Here's Another Idea For Bad Times

I found this interesting and possibly relevant to this topic:

from: http://www.usatoday.com/money/perfi/...lts-rise_N.htm

Record Rate Of Consumers Falling Behind On Loans

A record 4.2% of consumer loans were delinquent at least 30 days

A record number of consumers are falling delinquent or into default on their loans, a problem that some economists say will only get worse this year.

A record 4.2% of consumer loans were delinquent at least 30 days in the fourth quarter, the latest data available, according to the Federal Reserve. Another 4% of consumer loans were in default, meaning they’d been written off by lenders.

Recent data from the American Bankers Association and Moody’s rating agency show the same sobering trend: More consumers are paying late - or not at all - on home, car and credit card loans.

Employers shed 663,000 jobs in March, pushing the nation's unemployment rate up to 8.5%, the Labor Department reported Friday. Since December 2007 — when the recession began — companies have cut a total of 5.1 million jobs, more than 2 million of them this year alone.

The worst is likely yet to come. Chessen expects consumer loan charge-offs and delinquencies to continue rising through the end of this year.

In this economy, many families are juggling their bills, figuring out which ones to pay first, says Joel Naroff, founder of Naroff Economic Advisors.

Historically, consumers pay their mortgages before their credit cards and auto loans, because their home is often their most important asset. But this trend no longer holds true for all borrowers, data from the nation's credit bureaus show.

Some financially squeezed borrowers have begun paying their credit card and car bills before their mortgages, according to Experian and Equifax credit bureaus. That's because some consumers owe more on their home than it's worth, so they may be giving up on their mortgage and paying their credit card and car loan to get by, says Mark Zandi, chief economist at Moody's Economy.com.

But more people may soon fall behind on those bills, too. Zandi expects card charge-offs to peak at 10% in the first quarter of 2010, vs. 6.3% now.

"I don't think there's … any loan category that will avoid this storm," Zandi says.