At the same time, it showed credit unions in February held their largest share of the nation's credit card debt ever — $52.3 billion, or 5.5% of the nation's total.

George Hofheimer, chief knowledge officer for Filene Research Institute, in Madison, Wis., said the national debt levels underscore the importance of credit unions monitoring consumer household debt. But, so far, he said their prudence has been successful.

Credit card delinquencies last peaked at 2.06% at the end of 2009, during the Great Recession, according to NCUA data. Delinquencies fell to a low of 0.93% at the end of 2013, but had risen to 1.01% at the end of 2016. The delinquency rate for all types of loans was 0.83% at Dec. 31.

Credit union charge-off rates rose slightly in 2016, but were still only about 2%, while delinquency rates have hovered near 1%, Hofheimer said.

“The slow and steady approach is one that works quite well for credit unions,” Hofheimer said. “It's careful, it's a little bit risk averse, and it's helping the consumer.”

VyStar Credit Union based in Jacksonville, Fla., ended 2016 with $348 million in credit card balances, ranking 11th among the nation's credit unions. VyStar ($6.5 billion in assets, 545,155 members) had 119,741 cardholders, a 22% penetration rate among its members.

VyStar's credit card delinquency rate was 0.91% on Dec. 31, 10 basis points below the national average.

“It's not that often. Our credit card portfolio is very well managed. We don't have a lot of delinquencies,” Kathy Bonaventura, VyStar's chief lending officer, said.

During the recession, the default rate was higher on credit cards than now, but at the time credit cards performed much better than real estate, Bonaventura said. “Credit cards actually performed quite well during that period because people felt there was value in having that credit card.”

VyStar offers a variety of cards with interest rates of 9.85% to 13.5% based on the member's credit risk.

In a traditional workout program, when the cardholder has defaulted through nonpayment, VyStar can restructure the debt and cancel the card.

More flexibility is possible when there is early intervention. The debt can be restructured through an unsecured signature loan. The cardholder can often keep the card, but with a lower credit line.

“If we know the member and have a deep relationship with them that makes it a little easier. We know their repayment history, and how they handle their deposit accounts,” Bonaventura said.

VyStar might take a “stair-step” approach with those who have extraordinarily high credit card debts. The credit union would loan the borrowers money to pay off part of their debts. If they are successful in managing their debts over a year, the credit union might roll the remainder into a signature loan.

The credit union also refers members with debt problems to its Money Makeover program.

“We try to walk them through the whole scenario so they get a good idea of budgeting and their debt. We would explain what bankruptcy would do for them and what they would face,” she said. “We never tell a member to file for bankruptcy. That's a personal choice.”

For borrowers, valuing a bankruptcy deal comes down to weighing the potential to write off debt against the fee to a lawyer and the damage to their credit rating. In South Carolina, the fee can be $3,500 to $3,700 for a Chapter 13 reorganization or $500 to $2,000 for a Chapter 7 liquidation, said Steve Huggins, a bankruptcy lawyer in Columbia, S.C.

While tax debts and child support arrears can't be discharged in bankruptcy, credit cards and other unsecured debt are generally erased entirely in Chapter 7, and creditors might only get pennies on the dollar under a Chapter 13 repayment plan.

As for the value of a credit rating, bankruptcy will damage that rating for five years, which might mean more to a young couple starting out than to someone who is old or not planning to buy a house. “If they're only going to buy a car, it's not going to hurt them,” Huggins said.

But, in weighing bankruptcy, a good deal from a credit union might be a better option. “If someone has the ability to get a loan from a credit union, and the interest rate is going to be low, the credit union may be a lot more flexible than a bank.”

“We deal with credit unions all the time,” Huggins said. “Most of the time, the credit unions are more apt to work with the debtor because they value the relationship more than a bank.”

Excessive spending was once more common as a reason for bankruptcy, but now it's more typical to find people who have lost jobs or who have medical issues that have led to loss of income. Sometimes, Huggins meets elderly people who file for bankruptcy because they have overextended helping children or grandchildren.

Illness, layoffs and divorce don't come in credit ratings.

“That's where it gets hard from a risk perspective to manage to that,” said Jennifer Davis, vice president of SmartGrowth for CO-OP Financial Services, a CUSO based near Los Angeles that provides payments solutions and processes transactions on about six million credit cards.

“You want to try to make loans to people who are good risks, but someone who looks good today may look different a year from now,” Davis said. “Something happens, and life changes. And suddenly they find themselves unable to pay that debt back.”

Credit unions can use card history to identify when members are getting into trouble — before the obvious signal of non-payment or bankruptcy. Credit bureaus also have predictive bankruptcy indicators.

“From a CO-OP perspective, we are looking at the data and different things we can do with the data to be more predictive, and help to that extent,” she said. “We are gaining quite a bit of both expertise and efficiency in the development of predictive models that help clients see ahead on things like member attrition.”

Data can be used to identify people who would benefit from a debt consolidation offer, while ensuring they meet the credit union's underwriting standards. For the credit union, debt consolidation represents a growth opportunity if the member is trying to consolidate debt on credit cards issued by others.

“Bringing a debt over can be a good thing for a financial institution because you're getting a new account and you're adding an immediate balance — as long as you have sound underwriting practices on the front end,” Davis said.

Underwriting standards would take into account payment history, FICO scores, bankruptcy scores and debt-to-income ratios, which typically do not exceed 50% at credit unions.

On the collection side, data can be used to prioritize contact, distinguishing between debtors in trouble and those “who might just be a sloppy payer, or just have a hiccup in their record,” she said.

For cardholders whose behaviors indicate trouble but are still current on their payments, Davis said issuers can have a strategy to make a softer call to explore whether the cardholder wants help. Credit unions can offer relief programs that include a temporarily reduced APR, and a temporarily reduced minimum payment.

“I've seen those be very successful with people. Then, of course, you have to have rules around that so people don't abuse it,” Davis said.

That kind of soft intervention can help the borrower get back on their feet, and ensure the credit union is repaid. “If you're the first one in the door, you're probably the first one to get committed and get your payment,” she said.

If the credit union waits too long, the debtor can quickly run four or five payments behind, and be unable to pay back the debt.

“It helps to have a proactive strategy,” she said. “Is it 100%? No, because you can't help all of these scenarios.”