Going for broke

For more than 20 years Mom was a legal secretary at a Manhattan law firm specializing in bankruptcy and collection. Some clients were doctors and lawyers who had amassed enormous debt in student loans and then decided not to pay them back. Others lived well beyond their means and had not figured out how to live responsibly. But most of the claims she saw were by people whose life circumstances had given them no choice but to relinquish their creditworthiness.

Unsurprisingly, Mom ended up in the last category. My family has never been what I would call prosperous. My parents have never owned a house or car, bought stocks or bonds, or had any assets to speak of. They were modest, working-class professionals. Until I was 16 my two younger brothers and I shared one bedroom in a two-bedroom apartment.

Our parents always put us first, managing to send each of us through 12 years of private education. When it came to college we were on our own. I was a good student and was lucky enough to get grants, scholarships, and loans to finance my education. If I'd had to pay my own way, I probably wouldn't be a college graduate today.

The first charge card I got, in college, was from Macy's. I had a spending limit of $300, and in a matter of weeks I had maxed it out. I had three part-time jobs in college and paid only the minimum due. The next year Macy's raised my limit to $400 and then $500. I was in spending heaven, buying parachute pants and other 1980s fashion misstatements. On a trip to Boston I applied for, and got, a Filene's Basement card and a Jordan Marsh card. Cards from Sears and Abraham & Straus followed. American Express was also happy to give me a card, as was Master Card. I wasn't even a college graduate and I had far more credit than earnings.

By 27, living in DC and earning a low salary, I found myself living hand to mouth like I was still in college. After paying rent and utilities, almost every cent I earned went to paying the minimums on my credit cards. That didn't stop me from using them. I ate out a lot, bought records and clothes, and had no savings. Whenever I felt down I would charge something to feel better.

My friend Karen finally gave me a book to read called How to Get Out of Debt, Stay Out of Debt, and Live Prosperously. Initially I resisted reading it, but the subtitle caught my eye: "Based on the proven principles and techniques of Debtors' Anonymous." Wow! I thought. I'm addicted to credit. As I read the book I saw myself in every page--the rationalization, the compulsiveness, the euphoria after spending. I cried when I realized that the book was speaking directly to me.

I followed the book to the letter. I kept a spending journal, tracking every cent. I gave my credit cards to a friend, and he gave me his in return so neither of us would use them. Finally, I entered credit counseling, surrendered all of my credit cards, and lived on a budget. In 5 years, I paid off more than $25,000 in debt I'd racked up, including student loans. When I considered that I could have put a nice down payment on a house with that kind of money, it made me sick.

After graduating from credit counseling debt free, I got one card to use for emergencies. Everything else I pay for in cash. I'm now a compulsive saver. The book was right.

When Dad died, he left his 401K and not much else. His death coincided with the tanking of the stock market. In less than a year, his account had more than halved its value. Mom used any money there was to pay off her own bills and lived on the rest. She was not yet eligible for Social Security, but she couldn't work because she had a disabling condition. She was generous with her money, insisting on paying whenever we ate out or helping us when we were a little strapped. "Who knows if I'll die tomorrow?" Mom said, waving her hand dismissively. "Yeah," Liam said, "but what if you don't?"

Living for the moment is admirable, but as the grasshopper found out, you may still have to provide for yourself tomorrow. Two years after Dad died, Mom was barely able to make ends meet. She'd simply run out of money and was living off her newly acquired Social Security and Dad's pension, which barely supported her expenses.

In 2003 more than 1.6 million people filed for bankruptcy. The number of elderly with household debt averaging more than $20,000 rose 164 percent in 2000. One medical emergency could be enough to reach that figure.

A few times Mom mentioned she might declare bankruptcy, but her deeply entrenched Catholic values prevented her. She always taught us to make good on our promises, and I advised her against filing.

I started helping her pay her bills, not just the minimums but whole amounts. Six months later, I'd barely made a dent. The interest rates were exorbitant. Something needed to be done, so I suggested Mom go into credit counseling. She reluctantly did, and all her bills were consolidated into one monthly payment. But even that was too much for her to handle.

On last summer's road trip with Glenn and Simon, I mentioned the situation, and they berated me for not getting my mother to declare bankruptcy. Clearly they were not raised Catholic, I thought, and I testily said, "Let's not talk about it." Deep down I knew they were right, but I wasn't ready to admit it. I did some research and found that Mom was, indeed, an ideal candidate. She owns no assets, and most likely never will, and she lives on a fixed income.

Today I sat with Mom in U.S. Bankruptcy Court, presided over by trustee Robert Geltzer. In 2002 Mr. Geltzer sued Tobey Maguire, Cameron Diaz, Ben Stiller, and others for money they received as part of a fraudulent securities operation. He doesn't exactly have a compassionate reputation. He reminded me of the judge in What's Up, Doc? who appears he is about to have a nervous breakdown. As we waited in the hearing room with the dozen or so other claimants and their counsel, it was clear he was not to be crossed.

"If you want to talk, take it outside," Geltzer bellowed.

"Whose cell phone is that?" No one raised a hand. "Turn it off. Now!" The nuns were pussycats in comparison.

Mom had been prepped before the hearing by her counsel's paralegal, who's a family friend. She handed me a list of questions that the judge would ask her. All she had to do was answer "no" to every question. When I saw some of the questions I thought, Oh, crap, how is she going to pull this off? During her initial interview with counsel, who explained the budget he was going to submit to the court, Mom said, "You have here that my electric bill is $100, but I think it's only $60."

"Mom," I said. "Let the attorney think for you."

Mom's attorney had not yet shown up at the hearing, and I started to worry. The judge called Mom's name third, and she stood up to go before the judge. I pulled her back and said, "No, Ma, wait till your attorney gets here."

An interesting assortment of people appeared before the judge. Almost all were black or Hispanic, and there was only one other white person besides Mom. The other white woman had the same sort of demeanor as my mother, was of her generation, and looked like she couldn't rub two nickels together. She explained that she and her daughter had joint accounts and that she could no longer pay the bills.

"Why can't your daughter pay the accounts?" the judge demanded.

"She doesn't have a job," the woman said meekly.

"Why doesn't she have a job?" the judge demanded.

"She's on disability," the woman said.

"What's her disability?"

"She has mental problems."

"Are you close to her?"

"No, not really."

"What?" Geltzer scolded. "Speak up."

"No."

The judge seemed rather gruff and harsh with her. By the end of the hearing, the woman was near tears.

Great, I thought, we're screwed.

"Mary O'Leary," the judge called about 20 minutes later.

The interview lasted all of about 5 minutes. The judge ticked off each of the 15 questions, to which Mom expertly answered "no."

"This case is closed," Judge Geltzer said. Whew! Unless her creditors appeal, her attorney said, she's officially bankrupt.

"Geltzer," Mom said as we walked to the subway. "God, he's been around for years going way back. At my law firm everyone was always afraid of getting Geltzer at a hearing because he was the toughest."

"See, then?" I said. "You got the toughest judge you could possibly get, and it all turned out fine."

"I don't know what I'd do without you," Mom said. "You're one in a million. If I could just hit the numbers you'd be set for life."

I was tempted to tell her that maybe she shouldn't be spending so much money on the lottery, but today was her lucky day, so why spoil it?