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Personal Bankruptcies Hit Another Record High in 2003

by Adam Price |
April 2, 2004
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San Jose, CA - 2003 saw a record number of people filing for bankruptcy - for the second year in a row. More than 1.6 million people filed for bankruptcy last year, or one out of every 73 households in the United States. The percentage of credit cards whose users have fallen behind on their payments also hit record highs last year. The increase in bankruptcies and late credit card payments, despite low interest rates, show that more and more households are being crushed by almost $10 trillion of debt.

The so-called 'economic recovery' last year was good news for Wall Street and corporate profits, but not for working people. Wages barely keep up with rising prices and almost no new jobs are to be found. Working families who had to borrow to make ends meet and the rising number of families without health insurance who couldn't pay their medical bills also contributed to the rise in bankruptcies.

Banks and mortgage lenders have been chasing households with poor credit. Last year almost one-third of profits from credit cards came from late fees and higher interest rates charged to those who fall behind on their payments. Mortgage lenders are also promoting adjustable interest rate mortgages, which allow families to make lower monthly payments, but put them at risk if interest rates rise and increase their monthly payments. On top of all those schemes, many crooks have set themselves up as 'credit counselors' to take advantage of people with credit problems.

While many economists are concerned that this growing mountain of household debt could hurt the economy, the Bush administration and the Federal Reserve Bank are saying that everything is fine. Federal Reserve Bank chairman Alan Greenspan testified to Congress that consumers are in good shape and that rising bankruptcies are not a sign of too much debt.

The big banks have responded to the increase in bankruptcies by pushing 'bankruptcy reform' that would make it harder to declare bankruptcy and force households which are deep in debt to pay back more. Banks deny that they have anything to do with household credit problems, and blame the victims of their own efforts to make as much profit as possible.

A real solution to the rising tide of bankruptcies must include higher wages for working people and government-provided health insurance for everyone. Over the last two years businesses have increased their output while laying off millions of workers - by making the rest of us with jobs work harder and longer, and at the same time making us pay more for our health care. We need fighting unions that can mobilize the community to win higher wages and protect what little health insurance we have left. In addition, if private businesses are not going to hire, then the government needs to hire people for useful projects. Last but not least, we need to make sure Bush and his cronies can't buy or steal another election in November.