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Watchin tha world go by
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Discussion Starter · #1 ·
the credit crunch has hit a new segment,those who have been using them to live now are hitting the wall.as their ability to service debt dries up so will economic growth which depends on a now tapped out consumer.



More Americans using credit cards to stay afloat
Posted by DeaconBenjamin
On News/Activism 02/28/2008 5:22:46 AM PST · 9 replies


Digg del.icio.us Newsvine Reddit FacebookWhat's this?By Kathy Chu, USA TODAY
Seven years in the credit-counseling business didn't prepare Ann Estes for the alarming trend she began noticing last fall: As her clients' mortgage bills became unaffordable, a growing number of them began paying their credit card bills before — and sometimes instead of — their mortgages.
"We've never seen anything like this," says Estes, who counsels clients by phone from her office in Richmond, Va. "Their homes are at risk, and they know it. But people say, 'I don't want to let my credit cards go because that's my cash flow.' "


Across the nation, credit counselors are reporting the same trend. Credit bureau analyses of consumer payment data show that financially squeezed borrowers have begun paying their credit card and car bills before their mortgages. That's a striking reversal from the norm, one that reflects rising desperation. It suggests that some people essentially have given up trying to stay current with their mortgages and instead are focused on using credit cards to squeak by.If the trend persists, many economists say, it could accelerate mortgage losses and further drag down the economy

The growing reliance on plastic may explain why revolving debt — most of which is on credit cards — rose at a seasonally adjusted annual rate of 7.8%, to a record $943.5 billion, in 2007 compared with a 6.1% adjusted rate the year before, according to the Federal Reserve.

The danger is that "The economy has relied on the consumer to keep it afloat for the last seven years, and there's no more gas in the tank of the consumer," says Howard Dvorkin of Consolidated Credit Counseling Services in Fort Lauderdale. "They've got nothing to give."

This reversal in payment priorities helps explain why the rise in credit card and auto loan defaults — which occur when lenders give up trying to recover a debt — hasn't matched the pace of mortgage defaults. Credit card defaults, while rising fast, are still in line with historic averages
 
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I am getting close to needing credit myself. I'm debt free right now but at the rate things are going for me I dont expect that to last more than another year. I am hoping to get a job but trying to go to school right now and get youngest in Kindergarten first so I dont have to pay the big $$ for daycare.
 

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what they need to do is tighten up the credit limit so people can't get out of control. we have 2 cards that have a high enough limit that i can buy a nice car with either one. really though, who needs that kind of limit!?
 

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People have been misusing credit for a long time, now combined with the market being flooded with forclosures, and falling home values, then add in stagflation, its the perfect storm for collapse. I think we are a long way from seeing rock bottom.
 

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Founding-American™
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People should have the right to do stupid things if they'd like. Smoking, jumping from an airplane without a parachute, or going into credit debt slavery.

I don't feel sorry for people who indulge themselves with credit and then complain.
Now, the banks engage in what is commonly called predatory lending meaning they give money to people whom they know can't afford to pay it back. They do this because they don't make money from the guy who pays his bill each month but from the selfish boob who can barely pay the minimum.

The debtor should not be bailed out from his follies through government programs funded by taxpayer dollars. The banks should be punished for engaging in these practices which cause damage to an entire economy.
 

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Destroyer of Ignorance
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True free markets need to be re-installed. Government bail outs? HELL NO! We have Bancruptcy laws for a reason and businesses fail everyday. Why should the government help any individual or business?

Once again, the founders had it right.
 

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Watchin tha world go by
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Discussion Starter · #7 ·
well there is bad news and bad news disguised as good.the bad is we are mortaged to the hilt and owe more on our houses than they are worth.disguised as good news cngress is considering legislation to help by assuming distressed mortages--your govt will now be your lien holder.and i guess as most landlords they will be able to put conditional use requirements on YOUR home.


http://money.cnn.com/2008/03/06/real_estate/home_equity.ap/index.htm?cnn=yes

03/07/2008 3:16:23 PM PST · by Lorianne · 12 replies · 331+ views
CNN Money ^ | March 6, 2008
Americans' percentage of equity in their homes has fallen below 50 percent for the first time on record since 1945, the Federal Reserve said Thursday. Homeowners' percentage of equity slipped to a revised lower 49.6% in the second quarter of 2007, the central bank reported in its quarterly U.S. Flow of Funds Accounts, and declined further to 47.9% in the fourth quarter - the third straight quarter it was under 50%. That marks the first time homeowners' debt on their houses exceeds their equity since the Fed started tracking the data in 1945. The total value of equity also fell...

http://www.freerepublic.com/focus/f-news/1980995/posts

03/05/2008 3:37:43 PM PST · by kiriath_jearim · 34 replies
Reuters ^ | 3/5/08 | Kevin Drawbaugh
WASHINGTON (Reuters) - As the U.S. government edges toward a more forceful response to the housing market crisis, a senior Democrat on Wednesday said a bill being created may call for federal purchases of distressed mortgages. House of Representatives Financial Services Committee Chairman Barney Frank said the bill from House Democrats may be unveiled next week to tackle what he called the worst housing slump since the Great Depression of the 1930s. The government is scrambling to stem a wave of failing loans as the rate of new foreclosures hits a record level and millions of marginal borrowers struggle to...
 

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I know for a fact that there is a serious credit crunch right now and creditors on average are cutting their credit limits by 50%.

I work for a credit counselor and they are reporting, across the board, a definite credit crunch.
 
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