Help for mom's serious debt problem

[phsaver]

Hi, I'm new here and seeking advice about my mother's debt problems. I recently found out she has about 90,000 in debt between credit cards, dental/medical bills, car loan and student loans (about half of the debt is in student loans). She has 13 credit cards alone which is mind boggling to me. She admitted she has a shopping addiction and would hide it from everyone. I had no idea the extent of the shopping or the debt.

The only reason she admitted it was because her brother wants to sell the house they co-own (my grandmother signed it over to them years ago). Her brother took out a huge loan on the house, which he pays, to do improvements on it. But now he got married and moved out and can no longer afford to pay the mortgage since he has another home to pay for. My mom has never paid rent or mortgage in her life and now is in the position where she's going to have nowhere to go and cannot afford literally even $1 rent. Plus she has bad credit, so I don't know how she'd get approved for an apartment to begin with. My mom is a cosigner on the loan since she owns half the house, and she doesn't even know how much the loan is for!!! She just blindly signed the papers. I know the loan is significant enough that my uncle thinks they will either break even or only get a couple of thousand dollars extra when the house sells.

My husband is just barely in remission from leukemia (less than 1 yr) and we are JUST getting a normal life back. So obviously this news, after the last horrible year we've been through, is extremely stressful and unwelcome. We're in our early 30s and have a toddler, so we obviously have our own worries and things to pay for. If he has a relapse and can't work, or God forbid something happened, I need every extra cent we have to be able to support myself and our child.

My husband and I are comfortably middle class, by no means rich, but we work hard to save money and have no credit card debt. Over the years have been able to enjoy extras like nice vacations, eating out, and so forth without having to worry about if we can afford it. I think my mother sees this as us being "rich" and expects handouts. She's never flat out asked, but I can tell by comments she makes. My husband especially is PISSED about my mom's situation and I agree. He said he hasnt worked his butt off, got master's degrees, etc to be able to have a nice life for his family, then on top of it fought through cancer to be punished for someone else's irresponsible behavior. We want to help her help herself, rather than give her money and then just have her rack up all her cards all over again.

I just don't know what to do and I don't want this to cause more stress in my relationship than it already has. If my mother had to move in here, I feel like I'd end up divorced. I've given my mom the number of a nonprofit credit counseling agency, and she talked to them yesterday but they basically said they didn't even know if she'd be eligible for their debt consolidation program and that she may need to file bankruptcy. Either way, I don't know where she's going to live if my uncle goes through with selling their home.

Just wondering if anyone else has been in a similar situation and how you handled it.

[JulieAlbright]

Not near as high of debt but yes, I've had to clean up my Mom's financial life.

First have to ask, how old is your Mother and what is her income? You say she can't afford even $1 in rent, does she have cash flow? How does she buy groceries etc? Has she ever worked? Had a spouse that worked? Who was the student that created the student loans?

[phsaver]

Not near as high of debt but yes, I've had to clean up my Mom's financial life.

First have to ask, how old is your Mother and what is her income? You say she can't afford even $1 in rent, does she have cash flow? How does she buy groceries etc? Has she ever worked? Had a spouse that worked? Who was the student that created the student loans?

My mom is 59 and she makes about 40k a year as an LPN. She's been divorced for about 20 years. The loans are all hers, from going back to school late in life to get a registered nurse degree which she never even finished, so she's 45k in debt on school for nothing, which makes me even more annoyed. All of her money goes toward the bills on the house (electricity, cable, water, etc), food, gas, her car payment, medical bills and then her ridiculous credit card bills. Even if she pays the minimum on all cards, it's about $500 a month in credit cards alone.

I added up all of her bills and they're about $3300 a month, and she takes home about 2600 a month. Found out that she doesn't pay half of her bills or takes turns paying them since she's actually negative cash flow every month.

[Weird Tolkienish Figure]

My mom is 59 and she makes about 40k a year as an LPN. She's been divorced for about 20 years. The loans are all hers, from going back to school late in life to get a registered nurse degree which she never even finished, so she's 45k in debt on school for nothing, which makes me even more annoyed. All of her money goes toward the bills on the house (electricity, cable, water, etc), food, gas, her car payment, medical bills and then her ridiculous credit card bills. Even if she pays the minimum on all cards, it's about $500 a month in credit cards alone.

I added up all of her bills and they're about $3300 a month, and she takes home about 2600 a month. Found out that she doesn't pay half of her bills or takes turns paying them since she's actually negative cash flow every month.

I don't know what you might do. You can't force someone to change, especially if it sounds like she doesn't want to, and your husband is 100% right, it's not fair for him to be burdened by this irresponsible person.

I would just prepare for the inevitable bankruptcy/foreclosure.

[Michael Thompson]

I think, you should not leave the hope. Try to resolve it by looking for a good lender who can take your mom's debt at the time. This will give you some time to preparation etc. Good luck

[snafu]

Please understand this is blunt. There is very little to be sugar coated. I'm sorry that your mom has made poor decisions and spent $ 90,000. not yet earned. A great deal of that money likely went out the window in interest payments. She needs to pull on her grown up pants and face her problems.

1st, this is your 59 y/o mother's problem, she made the decisions and she created her debt. I presume she has benefitted from the home improvements for all the subsequent years.

2nd, there is no way this is your mess to fix. Your husband and toddler don't deserve to be clobbered by the mess your mom created. There is not much you can do, you must put your family 1st. Enabling your mom to continue this behaviour is like giving liquor to an alcoholic

3rd, her brother, your uncle co signed that loan so he doesn't get to walk away from his responsibility. I presume he too benefitted from those house improvements.

4th. Please understand that most debt consolidators are in business to make profit from people like your mother who can least afford it. Most are scams http://www.savingadvice.com/forums/d...companies.html Debt negotiations is best done by the individual. There are a few that are state/government agencies who do not charge fees for their taxpayer paid services.

5th bankruptcy requires a lot of up front fees. Not even bankruptcy will discharge student loan debt. Your mom will have a rough time because creditors can line up to garnishee income.

6th All you can do is offer a sympathetic shoulder for mom to vent.

...just thoughts from an outsider.

[JulieAlbright]

I would say that your Mom needs to sell the house and get out of whatever mortgage etc she is responsible for there.
It doesn't sound like she can afford the utilities and upkeep on the place, so get rid of it.

If she can get a couple thousand from the deal, good. That's moving money. She likely needs to find an apartment share situation with another divorced/widowed lady around her own age. Yes, her credit score is going to be an issue, but she will be able to find something. Check around and see if there is any sort of subsidized housing she might qualify to obtain.

She needs something to drive to her job if public transportation isn't feasible. Something cheap and reliable.

She'll likely end up bankrupting out of the credit cards. It's not that I think bankruptcy is no big deal, it's just that she needs to pay the priorities first. Living, transportation, food. Then she will probably HAVE to pay her student loans. She might as well start looking for whatever payment plan she can find now because there's a decent chance that if she waits until Social Security collecting years, she'll find herself having her government payments garnished. That problem likely isn't going away so she needs to deal with it.

So that is going to leave her with
Rent/utilities
Transportation
Student Loans
Food and misc.

That's doable on her salary.

She'll need a couple thousand for the bankruptcy. It'd probably be best if she just stopped paying the credit cards right now and saving the money up for that.

Things are going to get much tougher when she reaches the point of not being able to work because I'm guessing she probably doesn't have anything outside of Social Security planned. But getting the credit cards off the table, stopping her shopping addiction habits, and shrinking her spending down to fit her income will put her in at least a better place than where she was before.

The problem is, saying what SHOULD happen is much easier than actually changing behavior. Under no circumstances should you and your husband be bailing her out financially. It's just pouring water into a leaking bucket or whatever that saying is. Money isn't going to solve her problem, the only thing that can do that is changing her behavior and you can't do that for her. All you can do is make suggestions.

Good luck.

[LivingAlmostLarge]

BK. Don't help her she needs to deal with it. She can move in with a roommate and she needs to pay the basics and the rest will fall into place. She needs to stop using cards. Help her learn but don't bail her out.

[Eagle]

Just wondering if anyone else has been in a similar situation and how you handled it.

Welcome to the forums Phsaver...

Sorry you are going through this. I agree with others this financial nightmare is your mom's and not your responsibility.

She needs to cut up her credit cards today. Then she needs to stop paying the cards and save up money for bankruptcy as suggested by JulieAlbright.

Then she needs to just spend money on the basics: food, transportation, rent, and her student loans as suggested by JulieAlbright.

I had a friend for years who was in a similar situation. Had a great job, married, had money in the bank, and spent like there was no tomorrow. Had a kid then got divorced. Lost the great job but the divorce decree said he had to pay 20% of his original income (which was 6 figures or 100k or more). He was unemployed for a couple of years. The jobs he got afterwards were making 1/5 or 1/6 of his original salary. I helped him as a single guy and later as a married guy. But it did cause stress in my marriage to my new bride.

I've known him for about 10-15 years. He lived in his car for a couple of years, then became homeless, then recently lost his job again. He ended up moving away to live with relatives which is a good thing for our family. Yes, it did cause a lot of stress in our marriage. No, I probably shouldn't have helped as much as I did.

Particularly when we could've used the money ourselves towards saving for a home purchase or paying off our debt (I had a car loan at the time). Particularly since he was unwilling to make the necessary life changes to try to get out of debt or declare bankruptcy. We helped him through the years but the last straw came when... We loaned him money to buy a car. He paid us about half the value he owed us then used the car to trade-in towards the purchase of a newer vehicle (nicer and nicer than even we had). By this time we had a little one of our so we had to re-evaluate our generosity... Particularly when putting our family's finances at jeapordy for someone else who refused to change or help himself.

So we simply forgave the debt and told him we could no longer help him financially.

Today we either give people a gift or simply say we can't help. We have to prioritize our family.

Learn from my mistakes. Don't make your mother's bad choices your priority or problem.

Take care of your family.

She will have to work things out on her own.

[phsaver]

Thanks so much for all of your advice. I really appreciate it. For some reason I never got the email notifications when further replies were posted, so apologies!

Update: My mom met with a nonprofit debt counseling agency and they helped her with creating a budget and giving advice . She wants to try and pay everything off herself, but I don't see how it's possible and most likely she will have to go through bankruptcy. I suggested the roommate option, which she turned her nose up at. I told her she doesn't really have any room to be picky in her situation. There's a friend who is a possibility, but I kind of doubt it will happen. My uncle still wants to sell the house before the end of the year, so what will happen after that is anyone's guess.

Still, the spending continues (saw her this week and she had a manicure and a new handbag, I wanted to scream but just told her that she can't afford that and she needs to stop).

When she makes remarks like "well I guess I'll have nowhere to go" I just sigh or don't say anything. I'm not offering up my house as an option unless it was an ABSOLUTE last resort and all other possibilities have been exhausted, like a "she'd end up on the street" situation. I can't risk the stress it would put on my marriage.

Thanks for listening!

[bjl584]

[QUOTE=phsaver;389290] She wants to try and pay everything off herself, but I don't see how it's possible and most likely she will have to go through bankruptcy.[QUOTE]

Careful,
Bankruptcy doesn't forgive student loans. Even if your mom files she will still have $45,000 in student loan debt to pay off.

[phsaver]

[QUOTE=bjl584;389291][QUOTE=phsaver;389290] She wants to try and pay everything off herself, but I don't see how it's possible and most likely she will have to go through bankruptcy.

Careful,
Bankruptcy doesn't forgive student loans. Even if your mom files she will still have $45,000 in student loan debt to pay off.

Yeah, we know that. Sorry - I meant she wants to pay off her credit card/medical debt herself.

[bjl584]

Sounds like she isn't trying to hard. Going and getting manicures and handbags isn't exactly the behavior that someone that is trying to get out of debt should be exhibiting.

Instead of giving her a handout, maybe you could offer to take over her finances. Get her on a budget. Be the steward of her pay checks in essence. Give her money only when necessary. Make sure she pays her bills. Etc. Not ideal, but it's better than just giving her money and/or a place to live.

[Petunia 100]

When she makes remarks like "well I guess I'll have nowhere to go" I just sigh or don't say anything.

Next time, just tell her point blank "Mom, I love you, but I cannot be financially responsible for you."

Your mom does not intend to solve her own problems, she is expecting someone else to solve them.

You sound like a caring daughter, and a caring person in general. Here's the deal: your first responsibility is to your minor child and your husband. There is no need for you to feel guilty. There is no need to take your mom's problems onto your shoulders.

[JulieAlbright]

When she makes remarks like "well I guess I'll have nowhere to go" I just sigh or don't say anything.

Next time, just tell her point blank "Mom, I love you, but I cannot be financially responsible for you."

Your mom does not intend to solve her own problems, she is expecting someone else to solve them.

You sound like a caring daughter, and a caring person in general. Here's the deal: your first responsibility is to your minor child and your husband. There is no need for you to feel guilty. There is no need to take your mom's problems onto your shoulders.

Pretty much what Petunia said. The thing is, when it is one of your children misbehaving you have some options. You can take control, correct them, punish them whatever. I've been through this with my Mom and I have to tell you, the options you have stink because you cant make her live her life any differently. It leads to these situations where you feel like you personally are getting hit with all the consequences of her behavior and while she heads off to a new manicure, you didn't even get the fun of doing the irresponsible behavior.

I've been there and it made me angry and resentful and I can tell you from experience it can wreck havoc on your mental health and your marriage.

For your own state of mind I advise you to simply step back and let her either correct her behavior or not. I've been there with my Mom and believe me, she is now paying the price in her old age and yes it is sad, but it isn't like nobody warned her decades ago that it was going to happen. This is a choice she made. I made a promise years ago that I'd never let her be homeless or hungry, but I'm also not going to go beyond the basic necessities to make it better for her.

I love her. I will visit her and make sure she gets healthcare and is warm and safe and I will help her when I can. But beyond that I need to concentrate on my own responsibilities and priorities. I'm not going to sacrifice myself or my children to her vices.