Relative Needs Money - What Would You Do?

[jsrm]

My DH is a banker and as part of his employment contract he is required to have good credit. The reason for this is because he needs to be bondable. He is in a position that could cost the bank a lot of money if he did something stupid so they need to take insurance out on him. He would get fired long before he hit the bankruptcy stage. I do not know the exact line but I do know he gets upset at even the hint that I almost forgot to make any type of debt payment.

I do not know what she does, but for us my DH would have been fired way before the bankruptcy stage if we mismanaged our money.

 

[pb4uski]

I'm guessing that it may be different if it is part of an employment contract.... but the person in question doesn't sound like she is at a level that would involve an employment contract... if she was then there souldn't be a need to borrow money from family.

Then there is always whether the employer would even know if someone filed for bankruptcy unless they were a creditor in the filing... if you filed how would your DH's employer know unless you told them? And if he is supposed to tell them but doesn't what woudl they do... fire him?

 

[btdt22]

I have been there and done that and you are in a NO-WIN situation. The sister-in-law we loaned 5k to stop foreclosure no longer talks to us because she has never made a payment, and we just found out she decided to retire at age 62 because she is stressed. Much the same with another in-law.

Bottom line- Gifting is better, but only if you are sure it will resolve the situation. I see no reason to throw money at something if it won't resolve the issue, unless of course you are congress.

Bottom line- When you can't win, don't waste your money

 

[Just_Steve]

Actually, it is illegal to terminate an employee if they file for bankruptcy so I don't think that is correct.

Can I Lose My Job if I File for Bankruptcy? - AllLaw.com

Yet it is legal to fire someone for garnishments.

 

[timo2]

I would provide help finding social services, filing for bankruptcy, and paying for some necessities outright like groceries or buying a trac phone for phone service. There are many programs out there like discounts on utility bills, free phone service, food stamps, Medicaid, library services, etc. that I think many of the people who could qualify simply don't know about. If they don't qualify for any of those then I'd offer help with making a budget and a plan to become financially self sufficient, and still pay for some necessities.

We have given money outright to relatives from time to time in the past and in most of the cases the money ended up being used for discretionary purchases like new carpeting instead of college tuition or groceries, the intended purpose.

follow the example of don't give transients money directly, donate to the shelters and places that help transients. So you could pay for the bankruptcy, pay for any indirect support, anything but give them the money directly.
__________________

 

[mystang52]

...... In addition, the optics are particularly bad right now. We are literally putting our house on the market in a matter of days, which means a big pay day in the near future. We're also expecting delivery of a brand new motorhome, ordered months ago, with the money sitting in bank just waiting for that call. We appear to be rolling in money......"

No bad optics here, and you shouldn't feel guilty about this, and definitely should not let them throw a guilt trip at you for this. They are not entitled to the money you will get for your home, or the money you have put aside for that motorhome. Whatever help you choose to give is generous of you; you are not obligated to give up your life or the fruits of your lifelong endeavors to bail them out.

 

[jsrm]

I'm guessing that it may be different if it is part of an employment contract.... but the person in question doesn't sound like she is at a level that would involve an employment contract... if she was then there souldn't be a need to borrow money from family.

Then there is always whether the employer would even know if someone filed for bankruptcy unless they were a creditor in the filing... if you filed how would your DH's employer know unless you told them? And if he is supposed to tell them but doesn't what woudl they do... fire him?

DH employer would know because when the insurance is renewed each year a new background check (which includes a credit check) is done on him. (emoji looked to fun not to use)

 

[growing_older]

It never ends. My grandparents bailed out some cousins. They always said it was a family obligation to take care of family, but they also resented for the rest of their lives all that they had to give up to "save" their relations. My parents did something similar with in-laws and cousins and watched in disbelief as the recipients paid back only a fraction and lived high on the hog with expensive vacations and toys. There is a lot of deep resentment there as well. It would be hard to watch family suffer from true hardship, but it's hard to tell hardship from poor decisions.

 

[Ready]

I have a feeling this thread has been very cathartic to all who have participated and shared their stories.

Unfortunately, I have two. DH has a sister who borrowed $500 last year to pay the filing fees to have her home foreclosed. She promised to pay him back within a few months. That never happened and there's been no mention of it. I told him to forget about it and consider it a gift, but for him it's the principal. He believes she should do what she said she was going to do, and now wants nothing to do with her.

And then there's my sister. She refused to work her entire life. Mom has paid all of her bills. And now, because I won't continue to bankroll her lifestyle, she is suing me over a small inheritance my Dad left me.

So I'm a firm believer in never lending money to family members. Give them a gift it you want to. But know that a loan will rarely be repaid, and will almost always lead to bad feelings, resentment, and possibly an end to the relationship.

 

[Car-Guy]

So I'm a firm believer in never lending money to family members. Give them a gift it you want to. But know that a loan will rarely be repaid, and will almost always lead to bad feelings, resentment, and possibly an end to the relationship.

So an individual is going to pay someone (give them a gift) to maintain a relationship? Personally, I wouldn't want to maintain a relationship with a family member or friend who didn't "try" to repay a loan I made to them.

 

[aida2003]

Oh, boy, what a depressing thread!! I hope we will not experience anything like stories you've all posted but there's a potential to happen in the future...I'm just hoping for the best and maybe it will never happen.

I don't have advice to DustyMom, but I agree with someone who said that they'd had a similar situation in their family but agreed to pay after the BK only. Hearing/reading what you've already said about them I don't think it would be the end of the world if he lost the job due to the BK. First, you even don't know he'll be able to work or not in the same occupation. Second, the employer might take a pity on the guy and not fire after hearing his predicament. And jeez, do you really can afford to pay for their 6-figure hospital bill?

It's totally understandable to feel resentment and I don't think you should feel bad feeling this way.

I think before you open your wallet you perhaps should help them researching some kind of services that could help them with negotiating their hospital bills, etc.

Now I'm just curious: Can't they agree to some kind of plan to pay the hospital or whatever $10/month and pay it for the rest of their lives? Not sure it's still possible but I've heard such stories that supposedly people did this many year ago (20-30 years ago) unless I was told untrue stories.

 

[mamadogmamacat]

Give advice only at this point. They are adults and need to learn to act like it. Way past time for tough love. If they are serious about changing their ways, advice over say a meal you pay for will be appreciated. If it is not, cut them off. Bankruptcy may well be the best option, and I seriously doubt this will require giving up a job. It did not for a colleague who declared bankruptcy after the boutique business his wife insisted they open later failed. he kept on working throughout the painful process and their finances eventually recovered This was only a few years ago, maybe three or four.

 

[brett]

Look on the bright side. That hospital bill, along with other bills, will probably evaporate after bankruptcy. You could be doing them a favor by not prolonging it.

Nothing to feel bad about. My understanding is that medical/hospital bills are the number one cause of personal bankruptcy.

Why throw good money after bad just to temporarily salve your feelings?

 

[traineeinvestor]

A tough position to be in through no fault of your own.

To add to the collective experience, my parents went through a similar experience when my uncle got into financial difficulties - holding too many highly leveraged investments during an economic downturn. My aunt bailed him out by guaranteeing his debts. My parents refused to provide a guarantee but did offer other assistance including a car. My grandmother (his mother) did the same, providing some money but refused to sign a guarantee. It wasn't enough. My uncle was eventually declared bankrupt and my aunt was dragged down with him. My parents and grandmother (possibly) would have suffered the same fate if they had co-signed, so they made the right decision to offer limited assistance.

None of the siblings have been speaking to each other since then and, as a result of the squabbling, my grandmother wrote her children out of her will, leaving token bequests to her grandchildren and the rest to charity.

When my uncle emerged from bankruptcy he managed to remake a meaningful small fortune but hasn't offered to repay any of the people who tried to help him on the way down.

On a more positive note, I have lent small sums of money to friends twice. In both cases I was paid back when promised and offered interest (which I refused). We are still good friends.

If family members ever got into difficulty, I would provide limited assistance and not care about getting the money back - but not to the point where it impacted on our financial security. It helps that I have good relationships with my siblings and my parents and (for the most part) they are financially responsible people.

 

[brucethebroker]

BTDT, OP.
Our situation with an "unlucky" relative over 30+ years has been one of our frustration that no lesson has ever been learned (multiple evictions, car repos, etc.). No amount of income from a job was ever enough, and no amount of our help truly helped long term (including taking this person into our home 3x). Poor decisions were never changed and neither were the predictable results. We finally had a tearful final "chat", and walked away, severing future ties.

Even that did not change things-the downward spiral has continued and appears to have hit rock bottom (updates provided through another relative). The difference now is that we are out of it. Our health has improved, since we no longer worry about that person. Some money is owed, but we have accepted that.

We still have occasional guilt, but we are moving on. I truly feel sorry for what you are going through. Just wanted to let you know that you aren't the only one working through that particular problem. Good luck.

 

[braumeister]

If they are serious about changing their ways, advice over say a meal you pay for will be appreciated. If it is not, cut them off.

That's a good approach, but …

Our ne'er-do-well relative asked (years ago) what he could do to convince us to help him. We spent a couple of weeks researching his situation and came up with a good plan for how he could get out of debt, restructure his business, and turn his life around. It would have entailed him making a few small sacrifices in the short term.

Took him out for a good meal at a restaurant he liked but normally couldn't afford. Over the course of the meal, DW started outlining the plan and we said we would cover his current debt if he agreed to follow the plan.

He got very indignant, told her to save her breath because he wasn't listening, and refused to even accept the sheet of paper with the plan spelled out. "You aren't smart enough to tell me how to run my life. I've told you what I need."

That was the end of that. As mamadogmamacat said, they have to be serious about changing.

 

[gerntz]

We had a similar situation. We decided to help but only after a bankruptcy.

We felt that there was no point in giving money that would simply be used to pay creditors when bankruptcy looked inevitable. If we gave money we wanted it to be used to help them personally.

This.

 

[gerntz]

We helped DB and DSIL a few years ago. She's a 2x cancer survivor and each bout left them with big med bills (after insurance paid) and her without a job. After the first time they moved to a lower cost of living area (also to help take care of her mother) and got reasonably comparable jobs, again with good benefits. Her 2nd cancer threw them off and they declared bankruptcy. We provided cash to help even with that and they promptly paid it back. She's back to work (different place, of course) and they are doing pretty well, though they spent alot of retirement assets before the bankruptcy. Of course, she doesn't expect to live very far into retirement.

Anyway I was very happy to have helped them and I'd do it again (and we may be doing it again, who knows).

This story is different - and good. These people are actually responsible & honest.

 

[kaudrey]

I understand how tough this can be. My parents have, several times, given some money to an aunt/uncle who don't have much. The first time, which was probably 15 years ago, I marveled that they needed it, since they seemed to have a new car every few years and had multiple computers and big TVs....if they help now, it will be because my aunt (now 85) has Alzheimer's and my uncle probably could use some help....


I agree this could be a slippery slope. I'd try to help out in tangible ways: help them seek out social services that are available, cook them meals, maybe pay a specific bill once in a while, but don't give them a blank check. Just because you have saved diligently and planned your life doesn't mean you are responsible for them. Be helpful and caring, but don't become their bank.

 

[mystang52]

To paraphrase the great prophet, Judge Judy: never lend relatives or friends any money, Either gift it, or don't give money at all. Otherwise, the "lender" becomes the bad guy when they have the audacity to look to get repaid.
I disagree with the other suggestion to give advice to the family members. Unless they overtly ask for advice, they will not listen to a word that is said.

 

[euro]

I feel queasy writing about this because it feels like it should be kept private, but I need to vent and that FIRE thing we all have in common is really an important part of this.

So, here's the story. DH's sister and her husband have hit a really big speed bump in the road of life (not the first time, but the biggest bump by far). They have been skirting the edge for as long as I've known them and we've helped in the past by hiring brother-in-law to do work around our house, even when we haven't necessarily needed it (he is in the trades), or paid in advance for work to be done later if they had urgent needs. Now, due to medical issues that hit both within months of each other, they are in dire straits. She had just gone back to work and now he will be incapacitated for 6-9 months, or more (not clear yet). No disability insurance. Not even any health insurance (!), which we just found out. They came right out and asked if we could help.

Our dilemma is that they appear to be in such a deep hole, that there is no possible way we can save them, only kick the problem a few months down the road - throwing good money after bad. In addition, the optics are particularly bad right now. We are literally putting our house on the market in a matter of days, which means a big pay day in the near future. We're also expecting delivery of a brand new motorhome, ordered months ago, with the money sitting in bank just waiting for that call. We appear to be rolling in money, but we've spent years planning this and it was all finally coming together at this moment.

We are prepared to give them some help, but struggling with where to draw the line. It feels so selfish, but we're resentful at the same time, as they've not always made the best choices or exhibited any willingness to sacrifice to get back on track. Before I knew the full extent of their problems I had mentally allocated a larger dollar amount to help out, but now I know that would only be enough to prolong the agony yet still end up in the same place.

[Heavy sigh] Thanks for letting me vent.

Very tough place to be and there can't be ONE right answer for this. I'll just add, from my own painful experience, that loans to family members more often than not ( FAR more often than not), don't turn out to be "loans" at all, but rather they are "gifts". I don't think I'm unique in this, but I have never been paid back by relatives for personal loans - no matter whether they could, or could not afford to pay it back. So, whatever you decide, consider your money gone! If you can live with that and still want to help, then go ahead. If you can't afford to lose the money, don't lend it out.

 

[euro]

To paraphrase the great prophet, Judge Judy: never lend relatives or friends any money, Either gift it, or don't give money at all. Otherwise, the "lender" becomes the bad guy when they have the audacity to look to get repaid.
I disagree with the other suggestion to give advice to the family members. Unless they overtly ask for advice, they will not listen to a word that is said.

Thanks mystang52, you said it much more succinctly than I just did..... I fully agree!

 

[euro]

That's a good approach, but …

Our ne'er-do-well relative asked (years ago) what he could do to convince us to help him. We spent a couple of weeks researching his situation and came up with a good plan for how he could get out of debt, restructure his business, and turn his life around. It would have entailed him making a few small sacrifices in the short term.

Took him out for a good meal at a restaurant he liked but normally couldn't afford. Over the course of the meal, DW started outlining the plan and we said we would cover his current debt if he agreed to follow the plan.

He got very indignant, told her to save her breath because he wasn't listening, and refused to even accept the sheet of paper with the plan spelled out. "You aren't smart enough to tell me how to run my life. I've told you what I need."

That was the end of that. As mamadogmamacat said, they have to be serious about changing.

That's actually a better scenario than have them agree to everything just to get the cash and then have no intention to follow through. At least in this case, there were no "misunderstandings"

 

[Tailgate]

Regarding risky loans, I had a banker friend tell me once... 'never loan money to a policeman, preacher or prostitute' ---his words, not mine, but I would add family to the list... gifting ok, lending is dangerous.

 

[brett]

I think that it is a mistake to think that you can change someone's behaviour by helping them out financially. Almost akin to marrying someone with the view to changing them.

It does not work, never has, and it will only end in disappointment.

So why buy yourself a depleted bank account, a potentially ruined relationship, and a great deal of personal angst by putting your hand in your pocket.

Deep pockets and short arms are sometimes the best response. Perhaps not the easiest, but often the very best for all concerned.