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My mother retired early due to a stroke, cashed out her pension ($500,000) and spent it all in two years. Now she only has disability income. Her husband is younger, still works at a medium-wage job, constantly takes out new lines of credit. My sister has taken on managing all their finances, has been doing this for a long time. She just got Durable Power of Attorney. They still have access to their bank accounts, but my sister pays all their bills and gives them an allowance which is more than enough for their expenses, has negotiated countless times to get their cards paid off, worked with the IRS for a workable settlement on the back taxes from all that retirement money, has saved their house (on which they still owe over $200,000 dollars after 25 years!) from foreclosure several times, all using their own money - not hers. The two of them still overspend, the husband is still opening new lines of credit. They agree to save and then take it back out everyone month. This situation is killing my sister with stress. She is sure they will lose the house if she doesn't keep rescuing them from financial disaster. To me, it is like enabling addicts and a very unhealthy situation.

My opinion is that my mom should be declared incompetent, if possible. In addition, we should insist that they allow all their income to be deposited into an account to which they do not have access, all their bank accounts should be closed, they should be given PayPal cards for all their personal spending, and the husband's access to new credit should be shut off (don't know how that would be done - he would have to consent to it since we do not have POA for him and he is financially dysfunctional but not incompetent). They should also attend Debtors Anonymous together.

I think the alternative is to hand control back to them, since they refuse to follow the agreed on arrangement for my sister to handle their finances and not go over their budget on personal spending and credit. They will lose their house and be left to live (where??) on a tiny income once the creditors attach the husband's wages.

Please give me your suggestions. Thanks.

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Oh my gosh, some people no matter their age NEVER learn do they? My guess is that they've lived beyond their means their whole married life, and are NOT going the change now. How exactly do you get an addict to stop taking drugs? Let them hit rock bottom? I don't know. But like you said, then what? Where do they live? Are they going to assume they'll be moving into the homes of one of their children? Maybe it's time for an intervention with you kids and them. Lay it out, that WHEN, not IF if they go broke and are thrown out their house, the kids are NOT going to bail them out. If they're willing to make the changes that you've already thought of, then that's fine. But if not.....Hold fast.
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