Debt and Credit Management Part 2



Personal Bankruptcy Rates:
(Source: Administrative Office of U.S. Courts)
* 1998 – 1.39 million

* 1999 – 1.28 million

* 2000 – 1.21 million

* 2001 – 1.45 million

* 2002 – 773,740 (January – June) On track for 6.5% increase over 2001
(see more on bankruptcy at The American Bankruptcy Institute)
The economic fallout from the recent recession continues to flood the bankruptcy courts. During the first three months of 2002, 379,012 bankruptcy petitions were filed, the highest number of cases ever filed in any first calendar quarter. Source:, 5/20/02
Total consumer debt has been soaring. From 1999 to 2001 it was up 25%. Revolving debt (mostly credit cards) has climbed nearly 30% during the same time period. The debt service burden of consumers (payments on installment and mortgage debt as a share of after-tax income) has risen from 13.79% in the first quarter of 2000 to 14.35% in the first quarter of 2001. This is close to an all time record of 14.38% set in the fourth quarter of 1986. (click to see The United States public debt – to the penny)
The consumer’s non-mortgage debt level as a percentage of income stands at a record-high level after adjusting for home equity lines and automotive leasing. Both of these sources of debt are not included in the government’s statistics. We believe that the consumer is nearly “tapped out”, which is evidenced by the recent dramatic increases in delinquency levels and slowing retail sales. Housing has been flat-to-down over the last several months, even though long-term interest rates are two full percentage points lower than last year. The consumer has been able to continue piling on debt which has delayed defaults (until recently), as credit card issuers have advanced more and more credit to seemingly “anyone with a pulse”.
If you have become a slave (Proverb 22:7) to your creditors, it’s time that you make the bold step of performing “PLASTIC SURGERY”. Decide now that you are going to take control and begin your journey towards a debt free life! IT CAN BE DONE!
Part 3 will run next month
Mike Coe is the President and Founder of the non-profit teaching ministry, Christian Oriented Education, Inc. He specializes in seminars, classes and speaking engagements dealing with personal finance from a Biblical and practical perspective.


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