured credit debt. The shift from 5% to 2% minimums allowed VISA and Mastercard to earn billions, and was also the beginning of this spiral.
I get that we are a nation in debt. They run stories about it ALL the time. But what are we going to do?
Less talk about debt people and more action on getting out of it, regardless of who is at fault.
I have no sympathy for these people.
Blaming credit card companies for outspending your income and running your life into the ground is the same as blaming a drug dealer for selling.
Ultimately, its YOUR choice to either be a cost-conscious consumer who lives within their means or a hyperconsumer (like this lady here) who spends every penny they have, and then takes out lines of credit to perpetuate the myth that they are ‘successful’.
Here is the problem:
Inflation(Everything is becoming more expensive + Wages and job creation are stagnant) + Easy Credit = Debt * Everyone = Financial Collapse?
While these people are complicit there is enough blame to go around. During the period this woman was running up her credit card debt the real interest rate was negative. If you have a negative interest rate how much money do you want to borrow? The savvy answer is: all of it.
This is exactly the same issue as the securitization of mortgage loans. You are intellectually dishonest if you treat corporate deadbeats and individual deadbeats differently. The woman mentioned in this article is SETF(Small Enough To Fail).
A large proportion of bankruptcies involve serious medical problems. In any other industrialized country this woman would have received medical attention at minimal personal cost. This medical system would be, per capita, much cheaper to operate than the American one. It would also, very likely, produce a much healthier public.
Credit card companies specifically target the people most likely not to be able to pay back their debt. There is a name for this: loansharking!
Corporations are able to roll their short term debt(similar to credit cards) into long term debt(similar to loans) easily under ordinary market conditions. Individuals get hosed by the credit cards and are only offered consolidation after they are ruined.
There is an social problem (excessive materialism)and an institutional problem (total lack of regulation) going on.
Am I dreaming or is this real? TV commercials for up to $2,000 cash, right now! No credit rating reqd! But the small print reveals an APR in excess of 70%. Aren’t there usury laws for that?
I need to leave the DVR on and snap some photos of that small print that lasts maybe 1.1 secs.
With no body at HOME to teach your kids HOW to handle money..
With Little money AT HOME, what is there to Give a kid to TEACH them HOW to use money.
HOW MANY of you know HOW to use money..
do you know the words “Seed capital” or “Seed money”..And HOW to use it.
How many of you REALLY, know how to start a Life, business, with money.
How many of your wages, have increased over 30% in the LAST 8 years.