Americans Struggle to Pay Personal Debts

Current statistics say that an ordinary adult American has an average debt of 700 to 900 dollars. However, the figure only covers about 5 out of the total 50 states; so it is expected that the average debt will balloon if all states were to be considered. Additionally, there is an estimate of 250,000 people who can’t afford to pay their bills on time. All of these equate to more than 18 billion dollars of unpaid debts and they are starting to affect the economy as a whole.

Why Americans Owe Too Much Money

There is a bad joke circulating online about Americans and it goes like this: “America is a country of debts.” While the joke could be too general, there is still some truth to it. When asked why Americans owe too much money, the low compensation amidst the rising cost of living comes out as the most solid response.

But there is another emerging answer to the question on debt and it comes as no surprise. Based on a survey, the easy availability of bad credit loans is causing Americans to swim in debt.

Bad credit loans are non-traditional loans offered online. They provide instant gratification as responses are given almost immediately. Funds are also wired to your bank account in as little as 24 hours. More importantly, these types of loans do not need the usual requirement of a credit check. As such, even if you have the worst credit history, you can still apply and get approved as long as you can prove you capacity to pay.

However, the ease of securing loans does not translate to the ease in paying them. According to the data collected by the Bank of America, the present total percentage of non-performing loans reached 12.7 percent that is relatively higher than the 3.2 percent in the past. There have already been a number of blocked bank accounts due to the legal charges filed against the owners as a result of non-repayment. It was also revealed that cases of non-payment are up by 22 percent than the previous year while total debts in the past two years rose by 180 million dollars.

Solution to Increasing Debts and Bad Credit Loans

Unpaid loans and other debts have become a serious problem to banking institutions as well as the government. With this, the government has decided to make changes on its consumer loans act. The main goal is to prevent Americans from being trapped into serious debt problems.

Currently, a bill is being studied in the legislation, which limits the scope of bad credit loan companies. It primarily targets the excessive interest rate by considering the possibility of capping it. Another area of interest to the said bill would be the lengthening of the payback period. Basically, there is a move to institutionalize online lending through governemnt regulations.

But while the steps towards a successful government interaction is still being worked out, responsible lenders of bad credit loans are already implementing programs to empower borrowers. Education campaigns have been initiated through free webinars and the provision of debt counseling to troubled borrowers.

It is hoped that through these measures, Americans will be able to utilize bad credit loans responsibly and handle debts effectively.