Debt seems to be everywhere these days, from a now-ebbing tide of home loans to last year's record wave of personal bankruptcy filings. So perhaps it's not surprising that an organization called the Chicago Debt Exchange is launching its first official auction this week.

Think of it as something akin to the New York Stock Exchange or the Chicago Mercantile Exchange, except what's for sale isn't stocks or wheat contracts, but loans.

Wednesday's auction focuses on debts that have gone bad – more than $500 million in all – being sold off by the US Bankruptcy Court's Northern Illinois district. Buyers will try to collect enough of the debt to turn a profit.

In itself, that's nothing unusual. In today's economy, good debts and bad alike often change hands from the original lender to a range of investors. What the debt exchange hopes to be is a new venue for such trades – using a transparent format familiar in financial markets worldwide. "It creates excitement. It creates urgency," auctioneer and exchange founder Joel Langer says of the open-outcry system. Just as in a commodity trading pit, he says, "something sells for what it's worth."

The fledgling debt exchange may never rival the scale of Chicago's commodity markets, but it hints at a conspicuous fact: For better and for worse, America has an increasingly expansive culture of debt.

As credit has become more liquid – easily transferable from one party to the next – it has also become cheaper and more available to a wide range of consumers. That has helped a record 69 percent of families become homeowners in the US. It's also helped fuel a housing boom and resulting rise in family wealth in recent years.

But the availability of credit has also lured millions of people into a debt trap. Some have borrowed on credit cards to pay basic expenses. Many have bought homes using exotic mortgage setups that could backfire – some of which have already done so – in today's environment of higher interest rates.

All this raises three important questions for ordinary Americans who spend, borrow, and invest: Is the nation in danger of a debt-induced recession? How can you avoid becoming a statistic in a bad-debt sale? Does rising debt present new investment opportunities?

Here's what some experts say about these credit quandaries:

With about $9 trillion in outstanding home loans and $2.2 trillion in other consumer credit, a key issue for the economy is how much the squeeze of rising interest payments affects household spending – which makes up more than two-thirds of the nation's economy.

"You will have a weaker economy" as some of the debt-driven consumption of recent years unwinds, says Christian Weller, an economist at the Center for American Progress in Washington. "I wouldn't go so far as to say there will be a recession, but some economists definitely do."

He points out that rising home values allowed consumers to cash out $430 billion worth of spending power from home-equity loans in 2005.

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