Bill Cara: Bankruptcy filings say a lot about America, Wed., Nov. 23, 2005, 2:30 PM

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November 23, 2005

Bankruptcy filings say a lot about America, Wed., Nov. 23, 2005, 2:30 PM

An interesting aspect of life in America is the penchant to spend now, lie later. And if the latter doesn't work, file bankruptcy.

At least that was the case until fairly recently, when the laws were changed to make bankruptcy filing something deeper to consider than a simple whim.

According to an expert analyst in the credit card business, interviewed minutes ago by Bloomberg TV, there were 600,000 bankruptcy filings in the two weeks before the deadline beyond which new rules would apply. Six hundred thousand Americans declaring bankruptcy at once!

The mind boggles. You'd think it was an obligation, something like meeting the tax filing deadline.

It says a lot about the present condition of America.

I can see why, for those of you who can afford turkey, tomorrow is Thanksgiving.

P.s., (for Mark) I can say for those who are thinking this could be U.S. bashing on my part, that if Canada enacted the same piece of legislation, there would probably be a comparative 60,000 filings there too. My point is that the use of credit cards and debt in society has gone crazy.

But, seriously, are you not alarmed at the numbers? If you happened to remove all children, prison inmates, persons in long-term care, clergy, military, millionaires, and so forth, I happen to think 600,000 represents a big number.

Posted by Posted by Bill Cara on November 23, 2005 02:31:17 PM | Category: Economics

Discourse

Bill -

We are lucky in Canada (well, maybe not, since we pay through the nose in the form of taxes) because the biggest contributor to bankruptcy in the United States is the fact that few people have decent healthcare insurance.

"A recent study by Harvard University researchers found that the average out-of-pocket medical debt for those who filed for bankruptcy is $12,000. The study noted that 68 percent of those who filed for bankruptcy had health insurance. In addition, the study found that 50 percent of all bankruptcy filings were partly the result of medical expenses (11). Every 30 seconds in the United States someone files for bankruptcy in the aftermath of a serious health problem."

Full article at http://www.nchc.org/facts/cost.shtml

Teresa

Posted by: Teresa Lo at November 23, 2005 2:46 PM [link]

Bill,

America is in a bad place financially. Housing prices have gone through the roof, people are leveraged to the hilt and credit card debt is above 9K for the average American.

I work in a group of six people in our area. One figured out after three months that his house cost more than he bargained. He now has a second job to make ends meet. Another bought a year ago and with her rate adjustment on her adjustable rate mortgage, she's considering selling. A third co-worker just took out a second to buy some nice toys for his house to watch TV and other artifacts he just has to have as well as just refinancing from a fixed to ARM 18 months ago. A fourth is 2 car payments behind and almost 30 days late on his house. All these employees make good money (60-90K) and they still are bleeding. I just sold my house after only 25 months and made a nice six figure profit, have no debt and luckily am engaged to a like minded lady who has a small mortgage and tons of equity.

Most everyone I know is leveraged to the hilt. They all drive fancy cars, dress smart and live in beautiful homes. They are all sadly one missed paycheck away from the house of cards collapsing.

Not sure if you saw this article today, but it's pretty good.

http://www.freemarketnews.com/Analysis/102/2988/2005-11-23.asp?wid=102&nid=2988

My Trading Blog
http://activetrade.blogspot.com

Posted by: Rockmann at November 23, 2005 3:25 PM [link]