Will credit card bill stall mortgage foreclosures?
20th May, 2009 - Posted by admin - 3 Comments
According to a report from CBS News, the average U.S. family carried $7,300 in credit card debt in 2007. That's a big financial burden.
Is there a relation between this spiraling credit card debt and housing foreclosures? Probably. It's hard to make your mortgage payments when you're already deep in debt.
The numbers on the foreclosure side are even grimmer, if possible, than those credit card debt figures. RealtyTrac, an online provider of foreclosure data, said that in April, U.S. housing foreclosures remained at record-setting levels, with one in every 374 U.S. housing units receiving a foreclosure notice in the month. That's the highest this rate has stood since RealtyTrac began keeping track in 1995.
The government, spurred on by Pres. Barack Obama, are now getting in on the act. Earlier this week, the U.S. Senate passed a credit card reform bill. You know it's an important bill because the media were tossing around the word "major," as in "major credit reform bill."
According to the Associated Press, the Senate bill includes a host of changes, including this big one: Customers penalized by higher interest rates because they missed a payment will, if the new legislation becomes law, have the chance to return to their lower interest rate again after six months.
The credit card companies seem to be friendless these days, much like the mortgage lenders. Of course, I'm not sure the card issuers ever had many friends. I've noticed that the credit card statement that comes to my house seem to be coming closer and closer to their due dates. Critics say this is just one more trick used by the card companies to cardholders to miss their payments. Seems like an odd strategy, but I wouldn't put it past the card companies.
My hope is that the credit card reform legislation actually does help people struggling with credit card debt. One way to reduce the number of mortgage defaults and housing foreclosures, is to get homeowners in control of their other bills. I know too many people who've been living on credit for years. Today, unfortunately, all those bills are coming due, and a lot of people have no way to make their payments.
Posted on: May 20, 2009
Filed under: credit problems
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