With all the recent news about the crisis on Wall Street and the multi-billion federal bailout, the big question you’re probably asking is: “What does any of this mean to me personally and for my own debt problems?”  After all, how can you be worried about the crisis on Wall Street when you are too busy worrying about the financial crisis in your own home? This is what I’ve been hearing from most of the people who have come to our office recently for financial advice.

If you are in debt and are seriously considering bankruptcy as an option, I am sure a lot of thoughts are going through your mind. How quickly can I recover from bankruptcy? What are the different types of bankruptcy available? How do I know I am making the right decision?

Danger, danger. According to a recent newspaper article, a lot of consumers are falling behind on their credit cards at an alarming rate.  This conclusion comes from analysis of financial data obtained from the country’s largest credit card issuers.  The greatest increase, according to the study, is among accounts that are 90 days late.  If you have ever been 90 days late on paying your bills, you know that by this time, your accounts are usually turned over to a collection agency.  The collection agency is the creditor’s “hired gun” and their only job is to harrass you and make your life miserable.

Experts agree that this growing problem is partly a result of the subprime mortgage crisis and is only expected to get worse in the days ahead. Obviously, when homeowners can barely afford to even make their mortgage payments, other debts such as credit cards simply have to wait to get paid. Some of the biggest lenders like Advanta, GE Money Bank and HSBC are reporting increases of 50% or more on delinquent accounts compared with the same period a year ago.  Economists are predicting that delinquencies and defaults will rise further as the foreclosure crisis worsens.

The shocking number of foreclosures caused by the subprime mortgage mess may be taking over the headlines these days but the sudden surge of personal debt from mortgages, credit cards and other loans is part of a far larger problem than consumers are facing all across this country. Recently, I wrote an article discussing how a lot of people in foreclosure are resorting to using their credit cards in greater numbers just to stay afloat. Thus, it’s not just mortgages that we are struggling with in these uncertain financial times.  I predict that unless consumers get a handle on their own personal debts (mostly credit cards), this could the next crisis that this country will soon be facing.

Statistics show that there has been an explosion of credit card debt. Today, approximately one-third of households have credit card debt over $10,000. Although bankruptcy laws enacted in 2005 made it more difficult for many to file, statistics show that bankruptcy filings have actually gone up. In California, a recent poll shows that a whopping 63% of residents report that their financial situation is worse from just a year ago.  These numbers are higher than the previous high of 50% in 1992 when California was in a deep recession. The same poll shows that overall, 86% of Californians believe that our state is in bad economic times.  That’s the worst assessment in 15 years.