peak debt
n. In an economy or household, the point at which the costs to service increasing debts become so high relative to income that no more debt can be taken on, so consumption plummets.

Example Citations:
A corollary, peak debt, was coined in 2006 by a former Cisco employee named Jaswant Jain, who calls himself the Prophet of Doom and Gloom, and who first observed the deleterious effects of unrestrained borrowing as an eight-year-old in a village near the city of Jodhpur, where debt-ridden Brahmins appeared worse off than solvent untouchables.
—Ben McGrath, "The Dystopians" (paid registration required), The New Yorker, January 26, 2009

Home prices are about to surge again and fuel a phenomenon that a leading property analyst has dubbed "peak debt", where mortgage repayments outstrip the spending capacity of home owners.

Australian Property Monitors predicts that in the next decade many in the mortgage belt of "average Australia" will reach a point where they are unable to put food on the table because loan repayments swallow their incomes. ...

The general manager of Australian Property Monitors, Michael McNamara, said he coined the term "peak debt" to echo the "peak oil" theory, which suggests the production of oil has peaked and is running out. Likewise the capacity to borrow will have simply run out, he claims.
—Catharine Munro and Jessica Irvine, "Home price surge to fuel debt spiral," Sydney Morning Herald, July 3, 2007

Earliest Citation:
What happens at the Peak Debt is that the Total Debt of the economy, as a percent of the GDP, or nominal debt in current dollars, or both, stop going up and start to go down. The last time that the Peak Debt occurred in the US was in early 1930s and I can confidently predict that the next Peak Debt will occur within this decade, because the forces pushing debt higher and higher are reaching a point of exhaustion. The rising Consumption Debt exerts a depressionary effect on future consumption and at some point the debt service reaches a high enough portion of the income that the current consumption must be cut down.
—Jaswant Jain, "Peak Debt!", Save Haven, September 4, 2006

Peakniks have come up with quite a few "peak X" terms. Peak oil was the original one, but I've also seen peak carbon, peak fish, peak dirt, and peak dollars.

Related Words: