As she received credit-card solicitations offering zero-percent interest, a 42-year-old Selinsgrove woman — newly divorced and with two children to support — began a descent into financial turmoil by using new cards to pay debt on the old.

“I felt very depressed, very hopeless,” said “Jane,” who asked that her real name not be published. “I was scared. I was just desperate.”

She charged her car payment.

Her rent. Her school bills. Food. Clothing. Utilities.

“I started paying everything with credit cards,” she said.

Within a year, she was more than $30,000 in debt with seven cards later averaging 20 percent interest.

Many days were spent searching through purses and pockets, hoping to find change to pay for food or gasoline.

“It was,” she said, “like every negative feeling you could feel.”

Thousands of people in Central Pennsylvania face credit problems.

And many of them — such as the 7,502 in Pennsylvania’s Middle District in 2007 — file for bankruptcy. The number has been rising, officials say, and will continue to do so.

Daniel Rheam is one of those officials.



Rising problem

Bankruptcy filings increased 38 percent in 2007 from the previous year, and the trend will continue in 2008, said Rheam, a Lewisburg bankruptcy attorney.

The main reasons are the result of lost wages — especially stemming from divorce, job loss or illness, Rheam said.

In such instances, people sometimes find themselves living off credit, charging every purchase they make, and sometimes, like Jane, going so far as to get new cards to pay off old ones.

While credit-card abuse happens nationwide, overcharging represents only a small amount of bankruptcy cases.

“People want to pay their debt,” said Rheam, who cited confidentiality reasons in declining to disclose the number of cases his firm has handled. “The trend across the country is they want to, but can’t.”



Buying food on credit

Things started to go downhill when Jane’s marriage began to sour.

She found herself beginning to pay for items on her own, but with credit cards.

After she and her husband divorced, she rented an area house for $1,000 a month.

Because her $12-an-hour part-time job did not pay enough to support her and her children, she also decided to go back to school at a Valley university.

“The money was not near enough,” she said. “I didn’t splurge. I didn’t do anything frivolous. I lived meagerly.”

Jane recalled going grocery shopping only when she absolutely had to.

And then paying for the items with a credit card.



Consumers aren’t reckless

Divorce and separation represent a sizable portion of the reasons people face financial difficulties, Rheam said.

“Many couples get loans and mortgages on the basis of two incomes and one household,” he said.

When the couple splits, and faces two households with two incomes, funds become stressed.

But in many situations, like Jane’s, it is often a misconception that the consumer is reckless, Rheam said.

“Credit-card companies want to portray this as reckless spending,” he said. “It’s not always the case. People are paying all their bills with the cards and use their earnings to pay the cards. Big bankers are reckless and loaning what they think someone can afford.”



Humbling experience

Jane moved to an apartment with rent half of what she was paying for the house, and began saving from a job she received after she finished school.

“I received spousal support, which helped pay the bills,” she said, “but it wasn’t enough.”

Calls from creditors hounding her for payment were constant, she said, and the conversations humiliating.

“A couple made threats,” she said, “but I told them I may be filing for bankruptcy and to call my lawyer because he was going to handle it.”

Ninety percent of the creditors were women, Jane said, and several times she found herself speaking about her situation to a woman who was going through the same ordeal.

“Once,” she said, “I talked to the woman for over an hour.”



When bankruptcy is an option

Financial contributions from family and others — which provided just enough for her to continue small payments on her credit cards — helped Jane to avoid bankruptcy.

Many others aren’t so lucky, and seek Chapter 13 or Chapter 7 protection, Rheam said.

“People with an average income file for Chapter 13” which allows them to reorganize debts and make payments to the courts, Rheam said.

People with below average or no income file for Chapter 7, where the court is asked to discharge any debts and people get a “fresh start,” Rheam said.

“The main problem now is people buying their necessities on credit,” he said. “When prices go up, people find they are unable to make the bills.”

Though he could not disclose specific examples of clients’ situations, Rheam said extreme situations include a person paying more than 125 percent of his house or 100 percent of the value of his car.

These clients range in age and gender.

“A number of senior citizens are in this situation because of the increased costs of gas, food and heating oil,” Rheam said. “We find young people are different. It’s difficult for them to find a job that pays enough for expenses.”



Don’t wait for credit counseling

With the recent trend of manufacturing-plant closings leading to job losses, bankruptcies will continue, Rheam said.

“If we keep losing jobs to overseas competition, people can’t pay their debts,” he said. “It has to increase locally because we’ve lost so many jobs.”

Those feeling over their head in debt should seek help immediately, Rheam said.

“There are some good credit-counseling agencies, but you need to be careful,” he said. “Many agencies do not help people and create more harm than good.”

Some agencies are actually collecting for lenders and, unless you are dealing with all your financial problems in one plan, you may not get good results, Rheam said.

The Lewisburg attorney suggests those seeking help contact Consumer Credit Counseling Service of Northeast Pa., which, he said, is a reputable agency.

“You should consult with a bankruptcy attorney as soon as you are getting into a problem,” he said.

“Don’t wait until the last minute.”



The other side of the tunnel

Life today, says Jane, now 49, is better.

She has a good job and has found herself getting out of most of the debt she incurred.

She doesn’t own a single credit card, and said if she doesn’t have the cash for something, she doesn’t buy it.

“It’s a much better way to live,” she said.

“I learned a horrible lesson in life. Credit cards can turn into so much trouble, and I found out the hard way. I had never felt so lost, desperate and full of need.

“I don’t ever want to do that again.”

n E-mail comments to gmorton@dailyitem.com