Bankruptcy is a last resort of course.  But it is an option.  Paying back debt when you barely have enough money to survive is usually a horrible alternative.

Unless you are Suze Orman.  Ms. Orman styles herself as a financial adviser to every day folks.  And Oprah Winfrey has given her a column on the O website.   But Ms. Orman sounds more and more like she works for the credit industry, not you.

In her March, 2012 on-line column, she posted a Q&A response which makes  consumer advocates — and anyone who actually cares about their elderly family — scream.

The question was asked how to help an 81-year old woman with $8,000 of credit card debt and only $600/mo of Social Security income get out of debt.

I can think of a few ways to deal with it.  First, the lady could probably file bankruptcy.  If she has no non-exempt assets, that would be a very simple case.  But, second, she may not need to consider even that.  If she has no assets and no other income, she is judgment-proof and would not need to file bankruptcy to avoid the debt.  The creditors could not seize her Social Security for payment, for example.  And I suspect there are other options available to her.

The one answer I would not suggest for someone with that much debt compared to their income — $8,000 for a person earning only $600/mon is like Orman facing an $8 million debt — would be to try to pay it off.  But that’s what Suze said.

As she pointed out, “It’s fruitless to try to talk your way out of this; the card issuer has every right to expect repayment.”

This doesn’t really come as a surprise to some of us.  My colleague Susanne Robicsek, a Charlotte NC Bankruptcy Attorney, wrote about Suze and why her advise isn’t to be blindly followed in What Suze Orman Doesn’t Understand (About Bankruptcy) on the Bankruptcy Law Network, as did Kansas City Mo attorney Rachel Foley  and Greenville SC attorney Dana Wilkinson.

For someone like Orman who ought to know that Social Security is protected from creditor collection action — so the creditor may have a “right to expect payment” but the consumer has the right to refuse to pay from those funds too — it shows she’s not even trying to help.  She just doles out credit industry-approved guidance.  Whether it would help, do more harm than good or is even feasible in the real world doesn’t seem to matter sometimes.

Indeed, Orman not only suggested that the elderly woman divert her pittance to repaying debt, she suggested she use more debt to get out of debt.  She recommended they track down a low or no-interest card she could open and transfer the balances to.  Without saying it, the next step is likely to need to open another account, rinse, and repeat.  That’s a gamble and it puts keeping a good credit score over paying for the basics of life.  But she never hints at any other option but repayment.

In fact, Orman simply used the elderly woman’s circumstance as a way of pitching the concept of “card kiting” as viable repayment tool for anyone in debt (and to lecture us — but not the industry — about the evils of cash advance financing).

This is an easy scenario to address if you have the  consumer’s interests at heart — We already know the credit industry lost that money.  It’s gone.  Sometimes the only way to make them admit it is to file bankruptcy.  But one way or the other, only the most ruthless creditor-oriented adviser would tell an elderly woman in such straits to find a way to repay that debt and never mention non-payment or, heaven forbid!, bankruptcy.

So what does that say about Suze Orman?  Who does she really work for?  And what does it say about Oprah’s O Magazine, that it would feature this advice as “Suze’s Best Advice on Getting Out of Debt.”

Thanks to Bankruptcy Law Network