Credit Card firm closes accounts to new charges
Advanta Corp., the credit-card issuer for small businesses, may leave 1 million customers scrounging to find new lenders and debt holders facing losses of 35 percent after the company shut down accounts to preserve capital.
Advanta will cease lending June 10 after uncollectible debt reached 20 percent as of March 31, according to a statement and filings yesterday by the Spring House, Pennsylvania-based firm. The lender earmarked $1.4 billion to buy back securitized card loans with offers of 65 cents to 75 cents on the dollar.
They are going to try to squeeze by on payments for existing credit until the market turns around. Which probably amounts to saying they will go bankrupt slowly rather then quickly.
They are probably just the first, filling a role rather like Countrywide. With the small companies specializing the riskiest part of the market going first and then the big companies getting in trouble.
Jay
