Overwhelmed by debt

By Lisa Rapaport
Sacramento Bee Staff Writer
Thursday, August 5, 2004

Nine-year-old Christopher Hudson spent last weekend running a lemonade stand to help his family pay off credit card debt that grew to $56,000 after his mom got diagnosed with cancer.

For years, this Orangevale family of five was just getting by, using credit cards to pay for the things mom's job as a house cleaner and dad's job as a construction worker could not. They were all right financially, making enough each month to pay the minimum on bills.

Then, last summer, Robin Hudson, 30, learned she had a deadly strain of cervical cancer.

She stopped work to start an aggressive course of chemotherapy and radiation. Her husband, Scott Hudson, cut back his hours to be by her side.
Now that doctors say further treatment is futile, his full-time job is taking care of her. For the time being, his only income is cash advances from credit cards and loans from relatives.

"She's dying. I will do whatever it takes to make her comfortable and make sure my kids have a few more good memories of their mom," Scott Hudson said Saturday as he eased his wife from a wheelchair into a white sedan to shuttle her from the house to the lemonade stand at the end of the driveway.

The Hudsons, like many American families, had medical insurance but still struggled financially when a severe illness struck because they were carrying too much consumer debt.

Nationwide, one out of seven families has debt caused by medical bills or illness, according to a recent study by the Center for Studying Health System Change, a nonpartisan policy research group in Washington, D.C.

Two-thirds of families with financial problems created by illness - about 13.5 million households - have health insurance, according to the study. When medical disaster strikes, though, most of those families also have problems paying for basic necessities such as rent and food.

The Hudsons are insured by Medi-Cal, a public health program for low-income Californians. Families insured by the government have the hardest time of all managing debt in times of illness, said study author Peter Cunningham.

"This is a very low-income population," Cunningham said. "It might only take a few hundred dollars for them to say they have a medical bill they can't pay."

In the Hudsons' case, there is roughly $600 in medical expenses in the $4,500 in monthly bills that Scott Hudson said he struggles to cover.

Before Robin got sick, the couple owed $33,000 on three credit cards. Since then, Scott has opened three new credit card accounts and maxed them out, taking on another $23,000 in debt.

The couple have used credit cards to finance business expenses and to take out cash advances to pay their $1,500 in rent. After Robin got sick, Scott charged a new hot tub to help ease her pain, and he also used plastic to pay for two vacations this summer.

On top of that, he has borrowed more than $15,000 from family and accepted relatives' offers to buy school supplies for Christopher and his two siblings, Matthew, 8, and Kayla, 14.

Scott and Robin are self-employed, making their family more susceptible to medical debt, said Henry Sommer, vice president of the National Association of Consumer Bankruptcy Attorneys.

"A lot of self-employed people tend to finance their business and their living expenses on credit cards," Sommer said. "They are essentially supplementing their salary with credit cards, and it is very common for them to take on more debt when they lose income due to illness."

The stress of lost wages on families hit by critical illness is so common that social workers at Sutter Cancer Center in Sacramento discuss financial matters in their first counseling sessions with newly diagnosed patients.

"Part of what I do is point people to the resources that are available when they lose income or leave a job to focus on treatment," said Thomas Chipp, a clinical social worker at Sutter. "Unfortunately, there are fewer and fewer options that I can offer people."

Scott Hudson sees just one option for his family. He plans to get another credit card. "We just need to get through until I can get back to work again," he said. "I make good money. I can pay my bills."

Scott and Robin left the small Butte County foothill town of Paradise, where they met at a family Fourth of July picnic 14 years ago, to look for better job prospects. They came to the city, hoping to get ahead. And they did, eventually renting a three-bedroom ranch house on a big lot in Orangevale.

Robin went from working for her mother's house cleaning business to starting one of her own. Scott logged enough hours on construction jobs to qualify for a general contractor's license.

In the year before Robin got sick, she helped him study for his licensing exam most nights after work. Then, just as Scott got his general contractor's license, the ticket to better jobs and bigger paychecks, Robin was diagnosed with cancer.

At age 9, Christopher Hudson knew his mother was dying. But he didn't understand the magnitude of the family's financial problems until last week, when he asked whether he could go to Wal-Mart to get the new Spider-Man and Dr. Octopus action figures from the summer blockbuster, Spider-Man 2.

"My dad said that it was not a good time for me to get a toy. He said we needed money for our bills and for mom's cancer," Christopher said as he sat at his lemonade stand, waiting for customers, fidgeting with a bright yellow sign with a hand-drawn cancer awareness ribbon that read "lemonaid 50 cents."

His mom was by his side, visibly exhausted by her journey from her bed to the end of the driveway. With her husband standing behind her, rubbing her shoulders, Robin gently prompted her son to say thank you to every person who stopped by his stand.

Both his grandmothers were there, too, telling stories full of pride about the life Scott and Robin had built up. There was pride, too, in the small stand Christopher took to help his family.

"I told him this story about a little girl with cancer who raised all this money to help people," said Debra Edwards, Robin's mother. "This girl had a lemonade stand, and as soon as Christopher heard about it, he wanted to do the same thing."

That girl, Alexandra Scott, raised nearly $1 million for cancer research from lemonade stands she inspired all over the country. She died Sunday at her home in Wynnewood, Pa. She was 8.

So far, Christopher Hudson has raised $4,000 from his lemonade venture. Scott said the family was not soliciting donations, but contributions came from all over the Sacramento region as word of Christopher's effort spread. That money will be enough to see his family through the bills due this month.

After that, nobody in the family knows for sure when the rest of the credit card bills will get paid. And for whatever days they have remaining with Robin, they don't much care.

"You can't put a price on the time we have left together as a family," Scott said. "Everything I have to do to figure out the bills can wait."

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