Every weekday, in a small room on the sixth floor of the Wyndham San Diego Hotel at Emerald Plaza, dozens of people come to close the book on their personal bankruptcies. Today eight debtors have shown up in suite 630 well before their 8:00 a.m. appointment to file for either Chapter 7 or Chapter 13 with an attorney present and in front of a United States trustee. The sit apart from one another in rubber-upholstered chairs and stare at notices on the wall. One notice tells them to read the pink form and fill out the white form; both forms are prominently displayed in plastic racks. Most cast their eyes over the notice but don't seem to read it. They look lost or anxious, thumbing wrinkled manila envelopes brimming with paperwork. A few finger the purses or wallets that once bulged with too many credit cards. Awaiting attorneys, most of them are wondering what a debt-free tomorrow will look like.

There's an African-American man with a thousand-yard stare. There's an older woman who every ten seconds shakes like a nervous poodle. Another woman is massaging arthritic hands; she's wearing a black pullover with red spangled lettering: JUST BE HAPPY I'M NOT YOUR KID. There's a young woman with sleekly thin eyeglasses and cakey makeup who suddenly awakens. She asks a man nearby for his pen. The white form. Fill out the white form. The room begins to buzz: fill out the white form. An elderly couple in blue jeans and T-shirts ask to use the ballpoint pen next. Here is a day-of-reckoning unity: almost everyone has forgotten to bring a pen. A woman sporting a bubbled hairdo (did she sleep in a chair?) enters at 7:50 and says to no one in particular, "You mean, there's no receptionist?" Even this final gauntlet must be faced alone -- until the attorney arrives, which he presently does. A very expensive suit, a stiff white collar: the knot of his tie arcs like a water fountain over a gold pin. The attorney calls names and discovers that he's representing seven of the nine cases. His clients cluster around him. "Sally McCormick?" She responds and he jokes, "This is too easy."

The pall of indifference hanging over this room suggests that long-term debt has in fact been exhausting. But the 341(a) hearing promises an end to debt. A simple end, too, with debtor, attorney, and trustee huddling together in a brief public proceeding. The proceeding is as perfunctory as it is unwatched: no one is here because they care that a debt is being erased. Though the 341(a) hearing is called "Meeting the Creditors," the creditors rarely show up; there are rarely any assets to go after. While Chapter 13 bankruptcies reorganize debts for people with assets they wish to protect, Chapter 7 bankruptcies -- which account for 99 percent of personal bankruptcies -- are "no assets" cases. These debtors have no home to foreclose (they rent); no fully owned car to sell (they'll be dissolved of what's due on their car loans but face future payments); no camera or dishwasher to give up (under the state's "wild card exemption," debtors can keep $18,350 worth of their possessions). They have nothing to let go of but unsecured debt on up to 15 credit cards, whether it's $10,000, $45,000, or $115,000.

These people will soon know a tranquility they've been missing for years; free from yellow past-due notices, free from collection agencies hounding them by phone. After today, the flag of zero-percent interest will fly. But tomorrow -- literally -- Capital One and Providian, MBNA and Avanta will begin sending applications for credit cards with $300 limits and 29.99 percent interest rates. Bankruptcy law in America has been designed to give people a fresh start; one of its consequences, though, is that the debtor is soon bound up in cycles of consumption once again. Which may well be the credit industry's intent.

At 8:00, the door to the hearing room swings open and the United States Trustee appears. The trustee, who is an officer of the Justice Department, calls in the nine debtors, who rise and enter accompanied by their attorneys. How had these people found themselves here? How innocently or unremarkably had their spiraling descent into debt begun? For most of them -- and for the 1.6 million people in the United States who file for personal bankruptcy every year -- it began with a medical emergency, a lost job, a divorce. It began with a belief that money would always be available -- received, earned, or borrowed -- and that it would buy anything. The irony is it does buy anything, even freedom from debt.

* * *

Willie's bankruptcy woes began with those credit-card come-ons that arrive by mail. "My credit was good," he says. "I got one, two, paid them off; one, two, paid them off." Things were fine for a while -- "My girlfriend was working, I was working." Willie knew that his girlfriend suffered from diabetes when they moved in together, but he didn't realize she had unpaid medical bills. He suggested she apply for credit cards just as he had, but she was repeatedly turned down: bad credit. To help defray her costs, Willie got more credit cards himself and added her name to the account. (The names of those who shared their stories for this article have been changed, as have the names of relatives, friends, and workplaces.)

Debt began accumulating, and then Willie's girlfriend lost her job. "It set us back because I couldn't pay [both] what she owed and what I owed. We had it figured out, and we didn't have it figured out. A job is not always guaranteed to be there." Her worsening diabetes prevented his girlfriend from seeking new work. Payments for medications and doctor visits mounted. I hazard a guess that his girlfriend had no health insurance. "There it is there," he confirms. All at once, the debt in Willie's name mushroomed to $30,000.

"I wanted in my heart to pay what I could, but I couldn't see no way out. When you can't see no way out, and when they start hunting you -- dropping lawsuits on you and this and that. But I didn't let it get that far."

He signed up with Debt Free, one of many loan-consolidation programs that, for a fee, bundled his debt and collected one monthly sum. Willie had 15 cards. Why so many? They were living off the cash advances, and each card had a limit of $500. He assumed that cash would be "cheaper to pay off" when in fact cash advances are assessed at a higher interest rate than purchases. That was a first lesson.

"If you got it to give it, then that's fine," he says, "but if you don't, you can't just go and steal it. You know what I mean?" Every month, he says, the "money wasn't increasing, it was decreasing." Willie had no assets: no home, no car. His furniture was bought at Goodwill -- "if you want to call that an asset."

"You're living day to day," I said.

"There it is there."

What Willie feared the most was that his creditors would begin "garnishing my checks." Without rent money, "I'd have no place to live and I'd be back out on the street. Once you start going [in] that direction, what does your life become? A nightmare." Willie had been homeless years before. "It's not a good feeling. It's hard; you don't get the respect. You're out there, every man for himself."

The month before he filed for bankruptcy late last year, Willie saved enough money to make all 15 minimum payments. He says it was the least he could do. Those people needed their money, or at least the small portion of it that he could pay.

The worst part of bankruptcy, he says, is having to abandon his dreams. "I wanted to one day, if things got better and I went to buy a house, use those credentials [of good credit]. That's the only part that got to me. I want to be that A student. Now it's, like, they pull my file up and -- oops, bankruptcy. I don't feel like I did a bad thing. I feel like I didn't expect the worst."

The problems with debt led inexorably to Willie and his girlfriend splitting up. I asked whether she tried to help him pay any of the debt or whether she had saddled him with it.

"There it is there," he says, meaning the latter. "She hates that it happened. Now she says, 'I didn't mean to.' I couldn't [do any] spousal abuse for that fault there. Things happen. The best thing for me to do was to try and figure what I needed to do [for myself] without any hard feelings. The bottom line is I'm the one who's going to take the total loss."

After he paid the lawyer, Willie "went straight home and took the scissors" to his cards. "It wasn't like I was losing anything; I was already losing something just by having them. It was a relief."

Willie now says people should have a credit card or two, but they should be careful not to exceed the limit "in case something happens in the long run. You get a lot of cards, it's just like handing you cash. You have visions, but you don't have the vision to see what's going to happen later on down the road."

Willie's family had no monetary problems while he was growing up. "My mom was the money manager. She owned two houses. My dad was out working. My mom did all the budgeting. She had a bachelor's degree; she was bright. Coming up, we had a foundation. I had some good parents. Back then, it was all about pinching and saving -- saving for rainy days. We didn't get everything we wanted. It wasn't about going to the ATM machine; it's all about plastic now." Today, he says, if anyone were to make a big purchase with a stack of bills, "They'd be looking at you real hard."

Now 46, Willie works for a nonprofit demolition company called the Alpha Project running a crew that tears down houses or staffs lines during fires. He's been doing it steadily for ten years. He makes nine dollars an hour and has never had a raise.

* * *

The nine debtors and three attorneys seat themselves before the trustee. Overseeing the day's 341(a) hearings, he sits at a desk with a laptop computer and sheaves of paper. Behind him are two large signs, one in English and one in Spanish, warning people that the FBI investigates all bankruptcy crimes. He calls the first case. He asks for a picture ID and a Social Security card. Then he administers the oath to the debtor: under penalty of perjury, you must tell the truth. First up is Dave, a tile setter from Poway with a goatee and an unwashed dark green T-shirt. He looks to be in his late 20s. A cell phone, snap latched in a leather holster, rides on his belt. Dave states his name and address. The trustee asks: Have you reported all of your income? Have you read your bankruptcy papers? Do you understand what you've read? Have you received any new income since you filed? Dave's answers are sincerely deferential: "Yes, sir. Yes, sir. No, sir."

How much is your monthly income? $1372. Rent? $700. Food? $250. Car? $330.

The trustee accepts the assertions. It's a public airing, though the only public here is commiserating debtors.

Are there any creditors here on behalf of this case? The room is silent. The trustee announces the final relinquishing, ringing the bell of societal forgiveness: "Your debt is discharged," he says. "Sally McCormick?"

* * *

Elaine grew up near Fallbrook on an avocado ranch where her father supervised farmworkers. Her parents had not gone to college and knew little about personal finance. Though they could not afford to pay their rent, the family somehow made it from one day to the next. When Elaine's younger sister was born, the family borrowed money to buy a condominium; their monthly payment was steep. That's when "things went downhill." Both parents were working full time, but they had no savings and no idea how to manage their bills. Their situation worsened as they accumulated debt with department stores such as Target and Mervyn's. Within a few years, her parents filed for bankruptcy.

Now 27, Elaine says she had a similar attitude toward money. "When I was 16," she says, "I started managing a Jack in the Box; [I was] a shift leader, opening and closing the store. I was taking home two, two fifty a week. At that age, I didn't save; I was spending it [all]. Because I had it. I didn't have rent. I had tons of clothes. I was into the club scene as a teenager." At age 18 came a boyfriend and the birth of a daughter. Suddenly "it was constant work to pay the rent, work to pay the bills. It was never I've got extra cash in my pocket."

Elaine got a student credit card from Wells Fargo when she signed up for college classes. Her limit was $750. She used the card for books and tuition. After she and her boyfriend were married in 1996, he lost his job. They lived on cash advances drawn from the Wells Fargo card, then on a Montgomery Ward card, and finally on unemployment benefits after Elaine herself was laid off. In 1997, they rented a one-bedroom apartment in Vista. One day her husband lost his wallet, and with it a money order for the rent. The next thing they knew the landlord was serving them papers for rent past due, followed quickly by an eviction notice. This led to a series of court battles, in which the judgment against them totaled $2500.

Two years later they were living in a two-bedroom apartment when her husband lost another job. "We just never got caught up from there," she recalls. They fell $2100 behind on rent, and once again, a landlord took them to court for the money. Elaine and her husband hired a lawyer, who suggested a settlement, but the landlord refused to accept anything less than the full amount owed. Elaine's husband fought on in court, which meant more costs. The total for this judgment was $4000. The bulk of both judgments, Elaine says, were attorney's fees. They couldn't pay either sum.

The first apartment was in Elaine's name; the second in their married names. They moved to a third apartment, which cost $900 per month. Then they bought two cars, $500 a month for both cars plus $120 for insurance. Car loans were surprisingly easy to get. Elaine still had one credit card, the Wells Fargo card, which was maxed out. She also had Macy's and JCPenney cards. All the cards were in her name. Though her husband, seven years her senior, had once filed for bankruptcy at the age of 19, it never occurred to them to file.

They steadily fell behind on everything but their rent. The pressure of it all caused them to separate. "From there it just went down." Elaine moved back in with her parents and worked to pay off her bills. She received no help from her husband, who was himself being chased by a lien holder who was trying to repossess his car. To help him, Elaine took on his car payment. She was responsible for two car payments -- a Mirage and an Eclipse -- for about eight months. Everything she earned went to managing her debt, and she couldn't keep up. The Wells Fargo debt doubled with over-the-limit fees. "It was all fees."

Elaine was making $11 an hour working the graveyard shift at a wireless company, with no help from her ex, "who got away scot-free." She paid the debt down bit by bit, but then her daughter incurred sudden and unforeseen medical costs and "it went right back up."

For six years, Elaine paid all the bills for herself and her daughter with no help from her ex-husband. She says now that she should have fought for more during their divorce. "It's one of my problems. Sometimes you close the door emotionally, but I wasn't ready to go through the whole court process. I needed a fresh start. I've always had to fix everything, pay [for] everything. I go to school full time, I work full time." But she couldn't move out from her parents' home because as soon as a prospective landlord ran a credit check, he'd turn her down.

Next came a lousy experience with Freedom Debt Relief, another credit counseling service. The company signed a contract with Elaine to consolidate her loans into one monthly payment of $300. She was surprised when her creditors kept hounding her; she told them to call her consolidator. Freedom Debt Relief said they'd take care of it. She paid $1800 over the course of six months, which she now understands went to the company for up-front administrative costs. Virtually none of it went to pay her debt. "It made everything worse."

As a consequence, her monthly credit-card bills jumped even higher. Elaine got a Providian card with a $2000 limit. "I maxed that out" right away, she says, mostly to pay for a degree program in accounting at the University of Phoenix, a program that requires regular contractual payments. (She also took out a student loan to defray the costs.) For the next year and a half, she worked two jobs: she delivered newspapers from two to six in the morning, after which she got her daughter ready for school before going to her regular job as a telecom employee. Now earning an extra $1000 a month and facing her last car payment for her Mirage, she decided to upgrade: she bought a used 1998 Ford Explorer for $16,000 -- $500 down and $400 a month for seven years. She says it was necessary for her paper route. "I tell my dad, 'Had I not gotten the Explorer and just kept my car,' " which would have been paid off, " 'I probably wouldn't have had to file bankruptcy.' "

So Elaine sought to wipe out the $27,000 she owed. She paid $200 for the filing fee and $500 for the lawyer, and the bankruptcy trustee discharged her debt: creditors were forbidden to contact her, and they had to swallow what she owed them. For the next year, Elaine paid cash or wrote checks; those things that credit cards ensure (air travel, car loan, concert tickets) were much harder for her to get. Today, she is taking a finance class and learning the ins and outs of credit. "The people who always pay their credit bill each month and bring it back to a zero balance are the ones that never get asked to increase their limit and are always offered more credit cards. It's always the people who have a higher debt ratio who get more credit. Just like me," she says. "But not anymore."

* * *

The statistics on credit-card use, debt owed, and bankruptcy filings are staggering. According to the New York Times and a recent PBS Frontline episode called "The Secret History of the Credit Card," 144 million people in America use credit cards. Some 59 million pay off their monthly balance on time: they are referred to in the newspeak of creditors as "deadbeats." Some 85 million people are "revolvers" -- charging, running a balance, and paying off some portion of it; their month-to-month debt averages $8000. Payments on that debt make up 92 percent of a family's disposable income. Revolving debt, reports the Federal Reserve, totals $802 billion, off of which the consumer lending industry makes $2.5 billion per month. Of the revolvers, some 34 million pay only the minimum payment, about 2 percent of the balance. Their average debt is $18,700, which equates to a $375-per-month minimum payment.

This may not sound onerous, but consider that the credit-card companies also find ways to impose additional fees and change interest rates for a creditor's unsecured debt. First is the annual fee, which ranges from $25 to $85. Second, if you're late with a payment, the penalty is another $25; one company charges $39. Third, if you exceed your limit on the card -- usually a generous $5000 -- another $25 fee is assessed. Fourth, there can be fees for phone payments ($15) and cash advances.

Consumer lenders such as Discover Financial Services, which issues the Discover card, are becoming ever more devious in their attempts to control interest rates. The New York Times reported that in carefully reworded contracts disclosed to Discover cardholders last April, the company declared it has the right to raise interest rates on credit cards whenever it determines the borrower has "become a risk." One or more late payments could be considered actionable risk. Running a balance too close to your credit limit could be a risk. Making a late payment or missing a payment with some other creditor, such as a department store or an auto dealer, could be a risk. Credit infractions appear automatically on one's credit report and alter one's FICO score, the up-to-date barometer of a person's likelihood to "make good on his or her debts." Because of these newly identified risks on the borrower's credit report, Discover and other issuers have in some cases raised the cardholder's interest rate from 0 percent to 19.99 percent overnight. In one instance, a man who was carrying a $50,000 balance on his card, mostly from medical costs, watched his 5.25 percent interest rate quadruple to 20.21 percent over a three-month period. His minimum monthly payment rose from $209 to $808. Virtually no other creditor -- bank, merchant, car dealer, school loan program -- can change the rate of interest during the length of the loan.

While credit-card issuers establish a minimum monthly payment, they don't really want you to pay much more than the minimum, thereby ensuring that the next month's balance will increase. However, if you were to keep making minimum payments, the issuers would then penalize you by charging you more fees and higher interest rates because you've been paying the minimum. The more you owe, the higher your fees will go, since you're the one on whom the lender can make the most profit. You have to pay ever more for your profitability to the lender.

Bankruptcy filings in the last decade have doubled partly as a result of such usurious tactics. They rise roughly 6 percent each year, a trend that has seldom slowed since the early 1990s. In 2004, according to the Administrative Office of the U.S. Courts, nearly 1.6 million debtors filed, down slightly from 2003. Some researchers say that figure should be 32 percent higher (roughly 2.1 million) to account for the fact that 44 percent of bankruptcies are the joint filings of married couples.

* * *

As a boy, Charles was taught to "pull his own weight" -- debt was viewed as a "terrible shame." His family had a home mortgage and used credit cards "very judiciously." His parents saved for a new washer, and he recalls a better local economy when he was growing up in San Diego. "My parents both worked at missile factories, and they had reasonable wages. You could live on such a job [back then]." They lived well but also day-to-day and were unable to amass any real retirement savings. Their investments were a home and college education for their kids.

Nobody in the family ever talked about money, budgeting, or investing; nor were such subjects part of a broader public conversation at the time. Instead, Charles says, he learned that work meant money. In his 20s he was making a good wage at a union job, $30,000 a year. He was doing well when he got married. "I thought about building equity" by getting credit or buying a house, as his parents had. Credit came, in his 20s, as overdraft protection on his checking account, which he dipped into. "I carried a small debt in my 30s," but never more than a few thousand dollars. He and his wife had a child, but they separated soon thereafter, in 1989. And they battled for custody in court. Which became, he says with an understated sigh, "a protracted affair."

The custody dispute raged for nine years. "[The] actual wrangling in court never ended," he says. His ex "had means," and "every time she'd take me to court, I would have to respond in kind. When your kid's safety is at stake, nothing else takes priority. You pay whatever you have to [in order] to get stuff to happen. You pay the doctors, the psychologists, the lawyers who are involved in this custody case. I built up a substantial debt," well over $10,000. He soon realized that his monthly minimums were consumed by interest and late fees. Nevertheless, Charles still charged his legal fees to his card.

As his debt became "unbelievably huge, it became abstract." The divorce court proceedings had made him "disillusioned and heartbroken." He was so involved in "fighting the war" with his ex that he "didn't even look at the debt. I needed a new TV or whatever. I just got it." To make a happy home for his daughter, he'd buy her a new bicycle or the latest video game. Or something for himself. "What difference does it make whether it's a $20,000 debt or $21,500? Toward the end it got crazy. I turned around one day and I had almost $67,000 in credit-card debt and tens of thousands of dollars in attorney's fees." (Some of the debtors I spoke with cleverly denied themselves full access to their growing credit-card bills. They would cut open the envelope, inch the bill out, place a thumb over the balance due, read only the minimum payment, then write the check for that amount and mail it.)

Then came the moment of truth. "My payments on my charge cards were more than my income. When that happens -- talk about up against the wall." Though his divorce lawyer didn't come after him, Charles's attorney must have known that bankruptcy was a fait accompli once he started missing payments. Charles delayed seeking financial advice by working all the time. "When my daughter was very young, I worked nights in a grocery store. I would work all night and get off in the morning and take care of my daughter all day. Sleep when I could. On the weekends, I would do odd jobs -- just too busy to think about anything past tomorrow."

In the three months before he finally called a lawyer and declared bankruptcy in 1998, Charles agonized over the decision. A woman he knew at Bank of America had helped him get loans to fight his ex for custody of their daughter. "When I went bankrupt, I felt terrible" for her. He believes she must have suffered some "ramification," because he had welshed on the debt. He says he saw the pain coming, but "I was in denial." The shame was too much even to feel.

Charles says at his hearing he was a wreck because of "the stigma" of bankruptcy. "I'd been writing letters to people, telling them I couldn't pay them. I felt so bad about it. People were losing their money...I had let these people down." He felt bad for "the bank manager that I dealt with, who was so kind to me for so many years. Other people, like my attorneys who worked so hard for me. One of them I ended up stiffing out of $3000. I felt terrible about that."

It has been six years, Charles says, since he has really talked about it. His voice cracks several times during our interview. He stops talking, and when he starts again, the soft restraint of his voice is the sound of a man struggling not to cry.

For a year he lived on a cash basis. He couldn't rent videos. He couldn't buy airline, movie, or concert tickets. He couldn't cash a check. He felt like the proverbial second-class citizen. "It's an acknowledgment of your worth [to] society." Now he understands that "credit cards represent credibility," and that, if anything, has led to a kind of wisdom. A self-described "amateur cultural anthropologist," Charles points to "countries without bankruptcy laws where there are huge squalid debtor slums. Even debtor prisons. The economies stagnate. Whereas with bankruptcy laws, I've gotten a fresh start. I'm back working. I've got a new relationship going. I'm thinking of getting established again so I can buy a house and purchase a car."

Today, Charles has four charge cards, whose balances he keeps low. "No debt to speak of." He believes the stigma attached to debt is disappearing -- at least on the civic level: he points to the federal deficit and Enron's bankruptcy as examples. "Look at what they get away with." Deficit spending by governments and the debt that is carried by high-flying corporations boggle his mind. He mentions K-Mart. That company never "felt bad" about emerging from bankruptcy and buying Sears, so "why should I feel bad about debt." Many Americans agree with Vice President Dick Cheney, who said that "Ronald Reagan proved deficits don't matter." We have, Charles says, "a government that's spending like a drunken sailor and cutting taxes. Who's going to pay for that? I was raised to believe that debt and bankruptcy was a shame. Nowadays, it's a valuable tool to embezzlers and thieves." He laments the fact that commercial television tells the young that they have to have fancy clothes and lots of possessions to be considered a success. Whatever it takes to get those things, he says, "even if it involves bankruptcy," is something "kids believe in." That, he says, is the most frightening consequence of all.

* * *

According to Elizabeth Warren, a Harvard Law School professor and an expert on bankruptcy, 91 percent of bankruptcy filings are due to a lost job, a medical emergency, or a divorce. The majority of those who suffer such disruptions in their lives are in the bottom 40 percent of wage earners in the population: the median income for bankrupt debtors in 2001 was $24,108. (The median household income was $42,228.) What's more, the median amount of debt carried by bankruptcy claimants was $36,000, 50 percent more than their income. Warren was not surprised to learn that the majority of debtors live near or below the poverty line. What did surprise her was that people with heavy debt are not spending more money on stuff they don't need; in fact, they are spending less than their parents did on the same items a generation ago. When she compared the rates of spending on clothes between 1985 and 2001, she found that people today are spending 22 percent less than their parents spent in inflation-adjusted dollars. In 2001, people spent 21 percent less than their parents spent on food; 44 percent less on appliances; 35 percent less on tobacco, alcohol, furniture, and entertainment -- all this despite the frequent assumption that consumerism is rampant. What has led them into debt is not materialism, it's the high cost of basic necessities: mortgage or rent; day care or after-school care for children; health insurance, often a luxury for the majority of the poor; and two or more cars, often necessities in two-income families. These things cost a whopping 30 percent to 70 percent more than what they did a generation ago. Warren writes that "by the time they make these four basic purchases...they have less money to spend on everything else than their parents [did]."

* * *

For Bobbi -- a health-care worker who speaks in two-beat phrases -- debt began in college when she was first offered free credit cards and started using them. For what? "Parties," she says, "during my senior year. [But then] when you graduate, you need to put a couch in your place, you need a TV, you need dishes -- you don't have things, you're done, you've just graduated. That's how it starts. Then you pay for things, you slowly make payments, then you get more credit cards. They say, 'Get another credit card,' and it goes on and on and on. Throughout your life -- or my life -- you buy and pay, you buy and pay. Then you buy and you skip payments; you buy and you skip payments -- and it snowballs."

For years, Bobbi used her cards for "necessities." A TV, then a better TV. A stereo, then a better stereo. Furniture the same, and so on. "You get rid of the old or you leave it behind." In 1990, she sold everything, moved to San Diego, and needed new stuff once again. Which meant more cards. She charged "TVs and clothes and couches -- and stuff you shouldn't get, you know, like DVDs. I bought a $3000 bed on credit. That wasn't necessary. I should have bought a $100 bed."

Bobbi's pattern of buying on credit and repaying over time was well established by the end of the '90s. With 13 credit cards, she says, she "had it under control" for a while. "[I] paid it off and spent it. Paid it off and spent it." After nine years of working at a retirement home, one day she faced a momentous change: she got laid off. Though her long-time job had ended, buying on credit did not. That pattern was too ingrained. In fact, buying was both necessary and steadying for Bobbi. In less than a year, paying only that low monthly minimum (on 13 different accounts), she found that she had accrued interest charges and late charges and over-the-limit charges to the tune of $15,000. That was more than 50 percent of her debt at bankruptcy -- $29,000.

"That much interest was ridiculous," she says. In effect, she was paying for those couch and TV upgrades more than once. Debt Free helped her consolidate her bills, and she paid them $500 per month for five years. "That seemed pretty easy. But when you don't have a job, [you can't] pay it. I had no money coming in. I had to put my tail between my legs." Bankruptcy "is something you should do. It's nothing to be ashamed of. I didn't go out and party afterwards.

"I'm a Christian, a good person. A few of my acquaintances I told I went bankrupt. I listened to their opinion; I try not to judge. 'Yeah, I went bankrupt,' and they went, 'Yeah, you seem like not so stressed.' " Bobbi felt supported. But when she was considering moving and looked at a renter's application, she saw the question, "Have you ever declared bankruptcy?" -- "I've always checked, 'Hell, no.' But this time I was, like -- I froze. That's going to be a question if I move."

Today, Bobbi has to prove she's a good person, a good tenant, a good bill-payer -- all by paying cash. She says she gets "really pissed off" when credit-card and car loan solicitations are dangled before her. Shadier companies offer cards -- with enticements like "Bankruptcy -- No Problem!" -- that appear to suggest you can use them immediately when in fact you must secure the card with cash. (Loan sharks regularly check bankruptcy court files, which are public documents.) "I don't like it," she says. "I'm on some list. That's sick." She called one such firm that advertised a new car for "one-cent down," saying, "Listen, I don't need a new car. I paid off my car. I'm not dumb. I don't want a new car. Quit mailing me this crap!" The other mail she recognizes immediately, their "Low, Low 4.9 Percent Interest Rate" come-ons plastered on the front of the envelope: "I rip 'em up. I'll never have another credit card again."

Reflecting on the person she was ten years ago, she says, "I was spoiled. You get a credit card, and you think you can take care of it. You play the game, [the same way] most Americans do. You don't want to be like most. You should pay cash." And yet how often are we asked for a credit card? "If you're smart, you'll say no. Just like drugs. We all like drugs. But that's not life." Only recently, right before she went bankrupt, did she begin reading the six-point font on the back of the bill. "Capitol One," she says, "are really sneaky people. They wanted me to keep my credit card, after I went bankrupt. Isn't that crazy?" Like an alcoholic who keeps an unopened bottle of whiskey on a shelf, Bobbi keeps her dead Capitol One cards in a drawer to remind her of what she's gone through. She laughs when she sees their offers: Will she be tempted? Not so far. "I'm hard on myself. Like everyone else," she says, she believes "life is temptation."

And yet Bobbi did get another card. Several, in fact. This time for targeted purchases: a May's card for clothing; a Shell card for gas; a Discover card for the veterinarian. "My dog is 13. He's in good health because I was able, every month, to pay for his six-month check-ups, his food, his shots. All paid on credit. Thank God for that credit card. Now he's struggling a little. The vet I took him to [recently] was a total shocker. Two hundred dollars. I paid cash, but dude, I didn't eat for a week."

* * *

Racial and ethnic differences influence who owes whom and who owns what in America. Recent Census Bureau data reveal that 33 percent of black families and 26 percent of Hispanic families are in serious debt or have no assets. The figure for whites is 11 percent. In terms of debt, such a gap suggests that white families can survive economic downturns better than their minority counterparts. Since whites have greater net worth -- more homes, cars, savings accounts, stocks -- they are less likely to file for bankruptcy: such assets are saleable before bankruptcy sets in. Hispanic homeowners are three times more likely than white homeowners to file for bankruptcy, and black homeowners are six times more likely.

Whether white, black, or Hispanic, debt is running -- and ruining -- the lives of millions of Americans. Simply put, the cause of this debt and the cause of the rising tide of bankruptcy is an unregulated consumer-credit industry in which, according to Elizabeth Warren, "More creditors [are] lending ever more money to ever-poorer debtors." Warren has also written that "70 percent of American families [in 2003] said that they are carrying so much debt that it is making their family lives unhappy. The number-one New Year's resolution for 2004 was to try to reduce the debt load. That's the first time something has beat 'try to lose weight' in more than 20 years." She estimates that at the present rate, by 2010 "one in every seven families with children in America will have declared bankruptcy." This number is likely to increase now that the Senate has passed an overhaul of personal bankruptcy law. The legislation, which many view as pro-business, sets up an income-based test: If your income is above the state median, then you must file for Chapter 13, or re-organization. The American Bankruptcy Institute estimates that up to 20 percent of those who file for bankruptcy will be disqualified from using Chapter 7 to wipe out their debts.

* * *

Seventy-year-old Gus relates a common immigrant's tale. Born to a Mexican family, he was a "conservative young man" who always worked. He had "nice cars, nice clothes." In his 30s, he bought a home, sold it, and upgraded to a better one three times. Opened a restaurant at age 38 and kept it for 20 years. Gus never had any problems, and he describes himself as "very conscientious. I grew up feeling that money was always there. It was easy to obtain because you worked for it."

The restaurant's success nurtured Gus's innate idealism. "I always had the feeling I could make it happen." Possibility was always "just around the corner. I was a dreamer." However, in the clatter of daily specials and the exhaustion of nightly mopping, he didn't figure on his marriage failing. Which it did in 1988. He holds himself responsible: "I didn't want to hold on to anything that we had worked so hard for, so I gave it all to her. I walked away with not too much."

The breakup greased his slide into debt. He no longer had a home, so he started renting an apartment. "I had no life. I worked two, three jobs. I was [either] hanging out or I was working. I get bored easily so I work." Despite pulling in two paychecks -- from limo driving and supervising a restaurant crew -- he still sought out high-priced items in men's clothing or auto supply stores (a gabardine suit, mag wheels). He owned seven brand-new cars, one for each day of the week. "I had a Mercedes, a Lincoln, a convertible. I just enjoyed it, and my kids would use them, too. For their graduation, each one got a new car." Gus knew he was in over his head when his debt -- $50,000 on four credit cards and past-due accounts at a half dozen stores such as May Company and Firestone -- was double his annual income of $25,000.

Gus's debt hit $50,000 12 years ago -- and he managed it until last year when he finally, reluctantly, declared bankruptcy. "I carried it. Robbing Peter to pay Paul, robbing Paul to pay back Peter," a Biblical absolute employed by almost every bankrupt person I spoke with. "One way or the other," he says, "I kept everything afloat."

How does one manage $50,000 of debt for 12 years? Why didn't it grow?

It didn't grow because, Gus says, he kept it constant, "spinning my wheels and not going anywhere." He cleverly balanced who got what when. He would work two jobs for six months, save $5000, and then pay off one card while the other cards got minimum payments. He would borrow money from a relative. He would use that money to pay off another account, then work another two jobs until he had paid back the relative's loan. He would find a card with a 0 percent teaser rate for six months, borrow the maximum, and use the loan to pay off a card on which he was overextended. He kept the whole teetering assemblage under his hat, never telling his two daughters or his son or anyone else what he was doing. "I thought about bankruptcy for years and years," he says, "but I just couldn't do it."

And then, when two of his kids decided to move to Palm Springs and invited him to join them, he finally broke down and told them the truth. It was very difficult, he recalls, to express those emotions, to admit his failure. But his kids supported him. " 'Dad,' they said, 'it's the best thing you can do.' " The force of his habit, he says, could only stop with a family confession. He wanted a clean break. He was tired of the balancing act; he was tired of the phone calls and feeling inferior; he was tired of lying to his kids. He filed for bankruptcy in 2004, and it has cleared away a sizeable portion of his debt.

Now he's bringing in close to $3000 a month, he says, administering an estate in Palm Springs. But he's still got a secret: "My family thinks I'm free and clear. But I'm not." He still owes friends -- debts the court neither knew about nor, even if it did, could absolve him of. These debts amount to more than $7000. He'll make good on them, he promises. Since his children "turned out fine" and are both successful, "I don't want to concern them that I still owe this money."

His children want Gus to stop working and take it easy, he says. But he can't retire. In fact, he's got a new product he'll be debuting in the golf world. It's a gourmet beef jerky -- "a very expensive item" -- that's been endorsed by long-ball driver John Daly. In order to make it available at the pro tournaments this year (slogan: "Grip It and Rip It"), Gus found partners, invested ten grand of his own, and is engaging in a "little bit" of borrowing to make sure the thing flies. "I've got this crazy idea that I'm going to make several hundred thousand dollars off this product. I really believe it's going to be a good ending. All it takes," he says, "is money."

* * *

One of my three credit cards, Citibank AAdvantage, has notified me that because I've been paying off my balance every month as a Gold Member -- deadbeat that I am -- I have "been selected for a Platinum upgrade." I will earn more American Airline frequent flyer miles so long as I make purchases; I will get "exclusive privileges" to attend "invitation-only events such as private movie screenings, golf tournaments, concerts, and so much more"; and, when I travel, I will get "Luggage Express," which means I can "pre-ship" my bags and "experience stress-free travel." My upgrade, for which my credit limit will also be raised, "is waiting" for me because I've "earned it." In fact, since Citibank "value[s] my business," the cost to extend my credit is only $85 a year, $35 more than I pay as a Gold Member. What's more, for any balance I run, for purchases I pay 14.74 percent; for cash advances I pay 19.99 percent; and as a default rate -- if "you fail to make a payment to us or any creditor when due, you exceed your credit line, or you make a payment to us that is not honored" -- I pay 28.74 percent. I only need remember that Citibank "may change the above rates, fees, and other cost information at any time."

That marketing strategy seems meek when one considers the new target of some company pitches: children. Say hello to the Hello Kitty Debit MasterCard. Using the popular Hello Kitty brand, which children see stamped on pajamas, purses, and other kids' stuff, this card is being touted on its website as one that will bring little Missy "Freedom! You can use the Hello Kitty Debit MasterCard to shop 'til you drop." (An item from a rival company is the "Barbie Shop with Me Cash Register," accessorized with a toy American Express card.) The Hello Kitty card is for girls 10 to 14. Mom and Dad put money into Missy's Hello Kitty account, then take her shopping. When Missy flashes her MasterCard at the cash register (Mom or Dad need to be present), the transaction will, according to the senior vice president for Sanrio, which is marketing the product, help parents "teach their children how to manage their finances." (Please write me at the Reader with stories about ten-year-olds whose finances need managing.) And, the vice president notes in an interview with the Washington Post, the target age group "could certainly go younger." Sanrio's next offering: the prepaid Hello Kitty cell phone.

* * *

For Sharon, the debtor's trail began at age six, when she was denied two things by her iron-willed parents. First, they refused to give her a Barbie. "All the other girls had" one, Sharon explains over coffee in a cafÈ where 1970s feel-good music plays in the background. In fact, that childhood trauma recently resurfaced to sabotage her life. Her parents also refused to let her spend her allowance, forcing her to put it in a savings account every week. "They were trying to make me be 'grown up' about it." The upshot was that she, unlike her friends, had no money to spend on herself; the "good little girl" -- Sharon frequently mocks the roles she's had to play -- was saving for something as yet unimagined.

When her savings had grown to several hundred dollars, Sharon began badgering her mother about spending some of it. Her mother in turn lobbied her husband. On Sharon's 12th birthday, her father finally agreed that she could spend some, though a big discussion ensued "before he turned the money over." He warned her not to spend it all. What happened next is, perhaps, unsurprising: "I blew it all at once. I bought a radio, records, school clothes; I spent it in a very short time. My parents made me wait so long that I just went nuts when I finally got it."

Her father hit the ceiling. " 'I told you,' " he trumpeted to his wife, according to Sharon. " 'She doesn't know how to handle money. She blew it all. She saved for all these years' -- I was forced to save -- 'and now it's gone.' "

That "manipulation," as she calls it, has had lasting effects. "I felt bad about myself, ashamed. There was something wrong with me. I didn't realize until I was an adult that when a kid gets an allowance, she gets to use it that week."

In Cincinnati, Sharon's parents lived what she describes as the American dream. Her father invested at his workplace, AT&T (every raise he got was channeled into stock); he and his wife were homeowners, with two acres and a little forest. "They've done tremendously well. The food was good, steaks; we were one of the better families on the block." In the 1960s, when gas and department store cards appeared, her parents bought on credit and paid the bills immediately. For 50 years, they've never carried a balance past the due date. They have a summer home and a winter home, and her father was able to retire early.

Sharon graduated from high school a year early, met a man, and moved in with him. Her parents castigated her again. From then on, "It was always a struggle." She dated musicians and artists, never finding "that rich guy." Later, between boyfriends, when her car's engine seized up and she needed a loan, she called home. "They'd give me the money, but they would just shame me, guilt me for it." She remembers them saying, "All you want us for is money."

During her adult life, Sharon recalls her mother doing things that she thought "were very hurtful." While Sharon was driving a "junker car," her mother would call and say, "'Oh, we bought another house, and your father and I are going to get another refrigerator, and a convection oven.' You can obviously hear the anger in my voice.

"My big joke to my friends is that I spent the 1980s yelling at my parents. I brought it all back to their door. They raised me to be dependent on them. It's an issue I've had to deal with for years." Eventually, she and her parents underwent family therapy and resolved some issues. "My parents are changed people." Today, at 51, Sharon continues to receive an "allowance" from them -- $300 a month. "They send me this money, and there is no shame."

Once Sharon got into the working world, her dysfunction expressed itself further. Since she wasn't able to "make a decision, spend the money, and make a mistake," she has little trust in herself. She had a string of office jobs during her 30s, and her performance reviews always said that she "cannot make a decision." Compounding Sharon's troubles, she and her father have both been diagnosed as bipolar. She says her medication prevents her from being more decisive. When it comes to managing money, it has been easier not to make the decision not to buy something than face the consequences of debt.

During the late 1980s, Sharon got yearly bonuses at Tell Labs in Chicago; the expectation of this reliable windfall prompted her to get her first credit card. "I charged up the card and then got my bonus and paid it off." Three years this worked. The fourth year, the company took a loss and there was no bonus; Sharon was stuck with a $2000 debt. Her salary covered her living expenses, which she characterized as "1980s": power suits costing $100; blue jeans for $80; mountains of makeup. Still, the debt remained.

Coming to San Diego, she cashed out a 401(k) worth $4000 and spent the money to pay off her card. But, with a temp job, Sharon couldn't earn enough to pay her bills. Her depression deepened. One day, she had a "spiritual moment" and prayed to God. She immediately picked up a copy of the Reader and found an ad asking for a personal assistant. She moved in with a quadriplegic and took care of him for 18 months, rent and expenses paid. She was able to start saving. When she was displaced by a woman who married the quadriplegic, she found herself once again working in an office. The job "was overwhelming," she says. "They demanded I work 50 to 60 hours a week. I was slower than other people. I couldn't make decisions. This is where credit cards came in."

Credit-card debt in and of itself has not been Sharon's nemesis. Like many people, depression and family issues have disabled her severely enough that she was unable to make a living. Even though she qualified for disability benefits, received handouts from her parents, and lived periodically with boyfriends who paid her bills, she couldn't make it on her own. The cards kept her afloat. Until a burgeoning debt took her down.

By the end of the 1990s, Sharon's debt had ballooned from $1000 to $16,000. Her expenses had exploded, too. She had to pay for a therapist and medication. She left another boyfriend. She wanted to stabilize herself, so she found a mobile home advertised for a terrific price -- "the cost of a car." She told her parents about it, and they bought it for her. But there were hidden costs. Such as the land on which the trailer sits. New furniture. "I kept thinking" -- the curse of a rosy future -- "it's going to get better. I'm in therapy, I'm taking my meds. I'm going to get that 40-hour-a-week job. And I really believed that. I took several little jobs and failed. I was basically living on my disability and my credit card."

Her minimum monthly payment on several cards was $150. "I couldn't pay them $15, let alone $150." Sharon says she reached her "first bottom" when she was threatened by a creditor. She realized bankruptcy was an option, but having been raised by parents who continued to acquire things without accruing debt, filing for bankruptcy was "worse than being divorced." Still, on the advice of her ex-boyfriend, who himself had twice declared bankruptcy (you can file for bankruptcy once every seven years), she found an attorney and filed. Her parents "don't know to this day that I filed. They'll never know."

Her Chapter 13 bankruptcy allowed her to keep her home. "[It] freed me," she says. "It ended the panic of where my money is coming from." She was "so good" for so many years after filing, taking care to live on the cash she had. But her newfound discipline wiped out none of her "money issues." She began attending meetings of Debtors Anonymous.

DA, as it's called (www.dasandiego.org), offers a 12-step program for people who have unhealthy relationships with money. DA helped Sharon understand herself as an "underearner," that is, a person who doesn't earn the money she's worth or who doesn't work and earn enough because she is afraid of having money she can't manage. One in four are classified as "compulsive debtors," who, according to a DA pamphlet, share "the inability to control excessive debt or spending," with "a recurrent, often unconscious, use of money to overcome underlying issues." For those whose debt is wiped out by bankruptcy, their money problems are often far from over. In fact, bankruptcy can usher in a new slide.

As Sharon discovered when a fresh crisis arose: She came home one day and found a pipe had broken and flooded her home, ruining everything, including computer and appliances. Even the walls had to be replaced. Though insured, she faced three months of repairs. She moved out but needed to pay for a motel room.

Three years after her bankruptcy, Sharon was still regularly receiving credit-card solicitations in the mail. She always tore them up. But in order to get reimbursed by her insurance company for her extended stay, she needed a credit card. She finally opened one of those appeals she'd been resisting for so long. She told herself that as soon as her insurance reimbursement came through, she'd pay off the card: "It's just a little loan." Within a year, she had "maxed out [the card]." On what? Making a perfect home for herself: beautiful new furniture, beautiful new carpeting. Five thousand dollars' worth.

She swung back to the familiar pattern of making payments and counting on finding a better job to bail her out. Desperate, she indulged herself in the dreamed-of object her parents had denied her so long: a Barbie.

Sharon has been collecting dolls all her adult life. During the 1990s, old Barbies were selling for $1000 and there was money to be made dealing them. So, one day a week, for love and investment, Sharon began working at a doll shop. She bought a few dolls cheaply from the store and started selling them on eBay. Doll collecting became an obsession. Soon she was buying more dolls than she was selling; her credit-card debt bulged to $5000.

At the height of her doll collecting, her parents called to announce a visit. "The month before they came, I was on the computer five, six hours a night buying dolls. And I know now that it's connected to my childhood -- I was scared to death about them coming, and I chose to act out" by buying dolls. She hid the dolls from her parents when they came because "they would have had a fit if they knew I was spending money [that way]." Her childhood ache resurfaced. "It was my way of saying F-you to my parents -- buying all these dolls before they came."

A $700 doll, a Madame Alexander with clothing and trunk, a dead ringer for one she had lost in her mobile home flood, came up on eBay. With money she had received for her lost doll, she rationalized that the doll would someday "be worth $10,000," and she started bidding. A counter-bidder raised the price to $778, but Sharon "was right on her tail," and within a few minutes she won the doll for $800. She panicked. "Where am I going to get the money?" The next day, she looked at the mail and found her answer. Another credit card. She got a cash advance for $800 to pay for that doll. A day later, she says, "I had buyer's remorse. But you can't take it back on eBay."

That day, falling again for the credit card, she reached her "second bottom."

Declaring bankruptcy and going in debt again -- it's up to $5000 -- has accelerated a change in Sharon's behavior that, she believes, has finally ended her buying on eBay. She has gone back to DA, where she hopes to make and live on a budget, one month at a time, the goal of most members. At a DA meeting I visited, one woman perfectly expressed the lesson of spending what may not be there to spend. "I'm 65 years old," the woman said with a snicker, "and I'm finally starting to learn that it's money in and it's money out."