Organization helps those with growing debts
Ann Harootunian, 69, never dreamed the health of her finances would put her in dire circumstances.
But during the course of four seizures, four heart attacks and two open-heart surgeries in the early 1990s, the South Lake Tahoe woman was forced to retire earlier than planned as a school bus driver.
Then at the end of 1994, her caregiver and husband had a stroke, prompting the self-employed man to stop working too.
Meanwhile, the bills from traveling, gifts for their grandchildren and miscellaneous charges were beginning to pile up.
“We always paid our credit cards. We had no reason to think we wouldn’t be able to,” she said.
The couple quickly swallowed their savings and were left with social security payments and her small pension.
Harootunian contacted her creditors to warn them of their shortcomings, but “they were totally unresponsive,” she said. The finance companies wanted larger payments than the two could afford. One of their four cards mounted $1,000 in debt, a manageable amount to pay off if one has a job, she stressed.
“It’s been tough. I wanted to pay them off. I don’t like the idea of paying three times their amounts,” she said, referring to interest and late charges.
In 1996, Harootunian sought refuge from the firing squad of creditors at Consumer Credit Counseling Service of Northern Nevada. The Reno-based company, with offices in Carson City, Elko and Henderson, arranged a payment plan after a free consultation. The Harootunians pay $8 per creditor account. The company pays the creditors, and the clients pay CCCS.
“They’re helpful. I would recommend them,” Ann said.
People would be surprised by how often this typical scenario happens, CCCS Director Matt Bowser said.
Bowser’s company juggles up to 5,000 consultations a year and manages 1,900 clients that range from attorneys to city councilmembers. Also making the list are certified public accountants and those with addictive personalities who compulsively drink, gamble or take drugs. Some people diagnosed with bipolar disease have also been known to go out on shopping rages, when they’re experiencing manic swings.
Many overdo it over time then get hit with an abrupt, unexpected setback. A few of Bowser’s more affluent clients have gathered $250,000 in debt.
“These people have good credit ratings. Then suddenly something dramatically happens in their lives, and they find they can’t manage it anymore,” Bowser said.
Half of these clients on the program are affected by the holidays, he reported.
“They want to show people how much they care for them,” Bowser explained the reason for the gift-buying sprees.
Tack on better-than-average television marketing at this time of year, and it’s a slippery situation to those accustomed to spending freely.
“Everything around you says you must be giving a gift,” Bowser said.
Other culprits include decorating frills like wrapping paper, holiday lights and, with that, higher electrical bills for those seeking the Griswold Christmas.
But unlike the Griswolds, money problems have been known to cause about 40 percent of divorces, statistics show.
“It’s not just the debt. People come in to marriages with different philosophies,” Bowser said. “We like to get (the spenders) out of the behavior of the past.”
Americans plan to spend 45 percent more on holiday shopping than they did last year, Debt Counselors of America reports. The average shopper will spend $1,220 in 2000, up from $841 in 1999. One in ten shoppers will shell out over $1,500.
Add to that, credit card balances in the U.S. have increased by 60 percent, with 20 percent carrying five or more cards. People who earn less than $25,000 a year carry the highest average balance of $3,674, the company states. Five percent of people are clueless about how much they owe.
“People’s appetite for credit made a big leap forward in the past year,” said Mike Kidwell, vice president of the national counseling nonprofit. “It’s not surprising after another year of economic enthusiasm. Until we experience a major economic downturn, people will continue to push their credit limits to the sky.”
As an example, a $4,000 credit card debt at an average 18-percent interest rate will take 38 years to pay off if the cardholder only pays the 2 percent minimum payment.
There are ways out of the abyss, according to the debt counseling company.
-Carry only two cards when shopping.
-Record all purchases in the checkbook register.
-Avoid skip-a-payment and buy-now-pay-later offers that mount more interest.
-Use a low-rate credit card.
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