Easy credit

Thursday, December 4, 2003

Enid (Okla.) News & Eagle

Bankruptcies in the U.S. have nearly doubled in the past decade, including more than 1.6 million people who filed for personal bankruptcy this year alone.

Personal bankruptcies rose 7.8 percent in the 12 months ending Sept. 30. The upward trend has continued despite signs of recovering from nearly three years of a weak economy.

What's driving these numbers? Household debt. Make that credit card debt.

Some say a strong economy in the mid-1990s caused credit companies to be more lenient with their standards, a factor that has had an impact for years afterward. Others have said relatively low interest rates have encouraged people to borrow when they really didn't have the resources or a plan to pay back the money. ...

All this is finally catching up, and now even the credit card companies are asking for some type of relief. Legislation making it harder for consumers to erase their debts in bankruptcy court has passed the House and been endorsed by the White House. This kind of legislation has been pushed by banks, credit card companies and retailers. ...

The fact is, it's too easy to get credit, and the credit standards have to increase. Instead of saving for a major purchase (or even some minor purchases), consumers are just charging it on a wing and a prayer. Holding consumers accountable for their debt is one way to help ease these credit problems. The other way is to raise the standards for extending credit. ...

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