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Proposed changed could affect Michigan credit card debt

Many consumers in Michigan are struggling to overcome high levels of consumer debt. As the economy continues to falter, individuals and families are often caught in circumstances in which their outstanding debt far surpasses their ability to pay. Once this scenario is in place, it becomes very difficult to correct without an aggressive plan to eliminate a majority of their debt load. Some critics claim that irresponsible credit practices and policies have largely contributed to the current national rates of credit card debt.

Prior to Oct. 2011, spouses who did not work outside of the home were able to apply for and receive credit cards based on the household's income. However, with the implementation of the Credit Card Accountability Responsibility and Disclosure Act, the rules changed, and the Federal Reserve changed lending policies for issuers of credit cards. Based on these changes, each individual who applies for new credit lines must list his or her own personal income.

This has left approximately 16 million stay-at-home spouses in a difficult position when it comes to applying for credit card accounts. Many claim that the new policy is unfair and hinders the ability of spouses to handle bill-paying and household shopping simply because they are not the wage earner in their family. The argument can be made that while some spouses may use credit in an irresponsible manner, that does not justify limiting access to credit for all such spouses.

A new proposal by the Consumer Financial Protection Bureau would loosen these restrictions and allow spouse easier access to credit cards. Unfortunately, for many Michigan households, the change may have little effect. For families who are already buried under heavy loads of credit card debt, it may be too late to open new accounts in an effort to shift that debt to lower interest rate cards. In many cases, filing for personal bankruptcy is the only option that will effectively remove the majority of consumer debt and allow individuals and families the ability to rebuild their financial stability.

Source: MarketWatch, "Should stay-at-home spouses get their own credit cards?" AnnaMaria Andriotis, Oct. 22, 2012

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