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My reason for urgently needing a HELOC
Old 04-21-2010, 02:11 PM   #1
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My reason for urgently needing a HELOC

Here's the story I promised in another thread.

DW emails me saying her sister needs $23000 immediately. Gambling debt that keeps growing because she kept playing bigger and bigger hands to try to win back to break even. This has been going on for at least a few years in large-ish amounts. She would approach us and others in the family saying she needs $6000-$10,000 to borrow short term, and then she would eventually pay it back over time. But it was usually kept discrete at her request. There may be other borrowing going on too from others that we are not aware of.

Regarding DW's family, there are five siblings and the mother and father (my bros and sis's in law and my MIL and FIL) and we all live within a few miles of each other. They are all 1st gen immigrants from SE Asia, hence much more close knit than your typical American family. The other siblings and the parents in the family (excepting DW) are fairly low income (you'd call em "poor"). The sibling with the gambling problem is married with three kids. Gambler's husband hates the gambling and its effects and it is tearing their family apart. But he's committed to helping however he can, and is probably the nicest, most honest, generous person you will meet.

The $23000 gambling debt was mostly incurred in the last month. Some weekends there were $7000 losses. 36-40 hours of straight gambling. Not seeing kids or husband all weekend. Clearly a classic compulsive gambler.

What to do, what to do. The SIL says she is done gambling, knows it was wrong, and regrets doing it. However she sounded like a crack addict trying to score a few bucks for another hit when she called me yesterday demanding the money.

There may be general bad money management going on here as well that is intertwined with the reason and motivation for gambling. They have never really saved up a lot of money ("$23000 is more than I have saved in my life", per SIL's DH). House is mortgaged up to roughly 80% LTV based on public records, which is just as bad as 100% LTV in this credit environment. Credit is probably horrible (other credit card debt that probably was thrown away on gambling), late bills, etc. Quite literally no money in the bank. The only real assets are two cars with no loans on them, worth maybe $35,000. But one is for the husband's small business that he has to have to operate. They also have a fair amount of gold jewelry. Maybe a few thousand dollars worth, maybe more.

Income isn't great either - they struggle to pay bills as is. The husband is self employed in construction, and jobs are hard to come by right now particularly in his specialty.

So why do we need a HELOC? We are the bailout arm of the family I guess. DW wants to help out SIL with the $23k as a loan, which we don't have on hand (100% equities). I just got approved for a fair amount more than the $23k on a HELOC today. I still haven't made up my mind as to what to do and whether to trust SIL. Her husband says if we give her the money, we may never see it back, and she won't learn any lesson and it will all be gambled away. Not sure what to think.

The course of action at this point was to tell everyone in the family what is going on. The intervention is scheduled for Saturday night and most of the family will be there to talk this over and make sure she is done gambling forever.

So there is a lot to decide. Do we help monetarily, and how much? Will we ever see the money again? Is giving her money further enabling her, and will it be $50k or $100k in gambling debt in a few more weeks? What limits do we place on her spending, money management activities, etc if any? How to enforce? Do I secure the $23k with a note on her car or a note on the house? Make her sell her SUV and gold?

I know the conventional wisdom on addiction problems. The addict must hit rock bottom, and they must acknowledge there is a problem. And there is no way to satisfy the addiction by engaging in the addicting activity "just a little bit". Luckily this is the first time I have seen the ugliness of addiction in any of our family.
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Old 04-21-2010, 02:22 PM   #2
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Her husband says if we give her the money, we may never see it back, and she won't learn any lesson and it will all be gambled away.
This is a very damning statement and one that would carry a lot of weight if I were in your shoes. Who knows her better than her husband?

Also, a key piece of information is missing: to whom does she owe the gambling debt? What will the consequences of not paying be - or at least of delaying payment?
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Old 04-21-2010, 02:28 PM   #3
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I think you need to make sure that she gets help and recovers before giving her any money whatsoever. Recovery from addiction requires tough love from enablers (your family). And I wouldn't believe anything SIL says at this point. She is not done with gambling. She needs an intervention and she needs treatment.

If you give her the money now, I think that her husband is right, you will never see that money again and you will just have enabled her addiction. Worse case, she'll come back to you in a few months and ask for more.

Once your are satisfied with her recovery progress, then you can start lending her the money. How much? It's hard to tell. I think it wouldn't hurt for her to have to suffer a bit with the consequences of her choices. So perhaps you can give her only part of the sum which will force her to come up with the rest, either by selling some of her jewelry or her SUV.

Of course, if she owes the money to a bookie who threatens to break her legs, then you may have to pay the debt sooner rather than later...
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Old 04-21-2010, 02:30 PM   #4
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Fuego, wow- what a dilemma. You're damned if you do and damned if you don't.

I'd be inclined to help, but not 23K all at once. She (and her DW, who has been enabling her behavior) need to acknowledge the problem- Gamblers Anonymous, set up a payment plan, sell one car, the jewelry, etc- demonstrate that they are truly intent on turning things around. No more gambling. Get a part-time job (she should have time available since she won't be hanging around the casinos anymore) so she has some skin in the repayment game.

I'd offer to help with child-care, supplemental living expenses during the transition, maybe a short-term "loan" but she needs to dig herself out of this hole if she wants to stay out of it.

Throw her a lifeline, don't buy her a yacht. If you hand her 23K it won't solve the problem-it will just remove the consequences of her irresponsible actions.

Good luck on this situation, I don't envy you being the bailout arm in this family. Things could get really nasty- just remember-you married her sister, not her.
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Old 04-21-2010, 02:36 PM   #5
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Being a banker to your wife's family may be a family necessity, but it is very likely to work out badly. Her chances of paying this and never gambling again are quite small; so you will eventually have to say no, at which point everyone will hate you.

I saw this pattern in my parents' marriage. Bummer with no good outcomes.

I take it that she is playing poker rather than slots or table games? If so she may not be an addict, just a poor player with very bad money management skills.

Ha
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Old 04-21-2010, 02:46 PM   #6
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This is a very damning statement and one that would carry a lot of weight if I were in your shoes. Who knows her better than her husband?

Also, a key piece of information is missing: to whom does she owe the gambling debt? What will the consequences of not paying be - or at least of delaying payment?
Yes, I place great weight on what the husband says. They have been married 14 years and he knows her. Like he says - you don't change your ways in a weekend if the solution is this simple (get money from someone else).

As to who she owes for the gambling debt? Not exactly the knee breaking bookie type. But that is not out of the realm of possibilities. The husband says that is not a concern, but another family member says you never know. And you don't.

She was playing cards with other members of the SE asian community. There are apparently a few new people that showed up in the last year or so that apparently win all the time. I would put even money (oops - gambling is bad!) on many of the players cheating or getting unfair advantage (based on comments from family that are more in the know than I). Doesn't really change the situation though.

It is really sad. These people will gamble for days straight. All blinged out in diamonds and gold, driving $60,000-80,000 Hummers/BMWs/Mercedes/Porsche's, yet they earn very little, and generally have no real assets outside of status symbols. It is just an ugly microcosm of the community.
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Old 04-21-2010, 02:53 PM   #7
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Sounds like a last ditch Vegas blackjack trip is in order... always works in the movies?

But seriously I agree, I'd ask them to sell the jewelery, one car, etc. Can she pick up a minimum wage job on the side?
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Old 04-21-2010, 02:58 PM   #8
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But seriously I agree, I'd ask them to sell the jewelery, one car, etc. Can she pick up a minimum wage job on the side?
She has a job but it is something like 30-32 hrs a week. Maybe extra shifts would be available. With all the extra time freed up from not gambling, that should be a possibility.

I'm thinking suggesting to sell the SUV and buy a $5000 minivan or something would make sense and make her see the effect of blowing through $23k.

The husband doesn't necessarily want to lose the family vehicle either though, since it was "their" car, and he has joint title on it with SIL. He's afraid if he lets the car go, the sales proceeds will go right back into gambling debt.
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Old 04-21-2010, 02:59 PM   #9
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Sounds like a last ditch Vegas blackjack trip is in order... always works in the movies?
That has been suggested by more than one person I have spoken with. In jest of course (or so I hope). Actually I think it was dead lock on the lakers last night that one person suggested.
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Old 04-21-2010, 03:09 PM   #10
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I think I would go the tough love route and tell her to welch on the debt and hear for gamblers anonymous. This is compulsive behavior and you are at risk of becoming an enabler (more than has already the case). I see a similar situation going on in DW's family and the enablers are now swirling down the spout along with the sick person. Because they got in deep they will all have to hit bottom before it gets resolved. If I were in your shoes, I would let her hit bottom on her own. If you need a salve to your conscience for doing so, at least when she does hit bottom you will be in good enough shaape to help at that poiint.
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Old 04-21-2010, 03:28 PM   #11
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Wow, Fuego, this is really tough. If you give this money, how are you going to not give again? My family has been in this situation and it took us a couple of years to finally say no. This situation repeats until you and everyone else say no.

However painful and difficult it is now, it will be more so later. This money could be used to get good professional help.
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Old 04-21-2010, 04:21 PM   #12
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I guess I should make clear any amounts provided would be structured as a loan. With interest. 18% was the agreed rate (which shows the level of desperation). Whether we would ever see a return of principal in full - who knows.
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Old 04-21-2010, 04:25 PM   #13
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Loan or not, a compulsive is likely to disregard agreed-upon terms and just dig themselves in deeper. You probably know this, but just sayin'...
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Old 04-21-2010, 04:25 PM   #14
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It sounds like people were taking advantage of her and knew she would keep playing even as she was losing. I hope the Saturday family meeting results in some changes in her life.
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Old 04-21-2010, 04:35 PM   #15
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It sounds like people were taking advantage of her and knew she would keep playing even as she was losing. I hope the Saturday family meeting results in some changes in her life.
The victim rationalization ?

Was she not an adult and had free will to enter into such gambling contracts ?

We hear this tail all too much... The credit card company, the mortgage broker all made me take all that money and spend it on frivoulous stuff. I'm a victim now that they are going to foreclose on my house.

It's the man holding me down ! It wasn't me, it was the man !
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Old 04-21-2010, 04:36 PM   #16
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If the car is too tough to sell, I would suggest making her sell the gold, and making her work 40-50 hours a week, instead of 30, by taking an extra shift or another part time job. She absolutely needs to see there are major negative consequences to her actions. She clearly is not connecting the two. You can offer to assist her in selling the gold so she can get the best deal (and to make sure it actually gets sent to the creditor instead of gambled). If you really want to assist with the debt after that, get a payment plan setup with her creditor, and pay half of what remains after selling ALL the gold/jewelry while she pays the other half of the remaining debt out of her extra work.

I think it is ridiculous to offer her a loan of any sort until after she has to give up some/most of her own prized assets. For someone who does not understand the meaning of money, a loan means nothing.
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Old 04-21-2010, 04:39 PM   #17
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The victim rationalization ?

Was she not an adult and had free will to enter into such gambling contracts ?

We hear this tail all too much... The credit card company, the mortgage broker all made me take all that money and spend it on frivoulous stuff. I'm a victim now that they are going to foreclose on my house.
\\

Hey, I got no sympathy for her--I'm saving it all for Fuego--don't read so much into this comment.
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Old 04-21-2010, 04:40 PM   #18
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Have a similar 52 yo deadbeat in DW's family. Various family members have poured at least $10K - $20K down a rat hole trying to "help" her. All it does is make her realize that she doesn't have to be responsible for herself. My 81 yo MIL still works part time and gives much of the money she makes to this parasite.

I say that you don't owe a penny - don't let any one guilt you into paying, as you know it is not a loan, but really a gift.
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Old 04-21-2010, 04:48 PM   #19
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Take it a step further- Why should you BORROW Money against your home so you can GIVE it to her? By her husband's admission she won't pay it back, she will be betting against the house a few days later... I'd limit your involvement to whatever you have liquid and don't care if you lose.

BTW, What does your DW have to say about all this?
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Old 04-21-2010, 04:52 PM   #20
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Here's what I think. DO NOT give her any more money. If you do, you are just enabling her. Do not crack under any family pressure to give her money. If you give her money, IMO you would just be throwing money away. She needs to learn the consequences of her actions and apparently she hasn't had to face many yet.
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