Consumer credit evaporating – Consumer bankruptcy cases to climb
By David Leibowitz, Illinois and Wisconsin Bankruptcy Attorney on May 11, 2009 in Featured, General Bankruptcy Information
Consumer credit is drying up – fast. We expect this will result in tens of thousands of new bankruptcy cases by the end of 2009 and even more through 2010. Every credit card issuer has been approving fewer new applicants, reining in credit lines and canceling unused accounts. Lenders are also eliminating teaser rates and ratcheting up interest rates and penalties for existing borrowers. With the sweeping regulatory changes and relatively few signs that the economy stabilizing, the amount of credit available to consumers will continue to shrink.
Meredith A. Whitney, a prominent banking analyst, expects credit card lenders will cut the lines of credit they extend to borrowers by a total of $2.7 trillion through 2010. That is equivalent to a 57 percent reduction in the credit they made available two years ago at the height of the boom.
If you were using your credit card to make ends meet, it won’t work anymore. What does that mean to you? Credit card companies will be crashing down on you. They will raise your interest rate even if you are just a few days late. You will find yourself in collection cases and facing judgments. Garnishment of your wages will follow. If that happens, call on one of the experienced and excellent attorneys you will find here on Bankruptcy Law Network.
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