It is again that time of the year when everyone seems to look forward into the crystal ball and make predictions abut what the new year will bring. Not to be left out, here is what I see in the crystal globe to come for consumers and their debt.

Sadly the outlook is not rosy at all. Following the August fundamental shifts in the underlying credit markets the trickle down impact of the credit crunch will continue to be negatively felt in 2008.

It is almost as if the few years before this have been preparation by creditors to assemble all the tools necessary to inflict pain on consumers in troubled financial times.

Most outrageous for people is the intentional exclusion from access to fair, reasonable and sustainable solutions to remedy problem debt without bankruptcy or significant life impact.

Their remains an almost general assumption among consumers that if the average person finds themselves in a situation of financial distress that certainly the lender would work cooperatively to help remedy the situation. Sadly, nothing could be further from the truth.

That is unless you fall behind on your mortgage payments in the U.S. One person I recently spoke with has not made a mortgage payment in 18 months and the lender isn’t in a rush to foreclose on the home. In fact the attorney handling the foreclosure said he has so many cases to work on that it will probably be another 6 months before the home gets foreclosed on. The current occupant is taking better care of the property than the ones that now sit empty on either side of his home. The empty properties have already been vandalized.

If I owed you money and fell on unexpected financial times, I would call you up, we would have a conversation and work something reasonable out. However credit card lenders, mortgages companies and the like are not reasonable individuals nor are customers treated like individuals.

Corporate lenders are bound and obligated more to share performance and thus create tightly crafted policies and procedures that almost prevent people from being treated reasonably or like individuals. These policies actually do more to force people to not pay and go bankrupt as illogical as that sounds. The perennial insanity among lenders of pursuing maximum immediate returns at the sacrifice of customer relationships or financial health will continue and get worse this year.

Consumers will begin to realize that all this talk about a credit crunch will really impact them through tighter lending they have relied upon over the past ten years.

For people that have been unconsciously enjoying the benefits of easy access to credit and fueling lifestyles based on credit and home equity access, all of a sudden they will find that the credit dealers will have fled and the ability to get an easy will dry up.

What started out as a flight from mortgages should turn into less easy access to credit cards. Banks had turned attention to push credit cards after the initial subprime mortgage meltdown but it shouldn’t be long now before banks realize that their access to credit to almost all has left them with a load of soon to be non-performing credit card accounts on their books.

In fact between the time I wrote this and proofed it, I learned that London-Scottish Bank in the UK has just announced that due to credit card delinquencies they are no longer able to meet their capital requirements.

Already credit card delinquency rates have significantly climbed and they should continue to in 2008. Unfortunately in order to stem losses lenders will apply the standard Plan A and ramp up collection pressure to control the blood loss. It is almost the only approach they have been taught.

Unfortunately it is exactly that approach that leads to an increase in bankruptcies as consumers feel as if they have no choice in the face of what they feel to be unreasonable collection demands or collection harassment.

Consumers are looking for real solutions to their financial problems and lenders are looking for real and immediate loan performance results. The two forces are almost diametrically opposed.

Lenders will continue to push credit in 2008. I would imagine that HQ will issue mandates for creative new markets and profits. The bosses have to make the shareholders happy and profits are the way to do that.

So while the collection departments of lenders are soon to be blamed for poor performance in the collection of previous loans and credit issued, the marketing department will be out in mass trying to bring in more new customers. It would be nice to put the collection departments in charge of marketing and the marketing department in charge of collection for 2008.

In 2008 many consumers will uncomfortably wake from their credit feast of late with a cold slap on the face from the lack of access to credit or much higher rates and fees. Suddenly, lifestyles that were fueled with borrowed money will come to an abrupt slowdown or end. It will be that sudden realization that the current lifestyle cannot be maintained that will create the most pain as people believe that the life they are leading now is a right and not a privilege. 

And you can understand why consumers feel this way. Their minds are filled with massive credit marketing campaigns that convince them they deserve it, the outcomes of credit are priceless and they are entitled to pleasure over pain.

Energy costs are a real concern as well for 2008. Escalating energy prices only put more pressure on an otherwise shrinking purse and with energy prices increasing faster than wages, that shortfall needs to be compensated for somehow. In the good old days of early 2007, one of the ways people compensated for personal budget pressure like that was to use credit, if credit isn’t as easily available then the solutions are more painful.

I remember the post-9/11 warnings in the U.S. of the government advising citizens to purchase duct tape, plastic sheeting and bottled water in preparation for a potential biological or chemical attack.

Well the same warnings that consumers should make a budget seem almost as pointless. Maybe the more logical advice for 2008 is for people to simply evaluate their lives and to just be more aware before making purchases this year and ask themselves if they really need whatever it is.

A goal of a steadily growing savings account with diminishing debt levels would be a better indicator that things are headed in the right direction.

The cash in liquid savings is a lot like the gallons of bottled water people hoarded after 9/11. It’s comforting to have and can only provide benefit in case of emergency.

If I could have one wish granted for consumers and debtors this year it would be to erase the purposeful exclusion and policies of limited access to reasonable, fair and sustainable solutions for debt problems.

For example, in the UK, creditors like Northern Rock, now in terrible trouble themselves, and HSBC have policies in place to prevent consumers from remedying their debt problems through an Individual Voluntary Arrangement (IVA) that is put together by a licensed and heavily regulated Insolvency Practitioner (IP).

The IVA is designed to be a binding debt repayment plan that allows people to resolve their debt without bankruptcy. And while you would think that lenders would be in favor of such plans, banks like HSBC have written policies in place to reject all offers unless it returns more than 40% of the original debt. Those repayment plans that can’t jump that hurdle are rejected.

Lenders like Northern Rock reject these offers almost across the board with no concern for how such policies are clearly against the spirit and literal banking code of conduct.

In the U.S. it will yet been seen if recent Congressional action and investigations into credit card lending and other lending will have a significant impact. I would expect to see more action taken against lenders if a democratic administration is elected this year.

Already, with the threat of intervention by Capitol Hill many credit card lenders have backed away from their previous policies of Universal Default where they could raise the interest rate on your credit card, if your credit report showed any negative activity,  even though you had never been late on a payment with them. While at the same time grace periods for credit card payments have been getting shorter which I am certain is in an effort to trip more consumers into paying late, giving lenders an excuse to raise rates and charge fees.