My mother and stepfather are in their seventies, and semi-retired; they can't work as much as they used to, but both work part time. They have a mortgage on a very modest condo, but are upside down. They have no steady retirement income other than social security. They live modestly; with the exception to trips to see their grandchildren, they don't travel. They have two cars, but not fancy ones, and they are both used regularly.
Unfortunately, they've both had health problems and they have needed expensive meds not covered by Medicare. I was stunned today to learn how bad things were; they're about $30,000 in credit card debt. That's a little less than my net worth at age 40, and my income allows me to live modestly and put a little away, but my sister and her husband bring in probably a couple hundred K a year, and they live well below their means, even paying private tuition for their sons and maxing out savings for retirement and the boys' college. Part of the reason my parents are so in debt is that my mother went heavily in debt to finance private education for both of my sisters.
As I noted, they are underwater on their mortgage, so they have no equity to turn the credit card debt into something low interest. My stepfather is a former bank guy, so if there was some reasonable way for them to get the debt away from high interest, they would have done it.
My mother has insisted that I not tell my sister about their credit card debt. My sister, even without the information, has offered them money, either as an interest-free loan or as payback for having financed my sister's education. My mother has categorically refused.
There's no way that they take home $30K a year. They have talked about declaring bankruptcy, but won't do so yet; they will only do so if things get worse.
So here are my questions:
1. Do I tell my sister? I feel like she needs to know.
2. Is there anything that my parents can do, that I can suggest, that will help them?
3. Is there a good reason for them to not declare bankruptcy? They live in IL, and my reading on the laws indicates that they would not lose their condo or cars or (again modest) possessions. It will screw up their credit, and they might need the cards to finance more meds or other health care, but I can't imagine they have much room left, or that anyone would issue them a new card at this point.
I want to respect their independence, but given their low income and the ridiculous amount of credit card debt they have, they are barely making any progress on paying down the debt, and every time they make some progress, there's a new health crisis and the cycle gets worse.
Sat May 30, 2015 10:35 pm
oldguy Senior Member
Cash: $ 715.00
Joined: 21 May 2006
Maybe they could get a reverse mortgage?
And they might want to sell one of the cars? That could pay off a big part of their $30,000 loan?
You mentioned two sisters - are they both financially successful?
Sun May 31, 2015 12:04 am
yoshiofor New Poster
Cash: $ 0.45
Joined: 30 May 2015
Only one of the two sister has any money. They can't do a reverse mortgage because they are underwater; their condo is worth less than what they owe. As for selling a car, it would be really difficult for them; they live in outer suburbs, and need to get around, especially for the part time work they do. Besides, one car is worth maybe $7,000, the other maybe $2,500.
Sun May 31, 2015 12:23 am
Wino Senior Member
Cash: $ 113.80
Joined: 03 Aug 2012
I would tell the sister. They aren't bankrupt (not for only $30,000). If I found out my parents were in such a situation, I'd insist they let me help them. I'd then get them out of the upside-down condo and into something they can afford.
I am looking at this from the sister's point of view. She wants to help, and I'm fairly certain she would be upset if she found out later that you knew and didn't tell her, when it's now too late or too expensive to help your folks. And I'll guarantee that eventually she's going to find out.
Sun May 31, 2015 1:05 am
jeff New Poster
Cash: $ 0.45
Joined: 08 Jun 2015
What about debt consolidation?
Hi friend! Just like your parents I believe bankruptcy should be the last option. I think there are other ways of reducing burden. If you can help them in any way, then that will be great. Or else you should look in for some other options like debt consolidation. I think it is a better option. The interest rate can be reduced to a very low level. You can go through this blog
quote: Promotions of websites are only allowed in your signature after you've acquired $3.00 of Forum Cash
which describes why debt consolidation is a good option. Hope it helps.
Mon Jun 08, 2015 9:36 am
Cash: $ 380.25
Joined: 09 Feb 2009
Wow that's a tough situation for you and your parents to be in, when they didn't plan well for retirement. And being in their 70's it would be tough to find a fulltime job.
First off I wouldn't declare bankruptcy over 30k, it won't really solve any problems. I guess I'd have a private discussion with your sisters, to see what type of money you'd be able to gift your parents to help them get out of this mortgage and sell their condo. Then I would advice them to rent something inexpensive and continue to work part time to help pay down their medical debts.
This should be a lesson for those thinking they can postpone saving for retirement.
Risk comes from not knowing what you're doing. (Warren Buffet)
Mon Jun 08, 2015 5:50 pm
Peter Gillespie New Member
Cash: $ 0.60
Joined: 22 Oct 2015
Hello mate, Itís very sad to see such a massive debt, but I say I have seen worse as my friend was in over that figure and he is only 42, but he did not panic instead he want for professional help. It was very long journey he took with applying for IVA from www.IVA-Advice.co , it was 60 months plan (5 year), but at least it was certain he was getting cleared of all the mess afterwards, give this option a thought it might help you.