A majority of consumers have suffered some economic distress in the last few years as many experienced some type of income loss, or saw the value of their home decline significantly, and this has led to more caution around debt in general, according to a new study conducted jointly by researchers at Oregon State University and the French university Ecole des Hautes Etudes Commerciales du Nord. Further, half of the study’s participants said they were unable to pay some of their debts, while a third were forced to deal with collections agencies.
“Over time, credit card use and heavy debt has become normalized in our culture,” said Michelle Barnhart of Oregon State. “Even though we say as a society, ‘don’t get in debt,’ the overwhelming messages being sent out—from the way credit is used to approve or disapprove us for services to political leaders telling us to spend after a big disaster to prove our patriotism—all of this has created a culture of debt.”
Part of the problem may also be a lack of financial literacy, the report said. All consumers polled said they learned their credit habits on their own, and almost none received any instructions on how to handle debt in school or at home. In addition, most said they never discuss finances with their kids.
In the last few years, consumers had to learn from their debt mistakes the hard way, as many saw their accounts charged off, and their credit scores decline to the point that they can no longer obtain new lines of credit.
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