To most lenders, rising credit card delinquencies, high consumer debt levels, and record bankruptcy filings look like danger signs. But to finance companies that cater to homeowners with shoddy credit histories, they signal good times.

At this time of year, when consumers are struggling to dig out from under their holiday spending, business is especially brisk. Looking for a way to reduce the carry costs on their credit card accounts, consumers are turning to these so-called subprime lenders in droves.

"We're staffing to answer a record amount of phone calls in the next few weeks," said Dan Rich, chief financial officer of Champion Mortgage, a Parsippany, N.J., subprime mortgage lender.

The company runs more of its trademark television commercials ("When your bank says no, Champion says yes") in January than in any other month, Mr. Rich said. The commercials promote Champion's "pay down your debt" consolidation loans, designed to replace credit card balances with a home equity loan.

Champion is not alone. Across the country, subprime lenders are projecting strong volume, boosting advertising budgets, and stepping up employee head counts for 1997.

*Delta Funding Corp., a subprime mortgage lender in Woodbury, N.Y., is "hiring fast and furiously," mainly on the origination side of the business, said its president, Hugh Miller. He expects to boost Delta's employee head count by around 25% this year. "Bad news is good news for this industry," Mr. Miller said.

*Equicredit, Jacksonville, Fla., the home equity and subprime lending unit of Barnett Bank, will be stepping up promotion of its home equity debt-consolidation loan, a spokesman said.

*Champion itself will be opening 10 more branches in coming months, Mr. Rich said, and hiring 35 new loan officers, bringing the cadre up to 80 by the end of 1997.

George Yacik, vice president of SMR Research, Budd Lake, N.J., said he is expecting combined home equity and subprime lending volume to increase between 10% and 15% in 1997, from an estimated $144 billion in 1996.

Debt-consolidation loans secured by a home's equity practically sell themselves, Mr. Yacik said, because of the inherently lower interest rates they carry. Borrowers with good credit may be able to secure a home equity loan with an 8% or 9% interest rate, versus 18% on many cards. Borrowers with shoddier credit can still get a home equity loan with an interest rate in the low teens.

Loans generated by January promotions may not register on a company's books until February or March, many said, as consumers mull over the concept of a debt-consolidation loan.

There is still "plenty" of home equity untapped in the U.S., Mr. Yacik added, giving lenders the opportunity to continue to grow. Home equity volume nationwide numbers in the trillions, he said.

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