Card Debt

Bankruptcy filings in Maryland leapt by 41 percent over the last year -- higher than the nationwide increase of 27.2 percent, federal officials said yesterday.Maryland had 26,739 filings -- with nonbusiness filings making up more than 94 percent -- in the 12-month period that ended March 31, according to the Administrative Office of the U.S. Courts in Washington."Individual debt has risen and people are becoming over-obligated and they're starting to choke," said Russ Bohlman, president and CEO of Consumer Credit Services of Maryland and Delaware, which provides counseling to clients in deep credit card debt.

For years, consumers deep in debt turned to counseling agencies to negotiate repayment plans with credit-card issuers. But consumers are now in such dire straits, some can't even afford repayment plans despite concessions from card companies. So the National Foundation for Credit Counseling, a trade group for credit counselors, approached card issuers about making even more concessions for consumers without the resources to repay under a regular plan. The group announced last week that the top 10 card issuers, including Capital One, Bank of America, Chase Card Services, Discover and American Express, signed on. Of course, it is in the interest of credit-card companies to be more lenient, even though they will collect less in fees and interest.

HOUSTON -- Like an athlete who uses steroids to temporarily exaggerate muscle mass and to boost physical strength, the U.S. economy has been perilously inflated through the enormous increase of debt over the last two decades. And, like the myriad of medical maladies that eventually afflict steroid abusers, the negative long-term impact of societal debt has been neglected during this period of unprecedented U.S. economic growth. Today, the three principal legs of the U.S. debt triangle have reached staggering proportions: About $6.7 trillion in household (including home mortgages)

When a woman who calls herself Tricia discovered last week that she owed $22,302 on her credit cards, she could not wait to spread the news. Tricia, 29, who does not talk to her family or friends about her finances, says she is ashamed of her personal debt. Yet from the laundry room of her home in northern Michigan, Tricia goes online and posts intimate details of her financial life, including her net worth (now negative $38,691), the balance and finance charges on her credit cards, and the amount of debt she has paid down since starting a blog about her debt last year ($15,312)

Have thousands of dollars of credit card debt and little money? The online ads for debt settlement might seem the answer to your troubles. They promise to settle your debt with creditors for 30 cents or 50 cents on the dollar. No damaging bankruptcy. You can be debt-free in one to three years. But there's a lot those ads don't tell you. Debt settlers can charge stiff fees. Creditors could refuse to settle. They might keep hounding you with calls or take you to court. You can get hit by taxes on debt that's forgiven.

THE credit card, the legal gambling casino and the stock market all have been among the spectacular growth industries of the 1990s.Issuing plastic has been a favorite cash cow of the banking industry since Citicorp bought out the pioneer issuers, Carte Blanche in 1978 and Diner's Club in 1981.The perils of gambling and investing are well known. We were recently reminded of what can happen when the line between the two is blurred: A Georgia day-trader went on a homicidal rampage.Addictive debtThe addictive nature of credit card debt is less well recognized.

Janet Hard of Freeland, Mich., couldn't understand why she and her husband were paying more than the minimum balance on their Discover credit card - adding only an $8 Internet fee each month - but the amount they owed did not seem to decrease at all. As Mrs. Hard testified before a congressional subcommittee this week, it turned out that the interest rate they were being charged was a whopping 24.24 percent, based on an arbitrary determination Discover card...

Raising four teen-age kids through the '80s, Lucette Dumas knew what it was like to be hit by a barrage of expenses."Shoes -- my God!" Ms. Dumas, a Hyattsville nurse, sums up that category with an explosive exclamation. "Then there's that ski trip with the sophomore class. The equipment for the photography club. And the clothes. You wouldn't believe the clothes."But Ms. Dumas -- who also went through a divorce during these years -- never found herself strapped for funds. Not for the shoes, the ski trip, or even the frequent dinners in restaurants and twice-a-year trips to visit her sister in California.

A colleague recently received a charming missive from her credit-card company after she started knocking down the $6,000 balance on a card that had been charging 19.99 percent. Dear Ms. ... Your recent payment activity suggests that you're trying to pay off your ... credit-card balance. It's simply good business for us to do whatever we can to help you. So we're lowering your ongoing interest rate to 16.9 percent ... There are no strings attached or gimmicks. Simply call ... and give us the go-ahead.

Credit-card users face a wall of worry in 2006 over rising interest rates, higher minimum payment requirements and bankruptcy laws that make it tougher to write off unsecured debts. You can write your own sad story of being swept along by economic events beyond your control, or you can take firm control of your credit. Here's the true tale in progress of an acquaintance of mine who owns a small business: Under pressure to pay mounting bills at work, he opened as many new credit cards as he possibly could to expand his purchasing power.