America In Debt

By Kenneth Gibert

More consumers are in debt now than ever before. According to an article by Kathleen Day of the Washington Post, consumers make 10,000 credit card transactions per second worldwide. In 2004, the average credit-card debt of U.S. households was at least $9,300, and household debts were at the highest levels in history.

According to Cardweb.com, about 51 million U.S. households carried credit card debt at an average balance of nearly $12,000 in 2004. Since then, it’s only gotten worse. Much worse. In November 2007 Newsmax.com reported that American credit card debt totaled more than 900 billion dollars.

As bad as that sounds, it’s getting worse. Credit card and other consumer debt are rising at rapid rates. Credit card debt increased 7.4 % in 2007, but that rate was 11.3% in November, the last month of the report. You can get the actual numbers at: federalreserve.gov/releases/g19/current/ There you will see that total consumer debt now stands at 2.51 TRILLION dollars. This is household debt not including mortgages.

The Rise of the Zombie Debt Collectors–Feast of the Undead

Zombie Debt-Collectors are companies that buy vast amounts of unpaid debt for pennies on the dollar. In 2005, the Zombie debt-collectors purchased $110,000,000 in face-value debt, according to the Association of Credit and Collection Professionals. Sometimes these debts were legitimately incurred. Sometimes the debts are so old that no debt-collector has a right to collect on them. Sometimes the debts have been settled by agreement or paid in full. No matter. The Zombie Debt Collectors have it now, and they want money.

No matter how the debt began, years before, they scarcely resemble their original forms now, having had years of high interest and penalties added to them. The Zombie Debt-Collectors make phone calls, write threatening letters, and finally file suit, with devastating effect.

In New York City alone, the Zombie debt-collectors filed almost 300,000 lawsuits in 2006 according to the Urban Justice Center. And it’s happening all over the country in almost unbelievable numbers. Debt collection is a huge "growth-industry"–one of the largest in our economy. I estimate that in 2007 upwards of 50,000 suits were filed in the Metropolitan St. Louis area where I practice.

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