At the group blog Credit Slips, Harvard Law School professor Angie Litwinn makes some good points about the news, highlighted here yesterday, that credit card companies have been aggressively targeting subprime borrowers over the past year. First, she notes that it isn't clear from the information presented whether credit card companies are specifically going after subprime borrowers who are not making their mortgage payments, or simply the much larger category of all subprime borrowers. Second, she suggests that another reason for the ramp-up in direct mail to subprime borrowers was the passage, in October 2005, of the new U.S. bankruptcy law.

"It could be the case," she writes, "that issuers are still adjusting their solicitation volume to account for the newly weakened bankruptcy protections available to their defaulting customers."

Really, usurers never had it so good. Now that's it harder for people to declare bankruptcy, let's step up our efforts to offer credit to those most likely to default on their debts.

Credit card debt is rapidly becoming a hot topic, and for good reason. An excellent article in Wednesday's USA Today lays out some compelling statistics. (Thanks to Calculated Risk for the link.)

• "In the first five months of 2006, credit card delinquency was 3.77 percent higher than a year earlier, according to Moody's (MCO), the credit-rating agency. And late card payments surged 30 percent during that period."
• "From 2000 to 2006, the average card debt carried by Americans grew from $7,842 to $9,659, according to CardTrack.com. That totals $850 billion in credit card debt for 88 million Americans, it says."
• "Punitive interest rates charged by the major card issuers, meantime, have reached nearly 33% -- an all-time high, according to CardWeb.com."

The American over-reliance on plastic is old news, but the key point made by USA Today's Christine Dugas is that, during the housing boom, many Americans took out home equity lines of credit to pay off their credit card debt -- "Since 2001, more than $350 billion in card debt has been shifted into home-equity loans or into mortgages refinanced by homeowners, says Robert Manning, a finance professor at Rochester Institute of Technology."

That option is no longer available.