OCHEYEDAN, IOWA -- Kathleen Otto was worried about her husband Jerry. The bank had taken the sheep, the grain and most of the machinery, leaving the Ottos stone broke with five children and an empty barn. Jerry never spoke about it.

Kathy was in the kitchen the day she heard a shotgun explosion from the direction of the barn. She cringed, terrified. Almost every day she talked to Jerry about suicide, told him how much she loved him, how much the kids loved him, how much they all needed him.

She was crying when he walked through the door. He had been taking potshots at squirrels, he said. And no, of course he would never kill himself. Kathy was not sure. She needed help.

With a little bit of luck and determination she was able to get some, but many others in rural America are not so fortunate. Isolated, insular and cursed by an ethic that says anyone who cannot handle his own problems is a sissy, farmers are easy prey for mental illness.

"The most rural areas of the country often don't have a psychiatrist, a clinical psychologist or trained mental health nurse for hundreds of miles," said Alan Lechner, acting director of the National Institute of Mental Health. "You get a net effect of increased prevalence, because people don't get treatment."

While farm life has long been idealized in this country as the bucolic opposite of the stress of big city urban existence, levels of serious psychosis in rural areas match those in cities. And just like the cities, America's heartland has family violence, sexual abuse, marital problems, alcoholism and drugs. Still, in the past decade as the farm economy has gone through a cycle of hardship, health professionals and analysts have documented rising rates of suicide and clinical depression in much of rural America.

For the Ottos, career farmers deep in the back lands of northern Iowa, bankruptcy last December hit like a sledgehammer, destroying their livelihood and their self-respect. "There are still days when you feel you're at rock bottom, but you come back," Kathy Otto said recently. "I just can't tell you how bad it was last winter."

No national statistics have documented the extent of rural mental illness, but a growing body of evidence in individual states in recent years shows consistent patterns.

A 1987 survey by the Nebraska state government found that the rate of clinical depression among farm families rose from 10.7 to 21.4 percent between 1981 and 1986. A 1985 University of Minnesota study showed 3 percent of rural adolescents in that state had attempted suicide the previous month, a rate 15 times higher than the national average. In 1987, the Oklahoma Council of Churches reported a 143 percent increase in farmers seeking treatment for alcoholism.

The trigger was economic hardship: foreclosure; bankruptcy; erosion of savings; the inability of local business to survive in a prolonged economic downturn. Population in America's most isolated rural counties declined by about one-half of 1 percent a year for the years 1983-88.

And although the mid-1980s' "farm crisis" supposedly is over, rural prosperity lags far behind metropolitan areas. The Agriculture Department recently reported farm county per capita income in 1988 was 75.9 percent of the national average. In the first three months of 1990, rural unemployment and underemployment stood at 10 percent of the population, 2.6 points higher than in urban areas.

"There were some people involved in the farm crisis who got through it, but there are others still struggling, and still others just subsisting near the old farm," said Jim Meek, program coordinator for Iowa's Cooperative Extension Service, an Agriculture Department federal counseling program administered by Iowa State University. "We don't have a farm crisis; we have a chronic rural poverty crisis."

In Iowa this has translated into a surge in mental illness among those with economic problems. The suicide rate among all Iowa counties with less than 2,500 people rose from 15 people in 1980 to 32 in 1984 -- the first year of the farm crisis -- and has stayed well above the 1980 rate ever since, a period during which those same counties lost 7 percent of their population. One 1988 Iowa State study found that 24.1 percent of rural and small-town Iowans were clinically depressed. A year later the percentage remained at 22.4 percent.

"There are signs of continuing deterioration," said Joan Blundall, director of consultation and education for the Northwest Iowa Mental Health Center. "The people we're seeing feel like they're in captivity; they can't get away. It's chronic, unremitting stress."

For Kathy and Jerry Otto, the nightmare began in mid-December 1989 when their bank, the Farmers' Home Administration, told them it could not give them a loan for the 1990 crop year.

Drought had decimated their corn and soybeans in 1989; the year before, disease had ruined their sheep and hog business. They had missed loan payments for two years, owed Farmers' Home $95,000 and had no prospects of repayment. Jerry Otto came home from the bank: "I think we're through."

On the day after Christmas, the Ottos declared bankruptcy. They did not understand all the procedures, but they understood failure. The bank would take their remaining animals, their grain and most of their machinery. They were losers.

On the surface the Ottos seemed ill-equipped to cope. Jerry now 34, is a 6-foot-6-inch, 250-pound former high school football star. Kathy, 33, is a tall, broad-shouldered, handsome woman. Both were from farm families; neither had gone to college; neither had ever known anything except life on the farm. Spencer, with 11,726 residents, was the biggest settlement within 60 miles of Ocheyedan.

"For a lot of these people, moving to a town would be like moving to Sodom," said Iowa State sociologist Rand Conger, director of the Iowa Youth and Families Project, a four-year study of families in rural Iowa. The Ottos are that kind of family.

The emotional attraction of farming, say many farmers, is stability. Farmers live in the area they know best, work with their families and friends and see the same countryside that their fathers and grandfathers saw before them. It is, its proponents say, as close to a sure thing as there is in America.

"Your life is all laid out for you," said Ruth Book, field director for the Youth and Families Project and a farm wife who endured bank foreclosure in early 1985. "Your sense of identity and self-worth is tied up in the land."

Bankruptcy has a devastating psychological effect on small farmers like the Ottos, who, with 100 sows, 100 ewes and 100 rented acres of corn and soybeans, had never had what Kathy described as "a whole lot of years that were booming," but whenever they came up short, "could always sell a sow." Now there would be no sows -- and no farming.

The night after they declared bankruptcy, the Ottos sat up late, laying out the bad news for Kathy's parents. After an hour their 3-year-old daughter Katen came downstairs in her pajamas. She was upset, she said, because her older brothers and sisters were crying.

The Ottos soon found out why. The older kids had overheard their parents talking. They were afraid the bank was going to take their 4-H Club sheep. Kathy reassured them and brought them downstairs where she and Jerry explained what had happened.

"When do we start farming again?" asked Jason, 13. Probably never, thought Kathy, but no one said so.

As the crisis deepened, Kathy began to lose touch with Jerry. Like many farmers, he was not a big talker, not very good at showing his feelings. In normal times this reticence was a source of quiet strength for the family, but Kathy needed to know what her husband thought. Whenever she asked, though, all he said was, "I've always farmed."

Luckily, two years of hard times had dictated that Jerry get a town job, so when the ax fell he was already working at a furniture factory. Kathy was glad he had something to do so he could get away from the farm. Also, if he hadn't had the job, "I don't think mentally he would have been able to apply for it."

The Ottos, like many farm families in trouble, had done everything they could to keep their friends and acquaintances from knowing the extent of their misery. But after the shotgun incident, Kathy finally confided in a neighbor, who suggested she telephone Joan Blundall at the Mental Health Center in Spencer.

Blundall, a trained psychologist, interviewed Kathy the next day. The Ottos, she judged, could manage for the moment without professional help. She set Kathy up with Myrna Harms, a counselor from Jim Meek's extension service.

Jerry did not object to Harms's visits, but did not join in the counseling sessions himself, and Harms -- a down-to-earth woman who had been through the farm crisis herself and had a husband a lot like Jerry -- never spoke to him except in passing. Kathy served as the conduit: "Whether he responded or not, I just kept talking."

Recovery has come slowly. The Ottos took advantage of a number of federal programs: food stamps, school lunches, and a special food program for infant children. Like many farmers, Kathy found welfare a tough pill to swallow. She drove to Spencer to use the food stamps, "so people I knew wouldn't see me." After six months they quit the stamps, because, "I'm happy to say, we no longer qualify."

Jerry is still at the furniture factory and enjoying it more, a valued worker who takes home a regular paycheck. Kathy makes $30 a day working once a week in the business office of a local hospital.

She plans to wait five years until 18-month-old Kylah is ready for school, then she hopes to study nursing, a lifetime goal. She'll only be 38, she said, and Myrna Harms has told her how important it is to have dreams.