Get Legal Help for Big Debt Problems

Q. I am 82 and have a mortgage of $27,000. My pension and Social Security amount to $21,000 per year. Last year I cosigned a bank loan for a friend who is unable to pay off the remaining $34,000. The monthly payments are $800. Recently I received an offer of a $75,000 loan from a home-mortgage company. I wrote them for a loan of $61,500 to pay off the $27,000 plus $34,000. I've received no answer yet.

- H. D.,

Woodburn, Ore.

A. If you did receive the $61,500 loan, and the company is legitimate, that would meet your need, says Gary Schatsky, an attorney and financial planner in New York.

But if you do not get the loan and have no other assets, then seek legal counsel, he says. Have the attorney look for local or state government programs to aid senior citizens with financial problems.

Ask the creditor of the $34,000 loan to renegotiate your contract. Otherwise, you may have to consider bankruptcy protection. Normally, Schatsky says, he would not recommend such a drastic step, but given your age, your situation may warrant it.

Find out whether your house would be protected in a filing, he says. If so, your creditor might be able to put a lien on your home, so that someday, after your passing, he or she could recoup the full $34,000.

Q. With deflation under way, should we invest in gold? I was told it is the only way to protect the underlying value of your assets. Should we buy gold mutual funds?

- Name withheld,

Jersey City, N.J.

A"Unless you are an expert market timer, you will probably ... not make a lot of money from gold funds," says Christine Benz, an analyst with information firm Morningstar, in Chicago.

Gold funds have not helped most portfolios over the past decade, she says. If you do buy gold funds, use 5 percent or less of your assets, Benz says. US Treasury bonds, bank certificates of deposit, and money-market funds will also protect your assets.

Questions about finances? Write: Guy Halverson, The Christian Science Monitor, 500 Fifth Ave., Suite 1845 New York, NY 10110 E-mail: halversong@csps.com