my parent's financial debacle

**mariogreymist** · 10-29-2007, 09:39 AM

Originally posted by m3racer View Post

I really don't want to get into the details but my father has left himself in a financial mess. He has ~$1.4 million in debt.

No, that's not a typo. He seriously lacks any financial foresight and never considers the wide range of possibilities that can financially occur. He has $0 saved and has $0 equity left in his home because of the home equity loans that he took out for his failing business. I'm partially mad at my sister who gave him $40k to help bail him out. All he did was sink that money back into his business, which has not turned around. Is it me or are they failing to realize the obvious. I send him $$ monthly to help with his bills but clearly there is a much bigger problem. Should he just file for bankruptcy? BTW, he's 66yo and still clueless about $$$.

Any input would be appreciated.

Some people treat money like addicts use drugs. I've seen people like your father continue to throw good money after bad until they have absolutely nothing. It's a matter of having a compulsive personality - trust me, I have one. If you combine being compulsive with being stubborn, then add a drive to succeed in self-employment, all the contents are there for one of two things: Wild success and wild failure.

There is a problem with giving money to someone in this position: Money is fungible. If you give your father $3000 to cover the house payment and the car payment, he'll likely make half payments on each and put $1500 into the business. Once a compulsive behavior kicks in, it generally continues until it hits a hard barrier - not having any money left to sink into the business in this case. I understand not wanting to see loved ones on the dole, but there comes a time when giving money to a compulsive debtor is doing more harm than good.

**anonymous_saver** · 10-29-2007, 09:55 AM

My first advice would be to stop sending him money all together. I know this may be really hard, but I think your father needs to realize that he needs to get himself out of this. And yes, I'm thinking that bankruptcy is the only option, if he is 66, he may have some hope if he does a bankruptcy.

How is his physical health? How much longer do you think he can work? Does he collect social security?

By the way, I also think renting is the only logical option for your father at this time.

**Joan.of.the.Arch** · 10-29-2007, 10:22 AM

I wonder if there might be some sort of "business counseling" he could get? Really I'm thinking of a pro who could advise him whether it is time to throw in the towel. (From what you say, can there be any doubt?) It might be easier to swallow if he thinks the advice is coming from someone who knows business. But maybe, just maybe, you would want to make any monetary help dependent on some sort of personal counseling that takes into account his money decisions. That way, if there is an issue such as mariogreymist mentions, maybe he can take care of it and not stay on the same track for the rest of his life. Tough situation you are in. My sympathies.

**m3racer** · 10-29-2007, 10:47 AM

I just got a phone call from my sister asking me if I could give him some more $$ this month. Apparently she already gave him another $6k this month. I feel like my sister is not helping the situation by trying to bail him out. She's probably given him ~$60k over the past 5 years. If he filed for bankruptcy at least he can start from square 1. I think my sister and I could easily afford to support him during his golden years.

**mariogreymist** · 10-29-2007, 10:55 AM

Originally posted by m3racer View Post

I just got a phone call from my sister asking me if I could give him some more $$ this month. Apparently she already gave him another $6k this month. I feel like my sister is not helping the situation by trying to bail him out. She's probably given him ~$60k over the past 5 years. If he filed for bankruptcy at least he can start from square 1. I think my sister and I could easily afford to support him during his golden years.

If you keep bailing him out while his $1m+ debt piles up, you may find your own golden years, not to mention his, threatened.

**anonymous_saver** · 10-29-2007, 11:21 AM

Originally posted by mariogreymist View Post

If you keep bailing him out while his $1m+ debt piles up, you may find your own golden years, not to mention his, threatened.

That's a great point. You should share that with your sister. By your sister (and you) bailing your father out, your own retirement years are going to be hindered.

**Hot dog** · 10-29-2007, 12:27 PM

could you let your sister know I have been struggling a bit this month also

Wow if I had that much extra a month I would definitely be out of debt. I think you guys are only delaying the inevitable. He needs to have a piece of humble pie and just admit out loud that he failed and has gone through his savings and is now working on yours. Then he can deal with it and start to fix it.

**m3racer** · 10-29-2007, 01:14 PM

Originally posted by Joan.of.the.Arch View Post

I wonder if there might be some sort of "business counseling" he could get? Really I'm thinking of a pro who could advise him whether it is time to throw in the towel. (From what you say, can there be any doubt?) .

We had him meet with one a year ago. The financial adviser stated the obvious. Unfortunately, that has not lead to any changes.

**mariogreymist** · 10-29-2007, 01:46 PM

It sounds like he's in denial. Many have compared compulsive debt behavior as analogous to alcoholism/addiction. As a recovering alcoholic, I understand the recovery process. If the comparison is remotely true, he won't see the obvious until he hits rock bottom. That could be the day the sherriff comes by to put him and your mother out of their foreclosed home. It might come when you and your sister get together with him and say, "Listen, we love you, and you supported us when we were growing. Now we are supporting you, and we're not letting you take us down on your sinking ship. No more money." Perhaps, once you do that, and then follow up by actually saying no, no matter how desperate his current predicament is, he will understand how far out of control his life is.

The first step of recovery from any addictive behavior is recognition of the behavior as a problem. Until that happens, giving him money seems to me like throwing gas on a fire.

**PrincessPerky** · 10-30-2007, 07:49 AM

You gotta stop sending him money each month...I know you want to help, but you can't help a drunk by giving him money to buy drink...this kind of wasting money seems different but it is really the same.

We can't change the world....no matter how bad we want to help our loved ones, sometimes we can't. BUT we CAN stop being enablers...

**boefixepa** · 10-30-2007, 02:17 PM

I'm just going to agree with everyone else.....stop giving him money. Let him lose the business then work to pick up the pieces.

my parent's financial debacle