Individuals and small business owners alike have both been hurt by rising unemployment, limited access to capital and a deteriorating economy. These factors have caused many people to lose their jobs and fall behind on their bills. Many people have plunged further and further into debt. How severe is this debt problem?

According to the Center for Responsible Lending, there have been over 1 million foreclosures in the United States in 2009 alone. About 12% of all home loans are currently delinquent. Economists expect this number to double over the next 6 months. States such as Oregon have seen foreclosures rise approximately 90% this year. This is just the beginning. The government placed a moratorium on foreclosures last fall that stopped many of the banks from evicting homeowners until the end of March. Now that the moratorium has ended expect to see a major surge in foreclosures. Increasing job losses and decreasing home prices will lead to more foreclosures. 

While real estate may be the biggest debt culprit; credit cards are not far behind. I recently read a study that stated that the average American has over $8,000 in credit card debt. Credit card debt is a huge burden that affects most consumers. Credit card companies are in business to make themselves money and not to help out consumers. They typically provide easy access to money at astronomical interest rates. Credit cards make it way too easy to overspend leaving consumers with massive amounts of credit card debt. According to the US Public Interest Research Group,  Between student loans and credit card debt, the average college student owes roughly $20,000 before they graduate and the average college freshmen has $1300 in credit card debt, The average college senior has more than $2,600 in credit card debt. 

These debt issues are not only specific to North America. Debt problems have plagued European consumers as well especially in the UK. The average UK citizen has twice the debt of some of their European Union counterparts. 1 out of every 6 UK consumers don’t believe that they have enough money to cover their bills. The foreclosure problem is a global crisis and consumers worldwide are feeling the pinch from the economic contraction, G7 countries France, Italy, Germany and Japan are all dealing with similar issues.

So what can you do if you find yourself up to your neck in debt? The process of getting into debt is very simple but getting out of debt can be extremely difficult. The first step is to cut your spending. Next you must develop a plan to get out of debt. This involves contacting lenders and making payment arrangements. If you are behind on your debts or feel that you have no way out of your financial difficulties; a debt counseling agency may be able to help.