I was diagnosed with muscular dystrophy in 1997. After 37 years of work, paying bills, paying mortgages, raising children, doing the American thing, I now can no longer work. I now live on child support (one 11 year old), disability from SS and an annuity. I also have debts that were made previously. I have tried working, I just can't make it. I am embarrassed, humiliated and humbled. Thirty seven years of perfect credit looks like it is headed for bankruptcy.

Any advice. Thanks.
Harriet

Harriet's situation is not that unique. A recent study of 1,500 people who had filed for bankruptcy showed that nearly half of them said that illness, injury or medical bills were responsible for their predicament. It also showed that families headed by women were twice as likely to give that reason. Although Harriet is in a very tough situation, there are some things that she can do to help avoid bankruptcy.

And Harriet's right to be concerned with her reputation. Because her credit rating will affect how much interest she'll pay if she ever needs to borrow money again.

Her first step should be to examine monthly expenses. Remember, she'll actually have to live on less than her income. That's because the interest due on past commitments will consume some money each month. So she needs to be ruthless about cutting expenses.

If she has a relationship with a church or synagogue she should ask if they have a benevolence committee. Many have funds that are used to help those who are facing difficult times. And, even if they can't provide financial support, they may be able to provide budget training or provide other non-financial assistance.

She should also check for community resources. There are government agencies that serve people with medical and budget problems.

Harriet has probably already contacted the Muscular Dystrophy Association. They're found at www.mdausa.org or Muscular Dystrophy Association USA, 3300 E. Sunrise Drive, Tucson, AZ 85718. 1-800-572-1717.

Some things Harriet will have to do alone. One thing is to consider whether she has any valuables that can be converted to cash. This might be the time to part with the coin collection that Grandpa passed on. That's not a pleasant thought, but falling further behind in her bills isn't a happy choice either.

If Harriet owns her home she might want to consolidate her debt in a home equity loan. She'll pay a lower interest rate. It's important to only commit to a payment that she can afford. Falling behind on your house payments can be pretty unsettling for a single, disabled mom.

Harriet might consider sharing her home with another single mom. Not only could that reduce expenses, but sharing cooking and cleaning can provide time savings, too. Perhaps the other mom would buy all the groceries if Harriet did all the cooking.

If she hasn't already done so, Harriet needs to contact each of her creditors immediately. She should explain her situation in writing. She'll need to be willing to tell the creditors how much she owes to everyone, what her income is and how much she feels that she can pay them each month.

Some will make allowances for hardship cases if they see her willingness to pay them back. They might agree to waive minimum payments and grant Harriet a lower interest rate on the unpaid balance. She's also much more likely to have success if she approaches the creditors before she falls behind in her payments.

Harriet may find that her creditors are not willing to reduce the monthly minimum payments to a level that she can handle. A non-profit credit counseling agency might be able to help. They'll approach the creditors on her behalf and attempt to negotiate lower payments and interest rates. Some creditors will be more generous when dealing through a counseling agency. Most realize that if the debtor doesn't solve the problem here, the next step is the bankruptcy court.

Avoid anyone that offers a quick fix. We'd all like to think that there's some easy answer. But there isn't. Ultimately, either the debts must be repaid or the debtor's credit rating will suffer.

Ultimately, if she really can't keep up with the payments, Harriet may have no choice but to file for bankruptcy. And she should remember that the law was written for people in a situation like her's.

What follows isn't meant for Harriet. It sounds as if she's tried to be responsible in her use of debt. Unfortunately, she experienced events that she didn't anticipate. But hopefully we can learn from her painful experience and avoid it ourselves.Although she didn't say so, I suspect that Harriet based her borrowing on the assumption that her income would continue at the same level. And, that's not surprising. After all, that's the assumption that the lenders use when they make a loan. And most borrowers do the exact same thing.

But, that's a dangerous assumption. Statistics show that one out of every seven workers will be disabled for five years or more before they reach age 65. And, you don't need to get sick or laid-off to have your income disrupted. Credit counseling agencies often see people who have gotten used to over-time pay and fall behind when the extra hours disappear.

According to the U.S. Federal Reserve Board, there's $1.5 trillion dollars of debt owed by Americans. And that doesn't include home loans. The debt level grew 10% last year. And much of the debt could probably be avoided. For instance, spending for luxury goods is growing four times as fast as general spending. The result? According to the American Bankruptcy Institute there were over 300,000 personal bankruptcy filings in the first quarter of 2000.

What can we learn? It's dangerous to assume that tomorrow's paycheck will be big enough to pay for today's spending. We wish Harriet all the best and hope that both her financial and physical health will improve quickly.

�2000 by Gary Foreman. All rights reserved.

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