Heavy debts have left households making $25,000 to $45,000 a year particularly vulnerable if a recession occurs, an economist warned.

A cut in wages could lead to delinquencies and defaults, Mark Zandi said Wednesday at a Bermuda conference on asset-backed securities.

The debt burden on such "lower income" households is near record highs, said Mr. Zandi, who is chief economist with Regional Financial Associates of West Chester, Pa. The debt burden is a ratio of earnings to mortgage and credit card loans.

These households have a "voracious appetite" for debt, Mr. Zandi said, and card lenders fed it in recent years.

In contrast, higher-income households are generally in good shape to face a recession, Mr. Zandi said. Their debt burden is the lowest since the late 1960s, when credit cards were introduced, he said.

Lower interest rates, which have let homeowners refinance mortgage loans and reduce monthly payments, are helping reduce debt levels, he said.

"In aggregate, we're in better shape than the last recession," Mr. Zandi said.

High-loan-to-value mortgages, which let homeowners transfer credit card debt to lower interest mortgage loans, were also a conference topic. Investors and economists said they were unsure about the long-term effects.

Card lenders have experienced a surge in prepayments because of these loans, noted Debra Cunningham, senior vice president, Federated Investors. But whether the borrowers keep card debt low remains to be seen, she said.

Despite new loan products, generous credit, and high employment rates, consumers have continued to file for bankruptcy at a rapid clip, confounding most economists.

There is still little information about why consumers file for bankruptcy, said William Brown, a bankruptcy judge.

The cause could very well be the "kitchen-table" effect, Judge Brown said. "People sit around their kitchen table and ask, 'What did you do today?' and someone says, 'I filed for bankruptcy.'"

Cultural acceptance, a knowledge of the process, and access to credit after bankruptcy are contributing factors, said Karen Wagner, director and head of asset-backed securities research at Credit Suisse First Boston Corp.

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