Reliable Home Appliances, the no-frills, cash-and-carry retailer that sold many Washingtonians their first discount electronic goods, has gone to federal bankruptcy court to seek protection from its creditors.

The current recession, rising rents and competition from a new generation of discount stores over the past few years combined to hurt Reliable, which opened more than 40 years ago in a basement store on 11th Street NW in Washington's old downtown retail district.

Cheap prices, wide selection, good locations and word of mouth from loyal customers all helped make Reliable something of a Washington retailing institution, and they allowed owner Harold "Bud" Kurtz to expand to seven stores with annual sales estimated at $19 million.

Company officials said yesterday that the company will continue to operate as usual while it seeks to reorganize its finances under the bankruptcy court process, and that no layoffs of its 50 employees are contemplated. The bankruptcy petition was filed Tuesday at federal court in Rockville.

Yesterday, word of its financial problems caught customers by surprise.

"Oh nooo ... they have been here as long as I can remember," said Ann Bush, shopping for a washing machine at the Springfield store. "I would not shop without comparing prices at Reliable and I usually end up back here to buy. ... This is a shock."

But Reliable, like many other retailers in the area, has been hit hard by declining consumer spending, company officials said yesterday. Sales during the crucial Christmas season were weak, according to Reliable sources, especially for big-ticket durable goods like dishwashers and televisions that have been the retailer's bread and butter.

In addition, industry observers said intense competition from electronics mega-chains like Circuit City, Montgomery Ward's Electric Avenue and Sear's Brand Central has also taken market share from Reliable and made it harder for the smaller chain to compete as easily on price in recent years.

Kurtz pointed to recent consumer surveys that show his goods are priced nearly 10 percent lower than the competition. But more than a year ago, higher costs of labor, rent and financing began to cut profit margins, which were always razor-thin.

"Our sales were up 20 percent in the first quarter of 1990, but we ran into a cash crunch when sales dropped off over the year," said Kurtz, who bought the store in 1972 after starting work there as a stock boy in the early 1960s.

In its heyday, Reliable carved out a busy and offbeat niche business with its back-room decor, know-ledgeable salespeople and bargain-basement prices.

A wide range of customers -- from college students looking for their first inexpensive stereos to yuppies searching for fancy television-video recorder sets to families contemplating washer-dryer combinations -- were all attracted to the store and its simple cardboard-box atmosphere.

Goods at Reliable are packed away in boxes on warehouse-like shelves, and salespeople and shoppers can often be found hunched together over well-thumbed electronics and appliance catalogues looking for deals.

Court documents show that Reliable has assets of $2.7 million and liabilities of $4.9 million. Its biggest creditor is Columbia, Md.-based Transamerica Commercial Finance Corp., which lent $4 million for inventory. The rest of the money owed is spread among other vendors.

"We have really been a mom-and-pop operation that relied on people that come back over the years ... and we want to continue to serve the D.C. market," said Kurtz. "We've never tried to take advantage of those customers and we think about them always."

Those customers were also thinking of Reliable.

"I should not be surprised about anybody filing for {bankruptcy} anymore. It just seems like you are hearing it all the time ... but this is too bad," said Deanna Freese of Springfield, who said she had bought many appliances from Reliable over the years.

"I think the store is great, they have always had excellent service and I have no complaints," said Woodbridge resident Aulton White, who was shopping for a dishwasher at the Springfield store. "You always get good prices, they deliver and they are reliable -- just like they say."

Staff writer Avis Thomas-Lester contributed to this report.