DEAR BRUCE: What do you think about debt-relief companies? Are they legitimate? I know you're against avoiding your debt responsibility, but I am in severe financial distress with no way out. I have more than $25,000 in credit card debt and more than $15,000 in car loan debt. I am severely injured from an accident and can't work. My only income right now is from a small insurance settlement. My wife is disabled and has been fighting to get benefits for a year. She is also unable to work. I have read about these debt-relief companies that will absorb your debt and change things so the credit card companies rack up significant charges, which then forces them to wipe out the debt altogether. I know this is a cheap way out, but I don't know what else I can do. If I claim bankruptcy, then the credit companies would lose everything anyway, but by doing the debt relief it might be better for all concerned. -- D.A., via e-mail

DEAR D.A.: You have accurately described one of the techniques some companies use to reduce debt. You have no notable income at all, and, given the $40,000 in unsecured debt, I think that you would be better served by claiming Chapter 7 bankruptcy.

DEAR BRUCE: I would like your opinion about investing about $15,000 in municipal bonds. I am 60 and plan to retire in about two years. Should I go with a certificate of deposit or a money-market account? I have never invested in municipal bonds before, but I was told it's a better way to save money. My company does not have a 401(k) plan. I am enrolled in a deferred compensation plan, and put 10 percent of my salary in it. -- B.F., Milwaukee

DEAR B.F.: Municipal bonds are simply instruments where you loan money to some governmental subdivision -- a township, county, etc. The important thing to know is that a municipal bond's income, in most cases, is tax-free. They have to be purchased inside the jurisdictions that would be imposing taxes. For example, Wisconsin state obligations would not be taxable in your state or by the feds if they were issued by the city of Milwaukee. There are many types of permutations of "municipals" (aka "tax frees"), but the two that you should be aware of are general-obligation bonds and revenue bonds. In the first instance, the entire credit and taxing ability of the municipality involved is pledged. If they need money, then they are obliged to raise taxes in order for you to get paid. Revenue bonds are quite different. For the sake of discussion, let's say a municipality needs money to build a new hospital. The income from the hospital, not the income from the tax base, is used to repay. Revenue bonds are considered riskier, so they pay a higher rate of return. As you can see, a general obligation pledges the entire faith and credit of the community, and whether the city fathers wish to or not, if they have to raise money to pay the obligation of those bonds, they are required to raise taxes by law.

DEAR BRUCE: I worked for an insurance company for 25 years, and earned a pension. I was laid off several years ago, but found a new job. Three years later, I might be looking at that possibility again. I am 53. Should I start taking my pension now? Some of my prior co-workers do and they are surprised that I haven't. -- L.C., via e-mail

DEAR L.C.: You'd have to know more about your pension. If you start drawing the pension now, would it be less than if you draw it 10 to 15 years in the future? The likelihood is that the shorter period of time, the more you will draw. Then you have to sit and figure how many years you will have to draw the pension before the lines cross. Eventually, if you start taking it early and you live long enough, it will not be in your favor unless it's constant now and never changes. In other words, you're going to have to check on all these factors, and then make your decisions. Your friends may have done so or are just winging it. Neither of us knows that answer.