Daughter filing bankruptcy

[DMGO]

She's 33, professional RN, married, 2 kids, and 42K in credit card debt. I had no idea. She also has one of those stupid sub-prime mortgages, that goes up $70 per month each year, with no cap. Is she doomed? What can I do to help? Thoughts?

[gindie]

RUSH and get her Dave Ramsey's book "Total Money Makeover" and have her listen to his show on the radio and/or watch it on Fox Business Channel. His method helps people much worse off than your daughter.

[Maurice]

Sorry to hear... my best friend from high school declared bankruptcy 2-3 years ago (right after the law changed).

Re helping - my advice, make sure she has a decent attorney. Some creditors may try some scare tactics to get you to reaffirm certain debts.

The real advice - is do what you can to make sure her spending habits and relationship with money are indeed reformed. My friends haven't been, and its just a matter of time until he gets over his head again...


Good luck, DMGO.

[Dawg52]

Quote:

Originally Posted by Maurice The real advice - is do what you can to make sure her spending habits and relationship with money are indeed reformed. My friends haven't been, and its just a matter of time until he gets over his head again...

Someone who runs up 42k in cc charges has a lot of reforming to do. I agree, put her on Dave Ramsey.

[bizlady]

I am so sorry, as this must be heart breaking for you. We all want our kidds to succeed.

She sounds like a bright person that got caught up with spending for some reason.

Resist the urge to assist financially. They got into this, now they need to get out. You need to be supportive, without enabling.

I have a 50 year old sister who also overspends. Mom keeps bailing her out, and she has yet to learn, as she always gets a free bailout. When mom is gone, not sure what she will do....

[FinallyRetired]

A close family member had to declare bankruptcy about 15 years ago. It wasn't easy, but it worked for them. They restructured how they were living, cut their bills, and slowly rebuilt their finances. After 7 years the bankruptcy pretty much goes off the books. They now own a home and are free and clear. So there is hope out there, but bankruptcy is a means to an end, not an end in itself.

[Rambler]

Sis did it a couple years ago. She told my Dad "look at all this stuff I got that I don't have to pay for!" Made him furious, and made me furious. I admit that I do not keep in regular contact with this sibling because she thinks it is unfair that I have what I have worked hard and saved long for. That said, she had a big flat screen (on CC) before we got our smaller one (cash), bought a big 4x4 truck on credit before I got my 2x4 (cash), has a nice travel trailer bought on credit and not reposessed in the bankruptcy, while we are still scrimping and saving so we can eventually buy one (or an RV - cash).

I feel sorry that your daughter has to go thru this, but I would encourage her to divest herself of her excesses, pay back what she can, try to get the bank to forgive some of the debt in exchange for her paying the rest. She probably does need to feel some pain, so that she rids herself of the compulsion to buy on credit, so she avoids getting in the same jam again down the road.

R

[Martha]

The worrisome thing is that many people who end up in bankruptcy don't change, but do it to themselves all over again. So I agree with the Dave Ramsey idea and maybe some family intervention. Spending can be addictive after all.

Bankruptcy may allow her to start over fresh. Depending on where she lives and how much money she makes she might have to do a chapter 13 where she pays part of her debts over the course of a three to five year plan.

She has the opportunity to reaffirm the debt on her home to keep the home or walk away. As far as I know (and I do not keep up with changes in bankruptcy law), unless the lender agrees otherwise if she wants to keep her home she will have to cure any defaults and repay according to the terms of the loan. It may be possible, however, to renegotiate terms. A good bankruptcy lawyer can help here. It nevertheless may be the best decision to walk away from the home. People find that hard to do.

Other secured loans like car loans can be reaffirmed or she can walk away from the loan and have the collateral repossessed. She should NOT reaffirm unsecured loans like credit card debt. She may get solicited to do so, with the company saying she will be able to continue to use her card if she agrees to pay.

[tuixiu]

Quote:

Originally Posted by bizlady Resist the urge to assist financially. They got into this, now they need to get out. You need to be supportive, without enabling.

Yup. This is often problem #1 with relatives on the financial porn shows like Suzie... if you throw money their way you're just hurting yourself and delaying the inevitable.

[Sue J]

I listen to a lot of Dave Ramsey's radio show. I think what he'd ask is what is her household income for her and her husband? Do they have any car payments? Is the credit card debt all "stuff" or is it something else like medical debt?

He would also ask about the sub-prime mortgage. Can they refinance? Are they upside down on the house or the cars? Often, it's the car payments and out of control mortgage payments that make it so difficult to pay everything else. Can they sell a car and get something cheaper for cash or a smaller car payment? Can they sell the house and rent for a few years?

If she is a nurse she probably has a good steady income and better job security than many other people.

A lot of people in this position who call Dave for help are shocked when they are told to sell their car or home. They don't realize that he's not telling them they can't have a car or home, just not to have THAT car/car loan and THAT home/mortgage. People have a hard time accepting that they can downsize and be able to pay their debts. It's a long difficult process but it can be done without bankruptcy.

When you're having money troubles if you go to a bankruptcy lawyer you will get one answer - file bankruptcy. There are options. Their difficulties didn't happen overnight, it will take a while to turn the situation around.

[Texas Proud]

I agree with others.... don't spend your money helping out...

Does her husband work? Is it her or him that created the problem... what is his family doing to 'help'?

She might get depressed.... some people actually feel bad about doing this.... as others have pointed out, a lot do not... it is part of gaming the system....

[Westernskies]

This is one of those life lessons with really painful tuition. Hope they come away from it with a sense that they need to recognize what got them into this mess, open their eyes to the consequences of their financial choices, and re-assess their priorities going forward. Too many folks adopt the victim mentality and either end up right back in the same mess, or start looking at bankruptcy as a series of recurrent 7-year financial plans.

IMO, The best help you can give her is LBYM financial counseling, moral support, help moving, assistance with the kids during the transition, but no direct financial handouts- unless it is an apartment deposit, U-Haul rental, kids school clothes/supplies, etc. They need a major financial/lifestyle overhaul, not a bailout. The toughest part is going to be for them to understand this; they may perceive your limited support as "punishment" for their poor financial choices, rather than as helping them understand and adopt the necessary changes to a financially stable lifestyle. Until they take responsibility for the choices that got them here and embrace the solutions, it is going to be difficult. Your familial relationships may well suffer over this, best case short term; worse case forever.

Let us know how this turns out.

[CuppaJoe]

Quote:

Originally Posted by DMGO She's 33, professional RN, married, 2 kids, and 42K in credit card debt. I had no idea. She also has one of those stupid sub-prime mortgages, that goes up $70 per month each year, with no cap. Is she doomed? What can I do to help? Thoughts?

Quote:

Originally Posted by Texas Proud ... Does her husband work? Is it her or him that created the problem... what is his family doing to 'help'? ....

Bingo, Texas Proud. DMGO, it's odd you mention she's married, but everything you say is about her alone.

[jambo101]

As an RN she definitely wont be out of work and can make some decent money,long time ago going the bankruptcy route was frought with a social stigmatization and would pretty well end any future credit.,not sure whats different today but people seem run their lives into tremendous debt by living way beyond their means then when they get to a certain point they throw in the towel declare bankruptcy and expect others to pay for it all wheres the consequence for leading a financially irresponsible life style?

[Westernskies]

Quote:

Originally Posted by jambo101 wheres the consequence for leading a financially irresponsible life style?

...higher standard of living on other peoples tax dollars?

[CuppaJoe]

Quote:

Originally Posted by jambo101 ....wheres the consequence for leading a financially irresponsible life style?

Is Karma working overtime these days, or has it always been this way?

[DMGO]

Her husband doesn't work. Just stays home with the 2 & 5 year old kids. I can't stand unproductive people. He declared bankruptcy about 4 years ago, and I thought that was the end of his irresponsible behaviour, but, no, he said that after about a year after his filing, he got new credit card offers in the mail again (guess the cc people figure you cant file bankruptcy again until 7 years, and they might get paid..FAT CHANCE...I agree with most posters here, not to help her out of this with $$. I don't have 42K to blow that way anyway. Her home is mortgaged with one of those sub-prime deals, where she (they) actually owe more each month on the principal than the previous month. With property values the way they are now, they owe 260K on a house that is only now worth 170K. Think I'll go get some cold beer.

[DangerMouse]

Sounds like it's not a bankruptcy lawyer she needs but one who specialises in divorce.

[jambo101]

Sounds to me like she needs a total finacial lifestyle change starting with the two obvious albatrosses =the house and the hubby.

[DMGO]

Quote:

Originally Posted by jambo101 Sounds to me like she needs a total finacial lifestyle change starting with the two obvious albatrosses =the house and the hubby.

Unfortunately, I agree with this statement.