Bankruptcy

The Repo Man Cometh

By Angie Littwin

Repossession isn?t just for struggling car owners or low-income rent-to-own borrowers anymore.  The combination of the recent overextension of credit and the current corresponding crash has resulted in a newly strengthened market for the repo man:  boats.  And we?re not talking about the poor fisherman who can no longer make the payments because of weakening economy.  No, these boats are genuine luxury items ? boats with names like ?Jersey Dreaming?? or ?Toy Box.? According to an article by David Streitfeld of the New York Times, boat repossession is on the rise.  Streitfeld follows a repo man in Michigan who says that his usual summer "slump," when boat owners make an effort to catch up on payments so they can enjoy the season, is not occurring this year.  A related CNBC video clip documents a boat repo man whose business has increased by 300 percent since 2006.   

This is another sign that credit failure is making its way up the class spectrum.  (For others, see the April 25 New York Times article on home foreclosures in Greenwich, Connecticut.)  The affected people may not be ?balance sheet rich? in that their debts probably exceed the value of their assets of this point, but they are ? or were ? at the very least in the small group of privileged Americans who owned non-home assets valued in the six-figures ranges.  This gives their stories a different quality than others about repossession.  There is no head of household who can no longer make it to work without a car, no single mother of three who now has to make do without a washing machine.  And, unlike with home foreclosures, most boat owners are not being pushed out of their homes, their school districts, and their middle-class American Dream. 

But there is still some resonance with these other foreclosure stories.  The now-former owner of ?Toy Box? says he did borrow beyond his means, but he also described his frustration at the boat loan whose payment structure let him pay down only $14,000 of $125,000 over the course of seven years.  He recently lost his home to a mortgage rate readjustment and is filing for bankruptcy.  He has another thing in common with his fellow bankruptcy filers of a more modest lifestyle: the desire never to use consumer credit again.  In one of his last quotations in the article, he says, ?I have no intention of ever buying anything, ever.?

Full post as published by Credit Slips on May 21, 2008 (boomark / email).