Credit Card Debt Next Crisis?

08 Jan Credit Card Debt Next Crisis?

     The sub-prime mortgage crisis will not be isolated.  Consumers are turning to credit card debt to cover spending, now that the easy money window for mortgages and home equity loans has closed.

Like mortgage debt, credit card debt is securitized and ends up backing bonds and other securities, so called.

As the default rates rise for credit card debt, the same dominoes can start to fall in the credit card market that have in the sub-prime mortgage area.     In what passes for positive spin these days, a Moody’sEconomy.com spokesperson says:

“. . . . we don’t expect things to get as bad” as the mortgage market.

That assumes no recession, which we are well into in Michigan already.

As I always say, get a real budget of your monthly income and expenses, and stay within it, or seek bankruptcy counsel for alternatives, when there is not enough to pay, before you tap into retirement accounts like 401(k)s.

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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.
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