Debt! No word better describes why millions of Americans are now facing foreclosure. Last year, the average American receiving financial counseling earned $27,000 annually and had $38,500 of unsecured debt spread over eight credit cards, according the National Foundation for Credit Counseling, a nonprofit group representing 115 counseling organizations. The study showed that consumers carried debt loads that substantially exceeded their income and, as a result, bankruptcy — or foreclosure — were their only reasonable options.

Add mounting mortgage payments to the credit card debt and a gloomier picture emerges for overextended borrowers — in part because so many homeowners are now trapped by payments that are about to soar, even as the real estate market slumps.

Not surprisingly, more than 115,568 properties entered some stage of foreclosure nationwide in October, according to RealtyTrac’s U.S. Foreclosure Market Report. Among the hardest-hit states were California, Florida, Texas, Michigan, Illinois and Ohio. Of course, that could change as interest rates on adjustable-rate mortgages rise next year and beyond.

Rising interest rates have caught many homeowners in a “can’t pay, can’t sell, can’t refinance” vise, in which their ARM payments are outpacing their incomes and their homes have not appreciated enough to help cover the cost of a refinanced mortgage or to allow them to sell and walk away. For them, foreclosure looms.

Considering that the housing market is expected to continue to be slow through 2007, there could be increases in mortgage delinquencies — especially among high risk subprime loans.

Do you think debt is the primary reason why Americans are increasingly falling into foreclosure or do you think other factors are at work? We want to know your opinion. Feel free to either post a comment directly to this blog, or send us your thoughts and feedback to editor@foreclosurepulse.com.