NYT: Another Day Older and Deeper in Debt

http://www.nytimes.com/2008/07/20/business/20debt.html?_r=1&ei=5043&adxnnl=1&oref=slogin&partner=EXCITE&adxnnlx=1216493334-UnkgGv1rqv+0UjUj2LZ3Nw

Video and photo at link.

By GRETCHEN MORGENSON
Published: July 20, 2008

The collection agencies call at least 20 times a day. For a little quiet, Diane McLeod stashes her phone in the dishwasher.

But right up until she hit the wall financially, Ms. McLeod was a dream customer for lenders. She juggled not one but two mortgages, both with interest rates that rose over time, and a car loan and high-cost credit card debt. Separated and living with her 20-year-old son, she worked two jobs so she could afford her small, two-bedroom ranch house in suburban Philadelphia, the Kia she drove to work, and the handbags and knickknacks she liked.

Then last year, back-to-back medical emergencies helped push her over the edge. She could no longer afford either her home payments or her credit card bills. Then she lost her job. Now her home is in foreclosure and her credit profile in ruins.

Ms. McLeod, who is 47, readily admits her money problems are largely of her own making. But as surely as it takes two to tango, she had partners in her financial demise. In recent years, those partners, including the financial giants Citigroup, Capital One and GE Capital, were collecting interest payments totaling more than 40 percent of her pretax income and thousands more in fees.

Years of spending more than they earn have left a record number of Americans like Ms. McLeod standing at the financial precipice. They have amassed a mountain of debt that grows ever bigger because of high interest rates and fees.

While the circumstances surrounding these downfalls vary, one element is identical: the lucrative lending practices of America’s merchants of debt have led millions of Americans — young and old, native and immigrant, affluent and poor — to the brink. More and more, Americans can identify with late 19th and early 20th century miners in debt to the company store, with little chance of paying up.

FULL story at link.

They live from week to week, and sometimes, day to day. It is those unexpected bills that send them reeling. An unexpected medical bill from a trip to the emergency room. Or the motor in your old car blows a gasket or a transmission. When you are looking at an additional bill of $1500-$2000, you may as well be looking at a million dollar bill. You don't have it. You put it on the credit card. It had to be done. This is where a large number of Americans find themselves today. What's the solution?

And as the fees and penalties and interest go higher, she cannot declare bankruptcy anymore and get a fresh start. No, that right is reserved for corporations.

C'mon, Congress!!! We know you can do it!!! :applause:

And once she lost her job, I imagine she lost her health insurance as well; how can she afford COBRA with all those other debts looming? Reading these accounts is like watching someone's life unravel. And it seems to be happening more and more.

A viciously unaffordable pretense of protection.