Ending a Cycle of Debt : Addicted to Credit, She Learns to Kick the Habit

Muriel Brown won’t be giving Christmas presents this year. She’s not buying anything until she works off more than $12,000 in debt.

Credit cards were the downfall of Brown, 33, a single mother of one who makes $28,000 a year as a telephone company service representative.

She fell into the cycle of debt when the charges on her credit cards and the additional interest costs were more than she could afford.

“When I was married, I had no expenses, a good job, and the stores and banks gave me all the credit cards I wanted,” said Brown, who at the time had a good credit rating. Soon she had collected 11 credit cards.

“As long as you pay the minimum charges each month they keep extending your credit line. It’s very tempting to spend,” she said. But the payments keep accumulating “and you can never catch up.”

When Brown separated from her husband two years ago, she was left with thousands of dollars in bills for a television set, videocassette recorder and other household items they had purchased together.

She was solely responsible for the $466-a-month rent on her New Jersey apartment; phone and electric bills, and her daughter’s $75-a-month parochial school tuition.

She also used credit cards to splurge on new clothing so she would feel better about her new single status.

“If I had had to pay cash, I wouldn’t have bought so much,” she said. “Plastic is what got me in trouble. It didn’t seem real. . . . You know you have to eventually pay for everything, but you figure, why worry until the bills arrive.”

To keep up with some of her monthly payments, she took out a cash advance on one card to pay for charges on another.

When she got sick recently and couldn’t work for several weeks, she made only half her regular salary. Then during a telephone strike last August she didn’t get paid for two weeks.

Without any savings to help out, she could no longer afford to cover the minimum payments on her credit cards.

“I could barely pay my rent and that came first,” she said.

Soon collection agencies sent her warning letters. “They harassed me and called my boss,” she said.

Brown finally realized that the only way out of a problem that was progressively worsening was to seek financial help.

Recently, at the suggestion of co-workers who had recovered from similar problems, Brown went to the Budget and Credit Counseling Service Inc., a debt-management program in Manhattan.

With the help of a counselor she will work out a payment program for her $12,000 in bills. The counselor will write to her creditors to explain that she will pay them off in installments during the next couple of years.

Some may even drop the finance charges as an incentive for her to pay up.

Every month she will give the counseling service a check from which her counselor will parcel out individual payments that were negotiated with each of her creditors. The service will cost her $20, plus minimal monthly fees.

When she returned home from her first session, Brown ceremoniously cut up all of her credit cards and threw them away.

The National Foundation for Consumer Credit offers help through 256 debt management chapters nationwide. Address: 8701 Georgia Ave., Silver Spring, Md. 20910. Phone: (301) 589-5600.