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Debt Mountain About To Crumble
-- January 2, 2002
Americans piled up a record $7.5 trillion in outstanding consumer credit as of third quarter 2001. And that debt mountain could quickly become a debt avalanche! The number of personal bankruptcies in 2001 will likely break 1998's record year of 1.4 million. And that's just the beginning ...
As consumers attempt to dig out of from under the debt, they will be forced to curb new spending. And that means less growth for the economy.
And what about those who opt to file for bankruptcy protection, hoping for a clean the slate and the ability to keep on spending? Fat chance. Congress is looking to make it much more difficult for individuals to discharge their debts in bankruptcy. And anyone who's been through the painful process of filing for bankruptcy knows that it's not easy to get credit again.
One of the silver linings of a recession is that it purges the over-extended and strengthens the economy. So far, that process has just barely begun. When it begins in earnest, watch out!
related article: Americans Just Keep On Charging