Parents with Financial problems

[Dtail]

Especially as people misinterpret or misunderstand things, or even deceive themselves by not looking at all the facts.

Example: My happy to spend sister told my buddy she only owed $100 on her CC. Actually it was $5,000 owed with a monthly minimum payment of $100

When I asked her about it, she said she would just pay it off at $100 /mo. It would only take ~30 yrs

Does she understand the 30k interest concept?

 

[Yoheadden]

This is what my DM told me, but checking Zillow is a good idea.

Just a quick look tells me Zillow has the worth at $264,000.
This might help down the road when things start to spiral

 

[Yoheadden]

Especially as people misinterpret or misunderstand things, or even deceive themselves by not looking at all the facts.

Example: My happy to spend sister told my buddy she only owed $100 on her CC. Actually it was $5,000 owed with a monthly minimum payment of $100

When I asked her about it, she said she would just pay it off at $100 /mo. It would only take ~30 yrs

This was DMs attitude when she told me about the $1,200 annual maintenance fee for the time share. Yes, it’s only $1,200 for something you don’t use or have the money for.

 

[brett]

Far better to hit the ditch when you are young IF you learn from your mistakes.

My niece had credit card problems that took her to personal bankruptcy. She learned her lesson well and has recovered.

Her mother, my SIL, now in her 70's never did learn the lesson. She now lives with one of her children out of necessity. Broke.

 

[HMMY]

It is better not to pay off the credit card. They will just incur more credit card debt if it's not maxed out. I don't think it's "crushing" them because they're probably only making minimum payments, so they don't realize how much they will pay in interest cumulatively before it's paid off (if ever).

No need to do anything until one spouse passes. If it's your mom, you're done. If it's stepdad, you sell the house, pay off the credit card, buy her a small apartment, move her into a facility (assisted or skilled nursing), or into your home. There's nothing you can do now that will improve their situation later. Enjoy your freedom while you can, before your mom becomes your responsibility.

 

[Buckeye]

Replace unsecured debt with secured debt?

What is the purpose of converting to secured debt? What can happen if they don't pay their credit cards? Can their pension or SS be garnished?

 

[CardsFan]

What is the purpose of converting to secured debt? What can happen if they don't pay their credit cards? Can their pension or SS be garnished?

Well, some people believe if you incur a debt, you should pay it.

 

[Sunset]

Well, some people believe if you incur a debt, you should pay it.

Yep, still all the student loan folks are getting free rides right now and holding out for a giant gift.

Society can't help itself, it just seems to keep on rewarding bad choices.

 

[athena53]

It is better not to pay off the credit card. They will just incur more credit card debt if it's not maxed out. I don't think it's "crushing" them because they're probably only making minimum payments, so they don't realize how much they will pay in interest cumulatively before it's paid off (if ever).

This is a really good point. When my Ex was unemployed and I was scrambling to keep all the bills paid on one salary, I made minimum payments on his credit cards every month. (They were in his name only. I knew better than to be on the same account with him.) I realized it just meant that a little credit was freed up- and he'd max it out again. When things got really tight I just stopped paying. (He got more unsolicited card offers than I did despite that.) They were eventually paid out of his share from the sale of the marital home when we divorced.

 

[LV_Travel]

354Chevy’s advice should be presented to your parents. They meed to realize that they need to get into subsidized senior housing as soon as possible. Once one of them dies and the SS is cut it is going to make a bad experience a nightmare. Hopefully she can understand that once they are in the housing they won’t be kicked out. The same can’t be said for their zero equity home payment that no doubt goes into default once the ss is reduced.

If you explain that and they don’t understand the dire situation they are in, then it is truly hopeless.

 

[RetiredHappy]

Regarding timeshare, most timeshare are worth nothing and hard to give away. There are very few that are valuable like Disney, Hyatt, Marriott and Westin. The $1,200 per year in maintenance fees is usually on a low-end timeshare. All timeshare exit companies are scammers so make sure they don't fall prey to them.

You can go to TUGbbs.com (timeshare user group) and post what your mother owns and members will give you candid feedback as to whether it is worth anything. I belong to that forum and hang out there quite a bit.

Once your have established that it is a liability and can't give it away for free, the best route to take is to contact the HOA and let them know that due to financial difficulties, there will be no more payment and request that they take back the deed in lieu of foreclosure. It is actually a preferred cheaper route for the smarter HOAs instead of undergoing costly foreclosure. Some timeshare systems have deedback programs, others do not. Either way, just make it clear that there will be no more payment coming. If the HOA indicates that they won't do a deedback, just let them send unpaid bills to collections. It will take a year or so and some percentage of the timeshare owners will get a credit score hit if they do indeed go into collections. At their age, I won't worry about it although assisted living places do look at credit scores. But timeshare foreclosure is usually an accepted explanation to a credit score hit.

 

[Buckeye]

Well, some people believe if you incur a debt, you should pay it.

It's very possible they have re-paid their debt several times over already. I agree people are obligated to pay their original debt with some profit for the lender but 25%+ cc interest rates are beyond the pale given today's interest rates. Defaults and bankruptcies are built into the rates several times over, IMO. I don't believe they should risk losing their house because they can't re-pay balances generated by 25%+ interest rates.

 

[HGTVFanatic]

This situation is really sad. Now that so many young people are deciding to be childless, what will happen to them if they ever end up in a similar situation?

 

[Teacher Terry]

As a couple they might not qualify for low income senior housing.

 

[Buckeye]

There have been discussions about children, siblings and other family members in financial distress, but what do you do when it is your parents or in my case DM (74)& DStepdad (84).

In an attempt to get a better grip on my parents financial situation as well as contact information for end of Life planning, I came up with a 3 page form, asking about wills, accounts, contacts, last wishes, etc, etc. They live over 5 hours away and we don’t talk every week, but do have a good relationship where disclosing this information isn’t a problem. My DM isn’t a hoarder, but let’s just say things are cluttered. The idea of having to look through piles of paper when the time arrives for necessary documents is not the least bit appealing not to mention not efficient.
They procrastinated a few months on filling out the paperwork and whenever I asked, they said they were working on it. Just recently the topic came up again and when I asked about accounts and bills, I learned they still have 140,000 on a 165,000 mortgage, 25,000 among 4 CCs and for some reason, still pay $1,200 annually for a time share. DM said there are no retirement funds left and they get by, barely, on their 2 SS checks and a very small pension. I knew they were having issues, but never guessed it was this bad. DM did recently get 2 part time jobs to help out.
So how did things get this bad. They both had 2 successful jobs. I remember something about a nephew losing upwards of $200,000 of DSDs money years ago in an investment of some sorts. I’m sure there were other bad financial decisions, a bad addiction to QVC and just other poor choices. Needless to say they are paycheck to paycheck and the CC are from when unplanned expenses pop up, which we all know happens pretty regularly.
I asked DM if she thought she could stay in the house if/when something happens to my DSD and she said no.
Just to reinforce the mentality I’m dealing with, later in the day I get a text from DM showing a picture of an antique hutch she plans to buy from money borrowed from a neighbor. I think I saw purple.
So, my question is has anyone been in this situation and what is the best way to help. A financial planner, counselor, elder law attorney. Throwing money at the situation is out of the question, but how can I at least soften the landing when they (she) eventually falls?

How much is their monthly mortgage payment? Seems like it would be quite low on a $165,000 loan. It might be one of the cheapest housing options. Have they shopped their homeowners insurance lately? Are the policy limits appropriate? They might be able to defer property taxes or get reductions at their age.

 

[Chuckanut]

If their mortgage is one of the sub 3% ones, then this current inflation may help bail them out.