The 'Democratization of Credit' Is Over -- Now It's Payback Time

WSJ ^ | 10/10/09 | S. MITRA KALITA

[TigerLikesRooster]

The 'Democratization of Credit' Is Over -- Now It's Payback Time

By S. MITRA KALITA

NEW YORK -- Karen King owes nearly $36,000, more than she's ever earned in a year.

All day long, bill collectors call. She hunts for a second job, sometimes skips meals, and stays with other family members at a grandfather's crowded apartment, trying to get out of debt and turn her life around.

She largely holds herself at fault. "Years ago, I lived for now. It was so stupid," the 28-year-old says. "It's depressing, but I can't live that life anymore." Now, she says, "I basically want to live for the future."

The recession has forced a financial reckoning for Americans across the income spectrum. The pressure is especially acute for the low-income Americans who relied on borrowing for daily expenses or to gain the trappings of middle-class life. Shifting credit practices over several decades had enabled them to live beyond their means by borrowing nearly as readily as the more affluent.

[truthkeeper]

Her biggest chunk of debt, $26,000, stems from student loans to pay for her two-year associate's degree from a community college -- loans now in the hands of collectors.

$26,000 to pay for an AA from a community college??

[SaraJohnson]

Kind of like ACORN is to democracy as people with no money is to bankster credit.

[FreedomPoster]

People are idiots. And you generally can’t discharge student loan debt in a bankruptcy. It’s the new indentured servitude.

[Oatka]

My emphasis:"The rise I see now is in food stamps, even from teenagers," Mr. Mustafa said.

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