Susan Carpenter's $15,000 in credit card debt began with $40
dinners. It mounted with vacations, and while Carpenter paid the
minimum on her bills, she used cash advances from American Express
pay her rent.
Now she's considering bankruptcy -- if only she had the money to
file the papers.
"I think about bankruptcy every two days," she said. "I could
live on the money I make ... but am I going to be able to whittle
away at the (bills)?"
And so it goes for the record number of Americans who are filing
to have their debts canceled. Bankruptcy could free them of their
unsecured debt except for back taxes and student loans, but it would
make it difficult and expensive for them to borrow money for up to a
Unemployment is the lowest it's been in seven years; inflation is
low; hourly wages are rising, and the economy is in the sixth year
recovery since the 1990-91 recession. But Americans are awash in
bills -- taking on credit card debt faster than their wages are
They owe more money on credit cards than ever before, and many are
paying late. More than 1 million Americans filed for bankruptcy for
the year ended June 30 -- up 27 percent from last year and far
surpassing figures from the 1990-91 recession, according to the U.S.
A December study by Visa USA Inc. discovered more people cite
imprudent spending as the single largest cause of bankruptcy,
of health or job problems and family emergencies, which once were
Despite the risks, banks offer twice as much plastic credit as was
available four years ago, according to the Federal Deposit Insurance
Corp. They're also writing off bad credit card loans at the highest
level since 1992.
Overspenders say some credit card companies are so eager for
clients they send pre-approved applications to people who may not
know how to manage the cash -- or the payments.
Raymond Gomes, a 39-year-old Skokie, Ill., man who filed for
bankruptcy in July, said he drifted into debt, always intended to
his $26,000 credit card bills and was current on payments until he
went bankrupt. He said he feels bad about filing but that it was his
"Even if you pay a little more than the minimum, the balance
doesn't go down," he said.
James Chessen, chief economist at the American Bankers
Association, said it would be unfair and bad business to lend only
the few people with infinitesimal chances of defaulting.
"If we don't take that risk and look for diamonds in the rough,
we're not doing our jobs," he said. …