mother in credit card trouble in Mich.

hi...sure hope you can help. My Dad recently passed away, and my Mother's income was cut almost in half. Turns out she has a lot of bills, apparently buys anything from anyone who calls or knocks on the door. I cut up all the credit cards-no insurance on them, she owes about $15000 and can't make all those payments now. Is it a good idea to let them get behind so the companies will accept partial payment to clear it up, and get a consolidation loan? She owns her house and is afraid to go bankrupt and lose it. Then there is the car, they are leasing it. My Dad is the only one who signed the lease, there is life insurance on it, but Chrysler says because he died of a heart attack they won't honor it since a heart problem wasn't disclosed- they didn't know he had a heart problem. I have to clear all this up for her, she had a heart attack herself a couple years ago and all this stress is not good. Every time I turn around I find another bill, they have been paying almost $100/mo to publisher's clearinghouse for years, the list goes on and on. I appreciate any advice.I cut up the credit cards already!

[I AM ALWAYS LIABLE]

Originally posted by megram
hi...sure hope you can help. My Dad recently passed away, and my Mother's income was cut almost in half. Turns out she has a lot of bills, apparently buys anything from anyone who calls or knocks on the door. I cut up all the credit cards-no insurance on them, she owes about $15000 and can't make all those payments now. Is it a good idea to let them get behind so the companies will accept partial payment to clear it up, and get a consolidation loan? She owns her house and is afraid to go bankrupt and lose it. Then there is the car, they are leasing it. My Dad is the only one who signed the lease, there is life insurance on it, but Chrysler says because he died of a heart attack they won't honor it since a heart problem wasn't disclosed- they didn't know he had a heart problem. I have to clear all this up for her, she had a heart attack herself a couple years ago and all this stress is not good. Every time I turn around I find another bill, they have been paying almost $100/mo to publisher's clearinghouse for years, the list goes on and on. I appreciate any advice.I cut up the credit cards already!

My response:

It may be a good idea to refinance the home, or sell the home, so that these bills can be paid. Eventually, and if you don't do as I suggested, the creditors are going to sue and your mother will lose, and then the house is going to wind up on the Auction Block.

One way or the other, either through Bankruptcy or through a refinance or sale of the home, these debts have to be dealt with in some reasonable manner.

Don't wait for the creditors to take action, because if you do, interest will keep piling up, court costs will be added, and thousands of dollars in attorney's fees will be added to the debts. Such other expenses could, for example, turn a $1,000.00 debt into a $4,000.00 debt. Now, just multiply that potential by all of the debts, and your Mom's debts could become astronomical.

IAAL

If she is over 62 and owns her home outright, or close to it, she may want to look into a reverse mortgage. She will need to control her spending in the future though. With a reverse mortgage, she can tap the equity in her home and pay off the debts. She may even have a little money left over for future expenses.


good luck
Ken