The Wall Street Journal ran a grim headline recently that can only mean one thing: Debt consolidation firms better get ready for yet another influx of new business. The headline in question? It blared, in big, bold type, that the unemployment rate for adult males stood at an all-time high. This isn’t good news for anyone, even for adult females. The national unemployment rate is still hovering near 10 percent. That means that both males and females are struggling to find work. And there are precious few signs that the economy is going to improve. It should be little surprise, then, if future headlines trumpet the booming business that debt consolidation companies are enjoying.
Loans of Last Resort?
Many consider debt consolidation loans to be the loans of last resort, the ones that consumers turn to when there’s nowhere else to go. This may be true for the majority of borrowers. After all, the high interest rates and fees that go along with these loans don’t look so bad if they allow consumers to stop the collection agencies from calling. And, in all honesty, these loans are not inherently bad. If used properly, consumers can take all of their monthly debts, funnel them into one affordable loan and gradually pay off their creditors, without fear of losing their most valuable assets.
It’s a shame, though, that so many consumers need to turn to these loans. Again, though, this is no surprise. People who are out of work struggle to pay their bills. They rely on their credit cards to make more of their purchases. Those who do this for a few months suddenly find their debt levels rising. When they get too high, a debt consolidation loan may offer the only hope. Then there’s the bad news regarding the housing industry. Home values continue to fall. Many U.S. residents had the majority of their wealth tied into their homes. Now that a growing number of homeowners owe more on their mortgages than what their homes are worth – a story in the Wall Street Journal said that nearly 25 percent of homeowners were in this financial situation – the prospect of quick home equity loans to bail people out is no longer realistic.
Hoping For Better Times
The hope, of course, is that the stock market will continue rising, that consumer confidence will rise and that businesses, buoyed by such good news, will begin hiring again. But until this happens, and there’s no timetable in place for when businesses will regain their confidence, you can bet that the owners of debt consolidation businesses will see their profits rise.