David Pleitez watched intently from his seat in US Bankruptcy Court as a young woman tried to explain how she had shopped her way into $40,000 worth of debt, only to see it snowball into $83,000 because of late fees and finance charges on her credit cards. It wasn't real. It was a mock hearing to teach high school students how quickly spending can spiral out of control. But Pleitez has already seen the real thing up close. “One of my cousins got into bankruptcy,” explained Pleitez, 18, a senior at East Boston High School. “He told me all about it. He said it was kind of miserable.” As for Pleitez himself, no sooner had he turned 18 than he was inundated with credit-card offers in the mail. So he had no difficulty envisioning a real-life reprise of the courtroom scenario. “It's really scary to think of going to $80,000 from $40,000, all from late fees and stuff,” he said soberly. There is a fresh urgency to equip young people like Pleitez with financial savvy. The Administrative Office of the US Courts recently announced that bankruptcy filings in federal courts rose 38 percent in 2007, totaling more than 850,000, of which nearly 823,000 were consumers. In an attempt to prevent today's high schoolers from becoming tomorrow's debtors, the Boston Bar Association, along with the US Bankruptcy Court for the District of Massachusetts, runs a five-part program that is a kind of personal-finance version of “Scared Straight” for teens, complete with a final session in the bankruptcy court. So it was that on a recent weekday dozens of students from Madison Park Technical Vocational High School in Roxbury, East Boston High School, and Needham High School gathered in the courtroom of Judge Joan Feeney for a dramatization of how careless credit-card purchases can lead to bankruptcy. For Ricardo Rosa, an 18-year-old senior at Madison Park, there will be no return visit to the courtroom if he has anything to say about it. As with Pleitez, Rosa has seen family members struggle with credit-card debt, and he is determined that it will not happen to him. Still, Rosa was startled to learn during the mock hearing that interest rates on credit cards can rise as high as 25 percent. “I thought it was 5 percent,” he said. “They offer you so many things,” Rosa said of the credit-card companies. “Say you've got a job but you don't make much money. They offer you ((a credit line)) twice what you make. Basically they are making you go in debt. They're teasing you.” That had the ring of grim truth to another Madison Park senior, Sahra Farah, of Roslindale. “They make everything easy, and then people fall into it,” said Farah, 18. “If you look at all their commercials, they tell you how easy it is to get money, but they never tell you about the dark side: the debt you can get into.” Several students said the path to financial trouble often runs through a mall, where a desire to impress one's peers, combined with a lack of understanding about the true cost of credit, can turn a shopping trip into a shopping spree. “People today think that having plastic, credit cards, it's free money,” remarked Dante Fountain, 18, of Dorchester, a senior at Madison Park High. Financial-literacy programs have sprung up in all 50 states, many of them launched by lawyers and bankruptcy judges who have had a firsthand glimpse of the social wreckage debt can cause. “Bankruptcy judges have realized in the past few years that there's a gap in education, that many high schools aren't teaching students about personal finance,” said Judge Feeney, who presided over the mock hearing. “We've decided to fill that gap.” The stakes are high and immediate. As they move into the world beyond high school, many young people are already being denied jobs, apartments, car loans, student loans, and admission to graduate school because of their abuse of credit cards, according to Judge John C. Ninfo, a bankruptcy judge in Rochester, N.Y., who has led the nationwide push to educate high school students through an organization called C.A.R.E. (Credit Abuse Resistance Education). “Everybody is checking credit scores,” Ninfo said. “I tell them this is something you need to take seriously. If you ruin your credit, you're in big trouble. It's not a history test you can cram for the night before.” Consumer debt is a widespread phenomenon in the United States, but as the subprime mortgage crisis has illustrated, debt of any kind can virtually capsize low-income families. That is precisely why the financial-literacy program has focused heavily on students in the Boston public schools since it launched in the spring of 2005, according to Janet E. Bostwick, an attorney who spearheads the program along with Judge Feeney. “For these kids, it's an inoculation,” Bostwick said. “It's important for any student, but it's particularly important for someone who doesn't have a safety net. People from low-income communities, there's no one who's going to bail them out if they get into credit-card debt.” Around 250 students from nine high schools (four of them in Boston) have participated in the financial-literacy program this year, making a total of 750 students since it began. More than 100 members of the bar association, from bankruptcy attorneys to corporate attorneys, from firms large and small, have volunteered for the program this year. Over the course of four visits to the schools, the attorneys walk the students through such personal-finance basics as checking and savings accounts, paychecks, taxes, and budgeting, with an emphasis on distinguishing between “want” and “need.” They discuss such favorite teenage topics as how to finance the purchase of a car. They pull no punches in describing how the interest on the unpaid balance of a credit card can grow and grow - a lesson underscored by the fifth and final session, inside US Bankruptcy Court. “We talk to them about how much credit really costs,” Bostwick said. “This isn't about bashing the credit-card industry. We tell them: Their job is to lend you money. Your job is to be smart about borrowing it.” The hope is that the lessons will extend beyond just credit cards and will last well into the home-buying years of adulthood. “With the economy being tighter, as evidenced by the home foreclosures, it's even more important that people know where the money is going,” Bostwick said. It will probably be a few years at least before the high school students assembled in US Bankruptcy Court have to worry about mortgages. In the near term, though, they face the day-to-day challenge of resisting the temptations of a consumerist culture only too happy to lure them into debt. To cope with those challenges, Rosa, the Madison Park senior, offered this advice to the rest of his generation: “Don't let the moment take you away.” - The Boston Globe __
