The problem is American attitudes toward debt have changed drastically in the past 20 years. Debt used to be considered a privilege, Manning said, but based on a study he conducted of six separate lifestyle groups, Americans now consider it an entitlement.

The culture shift has created a situation in which American consumers can't afford their household debt obligations, much less fund nation's growing federal deficit. In fact, the average American household's monthly debt obligations are 130% of discretionary income, he said.

"The key issue here isn't saying yes or no to credit, but looking at how it's used," he said. Manning explained that credit was vital in building our nation's infrastructure and economy; however, in contrast, the fallout from loose subprime underwriting standards will have a negative effect on many communities.

It's not just poorly disciplined consumers and greedy banks that drive the cultural change, he said.

"We used to fight wars on collective sacrifice and war bonds, but now we just go to war on borrowed money," he said.

"Since 9/11, we've been told the biggest problem with our economy are those who aren't shopping enough," he added. "Our patriotic duty turned upside from saving and collective sacrifice to literally the opposite. No wonder there's so much confusion about this issue."

In fact, today's monetary values are so far out of whack, he said, a pair of Nike athletic shoes cost more than a share of the Nike company.

The cultural shift means trouble for credit unions, he said, because they will be forced to balance between their fiduciary responsibilities and the responsibility to help members in need. Things are going to get worse before they improve, he said.

Manning predicted a rise in unemployment to 7% by the end of the year, and a doubling of bankruptcy filings during 2009. He said he's concerned about those with jumbo mortgages who have lost up to 40% value and will see their adjustable rates reset next year. Those who are hundreds of thousands of dollars upside have little problem proving insolvency for bankruptcy courts, he said.

"I recently testified at the FTC, and as a result of the bankruptcy reform, they thought they would see a decline in the number of charge-offs as a result of bankruptcy," he said. "While it's true that the number of filings has declined, the average discharge amount has increased."

So what can credit unions do? Manning shared his responsible debt relief algorithm, which has successfully helped consumer credit counseling organizations successfully negotiate partial debt settlements with institutions in 30 states. The idea is to adjust collection methods to meet the demands of today's extraordinarily debt-strapped members, he said.

Mitch Ronco, a spokesman from InCharge Debt Solutions, an Orlando-based consumer credit counseling organization, joined Manning on stage near the end of the presentation. Ronco said Manning's algorithm provides his industry with some much-needed credentials because financial institutions receive a staggering variety of settlement offers from representatives of strapped borrowers. The RDR algorithm provides mathematical methods of ensuring borrowers don't skate by on settlements, nor pay too much and end up in bankruptcy court anyway.

Some members don't need to settle for partial payment, Manning said, and may only require help to bring the loan current or for the institution to lower interest rates.

"From 2001 to 2006, asset values were used to supplement underwriting standards," he said. "Now, we're back to the old reality that you can't pay back a loan with anything but wages."

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