Friend needs unbiased opinions

[DebtHelp2022]

A friend has asked for help. I have found this community provides good advice and would like an opinion on his situation. This is his 4th financial situation.


Details:

• 64 year old divorced male
• Gross income: 48k, net $2700/month
• Rent: 4k per month for three bedroom apartment (major metropolitan area)
  • He lives with his young adult son and his son’s GF
• Employment history: currently employed at a financial institution doing office work, since 2008 has been in/out of employment and failed business venture (in 2011)
• Has been near bankruptcy 3x previously (latest was 2014), each time refinanced home to get to solvency.
• With the 3rd financial situation (2014), his wife asked for a divorce and she implemented the following plan:
  • Had home appraised and they agreed on the value and for the wife to buy him out of the home.
  • Wife cashed in retirement and borrowed from her 401k, sold her jewelry, and borrowed money from a relative.
  • Wife used the above funds to pay off 109k of credit card debt
  • Wife provided 65k to the husband for a new start (½ of net proceeds after subtracting mortgage balance and paying off debt)
• Current state:
  • Credit card debt: 80k
  • Liquidated most retirement funds, what is left cannot be touched.
  • Unable to keep up with CC minimum payment or rent.

I have suggested the following:

• Seek consumer credit counseling
• Apply for senior subsidized housing
• File Chapter 7 bankruptcy
• Live within his means by not having access to credit, paying cash for everything (which would be a likely outcome for filing Chapter 7)
• Get a 2nd job
• Son and GF will have to find a new place to live (wife will help)

I already directed my friend to this forum, but I want to post his situation so he can get unbiased opinions.

[james.hendrickson]

Whats going on with his spending? Is he currently running a budget deficit?

[disneysteve]

Not enough info. We need to see his budget.

How did he rack up 80K on the cards? Does he have a lot of stuff he can sell?

[DebtHelp2022]

He didn't have a budget, He is putting together a balance sheet for debt counseling, I will post once it ready.

He has been in and out of work and lived off credit card. Even now, his monthly net income is $2700 but rent alone is $4,000.

Some debt from visiting elderly parent over sea.

[james.hendrickson]

Rent is $4,000? Certainly he should be able to find less expensive housing.

[disneysteve]

his monthly net income is $2700 but rent alone is $4,000.

What sort of mansion is he renting? He lives with his adult son and GF. How much are they paying toward that rent? Of course, even if they're paying half, him spending $2,000/month with a $2,700 take home is out of whack. He needs cheaper living accommodations. It sounds like he is living way beyond his means.

[Fishindude77]

$2700 per month income is never going to support $4000 per month rent, even if the adult son and girlfriend are paying 2/3 of it.
Sounds like this ship has financially sunk. It will take major life changes and physical relocation to turn things around, which is pretty unlikely at 64 years old. You're probably just going to have to sit back and watch the mess unravel.

Be a friend, buy a meal or two, but there's really not much you can do.

[myrdale]

I think he is judgement proof.

File bankruptcy to nuke the $80k in debt.*
Get a second job.
Get CHEAP housing. Subsidized Section 8 housing (ear plugs and roach spray may be required).

Does he have a gambling issue? Is he gullible? Or was it all just bad luck? The failed business venture, and multiple times he's refinanced, all this smells like something else.

*Please note I think this is the first time I have suggested someone file bankruptcy on here.

[ua_guy]

Well the OP hasn't come back and a link was removed from the original post. Were we being phished?

[disneysteve]

Well the OP hasn't come back and a link was removed from the original post. Were we being phished?

I removed the link. It was for consumer credit counseling, a legit service but OP didn't have the qualifications to post links here.

[disneysteve]

Get CHEAP housing. Subsidized Section 8 housing (ear plugs and roach spray may be required).

That's not the only option. My mom lives in a subsidized senior apartment building through the Jewish Federation. She pays $597/mo for a nice 1-bedroom apartment. Her income also qualifies her for various other assistance like a reduced electric bill, meals on wheels (50 cents/meal), a housekeeper ($1/hr), a home health aid ($1.50/hr), etc.

Definitely something worth looking into.

[Petunia 100]

That's not the only option. My mom lives in a subsidized senior apartment building through the Jewish Federation. She pays $597/mo for a nice 1-bedroom apartment. Her income also qualifies her for various other assistance like a reduced electric bill, meals on wheels (50 cents/meal), a housekeeper ($1/hr), a home health aid ($1.50/hr), etc.

Definitely something worth looking into.

Definitely. But he should realistically expect to be on a waiting list, possibly for years to come. Qualifying for a program and there actually being an available unit are two entirely different things.

I also wonder how much the son and GF are contributing to the household.

[myrdale]

That's not the only option. My mom lives in a subsidized senior apartment building through the Jewish Federation. She pays $597/mo for a nice 1-bedroom apartment. Her income also qualifies her for various other assistance like a reduced electric bill, meals on wheels (50 cents/meal), a housekeeper ($1/hr), a home health aid ($1.50/hr), etc.

I didn't mean for my suggestion to be the final location, nor that conditions would be as bad as I stated, but more to convey the need to find something significantly lower in price as quickly (within the month) as possible. I can not get my head around a $4k per month rent. Even if his part is only $1350, that is double what I think he should be.

As a percentage of his budget, he should not be spending more that 25%, or $675 in my opinion. The cheaper he can locate the more he can save.

[disneysteve]

I didn't mean for my suggestion to be the final location, nor that conditions would be as bad as I stated, but more to convey the need to find something significantly lower in price as quickly (within the month) as possible. I can not get my head around a $4k per month rent. Even if his part is only $1350, that is double what I think he should be.

As a percentage of his budget, he should not be spending more that 25%, or $675 in my opinion. The cheaper he can locate the more he can save.

Agreed. And if it is him and a couple, two bedrooms are plenty. I suspect the son and GF are living beyond their means too.

[LivingAlmostLarge]

he should go into a retirement over 55 community where the rent is on a sliding scale.