Problem Debtors' Situations Worsening
Economy spurs large increases in credit card and mortgage debt
For Immediate Release: October 9, 2003
ROCKVILLE, Md. — Americans experiencing financial troubles have been seeing their situations deteriorate over the past year. According to a Myvesta.org internal survey of clients in financial crisis, the average amount of credit card and unsecured debt has risen almost 50 percent in 2003 and mortgage debt is up almost 25 percent over the same period. The average credit card and unsecured debt rose from $52,210 in 2002 to $77,036 in 2003 and mortgage debt rose from an average of $168,129 in 2002 to $207,958 in 2003.
"It hasn't been a great financial year for many American families," said Steve Rhode, president and co-founder of Myvesta.org, a nonprofit financial crisis center. "Low interest rates have tempted many people into mortgages too large for them to handle. Individuals have been turning to credit cards as a way to make ends meet in this lousy economy."
According to Rhode, who is also a money coach, it is not uncommon for clients with well over $100,000 in credit card debt to turn to him for help.
"Over the past few years I have seen clients' average credit card debt get larger and larger," Rhode said. "In one case I was working with a client who had over $1 million in credit card debt spread out over 78 different cards."
All statistics from Myvesta.org's survey were gathered when clients first entered a Myvesta.org program. The average client came to Myvesta.org with:
- 11.3 credit cards, up from 8.1 in 2002.
- A negative monthly cash flow averaging $2,468.
- 5.4 credit card late fees per month costing $169.
"The rise in consumer indebtedness is alarming. People are trying to fix their financial troubles by borrowing their way out of debt and creditors are happy to let them get in deeper," Rhode said. "Today, debtors have significantly fewer options for resolving difficult financial problems without bankruptcy. Creditors have become more resistant to working one-on-one with people to develop plans that allow them to meet their obligations. Good people are falling to their financial death even though they want to meet their obligations in difficult times. It's an American tragedy."
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MyvestaSM is dedicated to helping people create healthy financial lives. The organization provides a wide range of materials to inspire and inform people so that they can break down their barriers to financial and personal success. For more information visit Myvesta.org online.
