Help!, my friend is in serious financial trouble

[cookie1wood]

Hi,

My friend just emailed me and told me of her financial situation which is as follows. She is 3 months behind on her mortgage which is an amount of $1800. Also she is 3 months behind on her utilities. I don't know how much this is for and if this is all utilities. She also owes a little over $800 in taxes. She also has 3 paydays loans she owes on. She also has some medical bills for her husband in relation to a heart attack as well as medical bills in relation to her son and a specialist he has been seeing. I also don't know the amount on these. She does have health insurance through her employer, however I am unsure of how the coverage works at her employer. She has no retirement and is already working a second job. Please help so I can help her.

[Broken Arrow]

No offense, but I'm not sure exactly what it is that your friend expects any of us to do....

In general, I recommend the following steps:

1. Above all else, your friend must understand why their finances have become so dire. Is it something that could have been avoided, and more importantly, what can be done to prevent this from ever happening again?

2. Find ways to increase income, anything from working a second job to selling non-essential items on eBay.

3. Find ways to decrease monthly expenditures. Any expenses or luxuries that isn't essential need to be cut off and removed.

Your heart is in the right place, and I know this may sound harsh, but even friends are not obligated to bail each other out of financial troubles. In fact, sometimes you're actually doing them a disservice because it will only teach them to seek you out for help rather than change their ways for the better.

I wish your friend the best....

[sweeps]

In addition to BA's comments, Liz offers 9 options for your friend. Scroll down to "9 steps to getting out of this mess".

[tripods68]

Truth hurts but I don't see any other options for your friend, except 1) foreclose the house, and 2) file for bankruptcy protection. Your friend really need to seek an attorney and/or a counselor to learn about personal finance before anything else. Just IMO.

Good luck to your friend.

[disneysteve]

The unfortunate problem in most of these cases is that the people wait until the situation is dire before asking for any help. I think that is partly from denial and partly from embarrassment, not wanting to admit the problem to anyone.

In hindsight, as soon as someone encounters the very first time when they are having trouble paying a bill, that's when they should seek help, contact their creditors and alert them to the situation and try and work out a plan.

Unfortunately, I agree with the others. With your friend 3 months behind on the mortgage and utilities, owing back taxes, payday loans, medical bills and no savings, there may be no way out of this mess. The house needs to be put up for sale and bankruptcy may be the only option.

[Tree0164]

It sounds like she just hoping how this would just magically disappear. It sounds though as her husband has had some medical issues and this may have caused some sticking her head in the sand for 3 months.

I would sit her down and do a monthly budget-what is coming in vs what is going out.

She needs to cut out anything above her mortgage and basic utiltiies (cable tv is not basic).

Her mortgage needs to be her first priority at this time. However she may loose it due to all of the other expenses.

Don't loan her any money-she is an adult and she made this mess. Don't let her take you down as well.

[GRITSinMS]

Have your friend check into what is termed a "short sale" on the house.

[Ima saver]

payday loans are the worst thing you can do. Have her stop that immediately and pay those back first.

[disneysteve]

Originally Posted by Ima saver

payday loans are the worst thing you can do. Have her stop that immediately and pay those back first.

While that's good advice, it is only worthwhile if she has any money. It kind of sounds like she doesn't.

[cookie1wood]

thanks ofr all of your help some of the things you mentioned I already told here. but there were a few here I didn't think of. Naturally this is her fault and her job to get out of this mess. But if I can help her get on track with the advice given her hopefully it will go a long way in her getting a handle on her finances once and for all. once again Thanks so much

[Stuartthomas]

she need to consult a good financial advisor to get advice about her financial situations.....and find out if a debt consolidatin would help her out in making her all debts into one master debt and thus reducing the payments..payday loans can be included into the dmp..

[cschin4]

People need to recognize when their life is changing and their circumstances change and act accordingly. The writing is on the wall. She has 2 jobs and no retirement and an ill husband who probably will never return to his former income level, etc.

My advice. Sell the home. Pay off all loans. Downsize your lifestyle and then drop the second job and enjoy the rest of your life because stuff and things don't make you happy.

[bjl584]

The hole that she dug is way too deep. In this case, I would advise Bankruptcy.

[buildmybudget]

It seems the one positive thing is that she has a job that provides medical insurance. Can she file for bankruptcy and then rebuild her life around the income from that job? Clearly she must begin to understand what the root cause(s) of this problem is so that history doesn't repeat itself. She needs to start by looking at her budget to understand where she is heading financially and whether she can recover.

[disneysteve]

Originally Posted by Stuartthomas

she need to consult a good financial advisor to get advice about her financial situations.....and find out if a debt consolidatin would help her out in making her all debts into one master debt and thus reducing the payments..payday loans can be included into the dmp..

Stuartthomas, is there any reason you keep pulling up threads that are years old? This thread is from March 2008, more than 2 years ago. I'm sure one way or another, this situation was settled long ago.

Let's try and stick to current threads, folks.

[bjl584]

Originally Posted by disneysteve

Stuartthomas, is there any reason you keep pulling up threads that are years old? This thread is from March 2008, more than 2 years ago. I'm sure one way or another, this situation was settled long ago.

Let's try and stick to current threads, folks.

I was wondering that too. He did this yesterday as well. He must have looked back over 25 pages worth of history to even find this.