Hi everyone,
I'm in a predicament and am hoping someone can shed some light on it.
My mother who is 64 has about $200,000 in debt, is living off credit cards, has her mother in a nursing home back in Europe, just finished fixing the foundation of the house because water was leaking into the basement for $10,000 which she had to borrow from the bank (they only gave her $5K) , remortgaged her house twice to pay for bills and now her work just shut its doors for the month due to covid. She will be getting about 55% of her salary (which wasn't huge to begin with) but regardless, she was never able to pay for her debt and expenses with a full salary either, clearly. Bank advisors and family members have suggested to her that she sell her house so she can pay off her debt and finally live comfortably, but she refuses to sell the house because she wants to leave it for her kids and both my brother and I have expressed that we have no interest in living there or having the house. We just want her to be debt free and to life a worry-free life which she can totally have if she just sold the house, she is being so stubborn about it I don't even know what to do. My first reaction when I heard that her worked closed and that she was only going to get 55% of her salary was that I was going to go live with her instead of paying rent for my apartment and help her with some cash. However, I thought about this for a good while and realized that helping her would only keep her in this crazy situation that she seems to be comfortable in. She keeps on telling me that she has faith that some miracle will happen and everything will work out and to trust God, but this is beyond God's help now. I feel sad because I want to help her but why would I have to sacrifice my life for her bad decisions? Am I being insensitive? What would you do?
Thank you so much in advance for your advice.
Kind regards,
Sunshine.
I'd highly advise against moving in with her, or having her move in with you as that would likely just reinforce/further enable her poor financial decisions.
I think I wouldn't give much financial advice, because if things continue in this manner you don't want to be blamed (without cause or reason) for outcomes in future. Just be gently there to listen, and be as supportive as you can.
Thank you for your response.
It is definitely causing chaos within my and within my brother. Sometimes it's even hard to be happy around her or go visit because it reminds us what she is going through. The house is also so old and falling apart and doesn't/won't have the money to fix it either. It's really a crazy situation, your reply is pretty much my thoughts and what I was planning on doing. Thank you for the reassurance!
If she can grown to accept her situation, then she can make a roadmap out. This may well be downsizing to clear debt.
"..that some miracle will happen and everything will work out". She does not have to lose faith or hope, but I think more useful to have ACTIVE HOPE. Where she can actively take steps towards a new hopeful phase in her life.
I think her thoughts surrounding "leave it for her kids" speak volumes.
She may be thinking to leave you the house = will ensure you are left financially stable? Or shows how much she loves you? Ask her. The reality is you both have homes already so the house would become a business (or even burden) to rent out. You don't have to mention that... You could acknowledge her generousity in wanting to leave you the house. Tell her how proud you are she bought it. You will be even more proud & happy if she can accept change in these very tough times, work together & change direction as required.
I see where you are coming from, I believe God/the universe always has a plan for us and to trust, but as I said in my response to Beatty: I think God can only do so much, he also gives us family members to advise us because they have our best interest and logic to help us in life. I.e. he gives us legs but we need to learn how to walk.
I admire her faith but I hope that she doesn’t belong to a “prosperity gospel” church where she is “sewing a seed” in other words, making a pastor rich while she is getting poorer because the church teaches that she will get her money back ten fold.
These types of preachers are all over television too! They prey on the vulnerability of others. It’s good to be charitable but not to people who take advantage of others.
You have said your piece. What else can you do? She knows what is necessary but it is hard for her to let go of her material belongings.
It’s a very sad dilemma. I am so sorry that you are struggling with this awful situation.
If not, then your mother will eventually be made bankrupt. The house will be sold but she will be able to keep most of her personal possessions – look up bankruptcy rules in your state to find out what. Bankruptcy gives a fresh start, and even for older people it takes away a huge burden of worry. Financial counselors rarely recommend bankruptcy because they don’t make any money out of it themselves, but it can be the best option.
Stop paddling mother’s canoe, it isn’t going anywhere – it’s sinking.
I found when faced with some hard issues my family had denial over (medical) that involving a third party could be very useful. Would there be a person who counsels in your Mother's faith? You don't have to air the dirty laundry or cause shame - but some prior wording them up that feelings surrounding a financial matter would benefit. Invite this person over for afternoon tea, introduce them & they hopefully will gain your Mother's trust. It may lead to a financial councillor recommendation who could assist with the actual financial matters.
Sort of like a soft, supportive version of an intervention.
I'd go with her to a bankruptcy attorney for a free initial consultation to get some information on her best options.
Bankruptcy is the option.
200K in unsecured not mortgage / car debt is huge debt unless it’s like 180k in medical bills and the rest is usual CC / Visa spending. Or she was making big $ like over 400k - 500k a yr.
I’m guessing that was neither of the 2 are the moms backstory but it’s more she’s been layering CC and racking them up to the max and then getting new CC.
The mom has few options to get out from her debt and killer interest that’s topping it off each month. Bankruptcy is it.
If the mom is lucky, she might, just might be able to get those mortgage holders to do a “validation of debt” so that she can keep the home. She’d need to be totally current on her mortgages, if not she’d need to bring it up to current. Ditto for any car loans. The securitized debtors can opt to allow a revalidation on the debt for bankruptcy.
But lenders don’t have to do it (validation of debt).
You kinda have to make yourself “attractive” to them, like being current and able to show full insurance on the house / car that has the securitized lending.
As long as your Mom is of sound mind, however, this is not your business. You have advised her (thst is all you can do) she has heard opinions of bankers, financial advisors, etc. Be there to support and love her when she makes good decisions and bad ones.
Come to peace with this situation.
If you suspect that she may be incompetent, than you need to struggle with how to get her evaluated medically
Something else to think of:
She wants to leave something for you, but she also may be afraid of being forgotten. There are other things that she could leave besides love and memories. Has the family taken lots of photographs and video over the years? Help your Mom get these organized and put on disk. Has your Mom or other family members put together a family history or done any genealogy. Get her to record and write down all her memories. Interview her by asking questions provided by some genealogy websites. Your Mom would be leaving a tremendous legacy and will also know that she will not be forgotten.
I also plan to leave my home to my children and grandchildren. They would not want to move here to live as they have jobs elsewhere. They could rent out the house for the income or they could sell it to help put the grandchildren through college. Or they could take the vacation of a lifetime.
I suppose none of us wants to be forgotten, we seem to have an internal need to let it be known that we were here. That we lived. My family will have many photos, videos and genealogical records that I’m leaving for them.
As in Beyonce’s – “I Was Here” lyrics:
I want to leave my footprints on the sand of time.
Know there was something that, something that I left behind.
When I leave this world, I'll leave no regrets.
Leave something to remember, so they won't forget.
Good luck to you, your brother, and your mother.
if you have a good relationship with her then take her to a good elder care attorney. The reality is she doesn’t want to deal with the mess she’s made, so she’s waiting for God to help. My grandmother always told me that “there will be no miracles because God gave me common sense.” You will not inherit her house anyway because of her debt.
Do not enable this behavior. Do not move in. You can help by sticking to sound advice and a realistic plan and not being swayed by guilt or what “others might think.”
I also wonder how much the house is worth. If it is "falling apart" then it's possible it will only be worth a small fraction of the debt she owes (unless she is living in an overinflated area in which even a doghouse is worth $1M), but it would still make sense to sell it (if possible) because it will only cause more problems.
She can talk to her bank about consolidation of her debts and creating a plan to pay them off. If she does sell her home and you let her live with you, make sure the sale of the house covers her debt before she moves in.
As her adult child, you are responsible to respect your mother... not to follow her into debt. If she needs help, make sure she buys essentials - food, medications, etc. Lend her a hand if she needs help getting her home ready to sell: cut grass, paint the house (with paint she buys), pack up boxes...
Was your dad a veteran? If so, she may qualify for benefits. I suggest checking with VA.
Best wishes to you and Mom.
Based on what the OP wrote the mom has a rundown house as an asset but it’s already saddled with 2 mortgages. I just don’t see any traditional bank doing anymore lending as they would be behind 2 other securitized lenders.
The mom imo needs Debt Counseling like from Consumer Credit Counseling as they can work with the debtors to come up with a plan to pay debt down. But the mom has to do what they require, like cancel all credit cards and do the regular reporting to CCC.
The only decision that's yours to make is whether you move in to her house and pay her rent, and share bills - which wouldn't cost you any extra, and would boost her currently reduced salary.
But I can't see your modest rent making much impression on a $200K debit balance either way. So if it otherwise suits you to move in, fine, go ahead; and if it doesn't then for heaven's sake don't - your mother won't be materially any worse off, it isn't as though you'll be letting her down in some way.
Who does she owe the money to? Have you broken that enormous sounding sum down? How much is secured on the house (i.e. mortgage) and how much is to credit card companies?
But I only ask these questions as a way of getting perspective on the pickle that *your* *mother* seems to be in. How does she feel about it, and is she actually asking you for help?
Your MIL has to live somewhere and you never mentioned where she wojld live if she sold her house.
It's always less expensive to live in your own home that is paid for then to pay rent somewhere.
Also, a lot of times a family member offers to let MIL live with them and when it doesn't work out, they end up in a Senior Home.
So what if she has bills, don't worry about it, it's not your problem, her house can be sold after she's gone to pay her bills.
Evidently things aren't as bad as you think, or the Bank wouldn't have loaned MIL any money at all.
You said you thought about moving in with her to help her out which would be fine as it would help you out to because you could see lots of money that you were paying for your Rental while giving a fair amount monthly, to help with MIL's Bills and you can always go get yourself another apartment if it doesn't work out.
You might even let MIL know the live with her arrangement will only be 6 mo or 1 Year to help her pay down on her Credit Cards with you paying half the Rent.
You would be able to save up some money yourself and it would be a Win Win Situation.
Most everyone wants to stay in their own home, Bought and paid for.
I imagine if you ever own a home when the time comes, you will want the same thing.
Another thought, If your MIL needs money and you decide you don't want to move in to save yourself money while at the same time helping MIL, then you might see if MIL would be Open to Renting out a Room to someone to get the extra cash she needs to make ends meet.
Lots of people Live Check to Check and on Credit Cards, and the Credit Card Co won't let you keep charging if you don't at least pay the minimum and your MIL only has a certain Limit she can Charge.
You want to research a solution quickly ...go fork out $1500 each on an Elder Mediator a professional one....not Joe next door.... they will interview each family member discuss finances and options for your mother's future plans over all. I assume there are only 2 kids and your Mom. I know I am coming at this to you really shooting from the hip...but I do not think surprises help us in the end. We should all know before hand about aging and elder care it is a necessary skill and we must be prepared. I wanted my mom to sell her house so she could live her life to the fullest. Unfortunately my siblings wanted the house to stay in the family without them telling me this ...they turned on me....later God intervened. That house is now up for sale. Mom died in May. Not COVID. Get a mediator. No one wants to buy it. None of us can buy the others out. No one is talking. See now?? Trust me get into debt go for an Elder Mediator to discuss estate options and future care in old age.
I'd guess some of the debt was for something truly necessary, like medical bills or home repairs. But some of it has to be fun spending. Maybe she is lonely, scared, or bored, and she's buying things to fill whatever her empty place is. Retail therapy. She may not even realize that's why she does it.
There's more to this than her insisting it be an inheritance; especially if she's been told no one wants the house. The inheritance is a mask for the real issues. If she sells her house, it's defeat. She spent herself out of her house, it's no one's fault but hers, and knowing she messed up this badly is a horrible feeling. Selling would mean her facing the debt head-on, and she won't do that. Hence saying God will fix it, so she doesn't have to.
Also, she may be thinking you'll take her in if the house is taken. You're her backup plan. You'll need to explain that you love her but you can't take her in or support her financially. You have your own family and future.
And for the love of God, do not move in with her!
Absolutely right - anytime you bail someone out of their own mess, it takes an extremely short amount of time for them to get right back to where they were.
My BIL is a prime example of that. He is now in his 60's but grew up with my husband's dad always paying off his bills only to get right back in over his head. It ended his first and only marriage when his wife could see he would never be responsible financially giving her everything she really wanted and left him for another man. He continues to pay consequences from the very first financial mistake - a period of 40 years!
That being said - unfortunately, some people will never learn how to be responsible in regards to their own finances. My BIL wasn't able to hold jobs for any lengthy period either and all the jobs he has have been low paying. He asked my husband once for some money. I told my husband how I felt about him coming back for more. We are a one-income household and we've taken some unexpected financial hits from our retirement fund so we aren't made of money. I allowed my husband to make his own decision after I expressed mine opinion/concerns. He agreed to lend his brother the money with the caveat that he make monthly payments to us until he paid it off. He did make for the most part a payment each month and did pay us off. But, I told my husband in which he agreed that it would be just this one time. He hasn't asked for money since!
You also don’t say if and when she intends to apply for social security, but we do know that she is working at some kind of employment. How long can this job be expected to last? Is there a chance she can go back to work full time? Could things get better when she applies for social security without penalty and keeps on working? Your mother may be thinking that it’s a lot harder to repossess a house than to evict someone for non-payment of rent and it’s easy to understand why she may want to hang onto a house that may be the only possession of value she owns. Your idea of moving in with her for a while might be a good idea if it enables you to better sort out the finances, and helps pay the existing mortgages but that assumes you will pay rent when it sounds like, if you move in, you intend to take a free ride; in that case, you will be making the situation worse.
Based upon what little information is available, I suggest that you move in with her, pay rent, sort the finances, convince her to sell if appropriate, help her list and sell the house, help her apply for a housing subsidy, find a low income apartment, get her moved, and find another place for yourself. Sounds like it will take two or three years to accomplish but your mother is young and you also may be young enough to start over if you are not married and have no dependents. Others consistently advise that it “isn’t your problem.” It is your problem if it’s causing you to worry constantly and substantially interferes with your quality of life and ability to manage your own finances. If your mother’s debt is the result of chronic poverty and she has raised you and your brother and incurred debt in doing so, the least you can do is to continue to help her try to get it sorted out and help her find resources. That, of course, assumes that you love your mother and feel an obligation regarding her well being. So many people on this website seem to be giving advise based upon their own feelings of hostility toward one or both parents, “it’s all about me” thinking, or antipathy toward having to take responsibility for vulnerable adults in general. I’m not of that school of thought. People live too long now for children to believe that they won’t have to offer their parents some type of assistance in their old age. In the vast majority of cases, it will happen as part of a normal life cycle that everyone needs to anticipate, plan for, and be ready to take action when the time comes. This is a discussion that should take place when parents are still fully capable of taking care of themselves. The time is ripe to have this discussion with your mother and for you, your mother and your brother to get busy figuring out how your mother’s poverty is going to be handled when she can no longer work or care for herself physically or financially. Unfortunately, if you think that the problems and responses presented on this website are fairly typical, then you will agree that very few children are either ready or willing to face the inevitable with their parents nor do they grasp that they are likely to face the same abyss.
Maybe she needs to see the big picture. Make a list of all the debt she owes and compare it to the income that is available to her. Covid could prevent her from getting full time work again for a long, long time. Explain that if she continues to live as she has, there isn't going to be a house to give to you and your brother anyway. Not to mention, and a big one to drive home to her, she cannot just give you her house because it might prevent her from nursing home care if something happened to her health and she needed a nursing home. Tell her to make a list of every single bill she has that is not a priority (cable TV, internet, big car payment versus cheaper car, hair/nail salon, etc) and ask if she'd like to give all those things up just to break even. Bill paying is all about priorities and hers seem to be out of whack if she has consistently used credit cards to make ends meet.
If there is any equity, at all, to salvage from the sale of the home - she needs to take it now. That would be another thing to show her - equity she 'might' make from sale of house versus debt against the house. It's very possible she has already spent her equity with loans and has actually already lost it. Even selling a house that has not had regular maintenance will eat up more of the equity my making repairs to get it ready for sale.
Once you have the financial details ironed out, you may be able to work with a credit counseling company to make one payment to them and they distribute among creditors. She will have to close all of the accounts while they are making the payments. The credit cards are going to put her so far underwater (if they haven't already).
She can reduce her own stress and create a happier life if she gets in to something more affordable now. You aren't being selfish. You are being realistic and she needs to do so as well. At 64, she has the possibility of living another 20-30 years and her current situation would have her under a bridge somewhere if her children happened to pass before her. Ask her to make these changes for her children so they don't have to try and clean up a bigger mess than there is right now. She has no inheritance to pass down. She already spent it. Now you have to figure out her future.
Ask her what her plan is when her debt exceeds any equity she might have left in the house, cannot pay the mortgage/loan payments, and the house is foreclosed? She would be walking away without a red cent to her name. She may or may not have secured full time work again. She would still owe money on credit cards - maxed out and unable to use those to live on. The miracle she is waiting for will come when she changes her habits.
I definitely think sitting down and writing all the financial debts alongside a list of available income is a good place to start. Seeing things on paper as they really are and not relying on what may or may not be remembered in our minds is very helpful when trying to get a handle on the "true" situation. Then they can go to the next step and get some professional advice to help create a plan to get out of this big mess that will only continue unless some action is taking asap.
Well said and thought out!
The interest alone on $200 K will sink it.
Sometimes, using a home's equity to get one through difficult times could be okay. However, imo, and not legal advice, when that time comes and you are stuck, you need to be willing to sell.
If your mother has poor credit; if she can no longer service the debt, she should sell.
You can help her by getting her some debt counseling.
If she was still employed, she maybe could consolidate the debt by refinancing the house and paying off the debt in full. If she could afford the new mortgage payments. If not, she should still plan to sell. A home that is paid in full is harder to finance than to refinance, but it can be done.
1. What kind of debt? Secured or unsecured? This makes a big difference, especially if any of the debt is collateralized by her home or other assets.
2. Have any of her creditors filed suits against her? If so, have any proceeded to judgment stage? This is critical b/c judgments for unpaid debts need to be discharged when a house is sold, which would diminish available funds for remaining debts. They will also accrue interest (I believe at an established state monetary rate) until paid, so they will become larger debts, reducing the net funds from sale of a house.
3. I'm surprised that she's "living off credit cards". With a large amount of unpaid debt I'm surprised that credit is still being extended to her. What would she do if her credit cards were frozen and she had no access to them?
4. As for leaving the house for you and your brother, until her house is valued much higher than the amount of her debt, I'm not sure there would be any equity left to bequeath. The debts plus interest and possibly penalties may consume the equity.
5. I think you're understandably vacillating between becoming more involved vs. stepping back.
6. I'm not clear though on how you "would have to sacrifice" your life for her. You wouldn't be assuming debt, right? Are you still contemplating moving in with her?
7. I don't have any experience with financial advisors, but I do think that bankruptcy might be a consideration. I assume it would cost more than any financial advisor consult would be, but it will also create legal alternatives by which your mother would HAVE to abide.
All good points for "sunshine1986" to ask herself. I think the sacrifice she may feel would be having to move in with her mom, help her with some cash (which would be her own money being used), losing a part of her own life as well as contributing to the vicious cycle her mom continues to be in especially if the OP helped her out financially which she feels is paying a consequence for her mom's bad decisions. Just some thoughts!
Do you have a Power of Attorney (POA)?
The next could be an Elder Carry Attorney. Mine was a big help.
Painting a broad stroke, I disagree with almost everyone else on how to approach your mother. When trying to sway or convince a person, never make they feel bad about themselves. I would guess if your mother is given a glimmer of hope on a positive outcome, she is more likely to take action.
Question, are you valuing the holders of the debt more than your mother? Maybe selling her house and paying down her debts is the right answer for her. But then again, would she look back in 5 or 10 years and regret that decision, because she needs those funds?
If you or your siblings want to explore buying equity in your mom's house or lending her money secured by the equity of her home, don't do anything without consulting an elder law attorney first.