topic Need advice with my brother's situation in Credit Cards

Need advice with my brother's situation

Anonymous — Thu, 02 Feb 2012 10:30:28 GMT

My brother is a truck driver and just became unemployed after working with the company for about a year. His credit cards are pretty much maxed out, he has an auto loan with only about 5 more payments left and perfect payment history. I helped him with this month's car payment by putting it on my credit card and will probably help him out with the remainder 4 payments.

To make matters worse he has a Best Buy card and he took advantage of the 18 month financing deal which just expired so he is going to be hit soon in a few weeks with about $900 in deferred interest. I told him if he can get HSBC to waive the deferred interest I would transfer the balance which is about $2,500 to one of my credit cards. So far he talked to one HSBC rep who said they will waive half. I am reluctant to pay off the balance unless all is waived and also having second thoughts of even doing it since my utilization would go up causing my score to go down a bit and no clue when he would pay it off. I have talked to him about possibly filing for bankruptcy for the $8k in cc debt he has if he can't get a job in the next 6 months. He got mad at me for even suggesting it saying he will eventually pay off the debt. I need advice on what the best course of action is for him and me as well with helping him out.

His credit right now sucks because of maxing out his credit cards, late payments on a few cards, and a couple collections. I am thinking of telling him to let the credit cards default and if he gets back on the road in the next 3 months he can try to work out a settlement with each creditor to pay off the balance minus all interest/fees and hopefully report current for the months he was late.

Aside from his current situation I have helped him out in the past financially by lending at least $5k over the last couple years when he ran into financial problems. I'm younger than him by 10 years and have managed my finances pretty well. I have owned a house since 2003 and have had credit cards for about 10 years and have a perfect payment history. I have no car loan since I paid cash for my car with my savings. I have bailed him out in the past with credit cards by making minimum payments for him and even put a few of his car payments on my credit card.

Right now I am carrying over $7k on my credit cards with a few having 0% APR and if I was to transfer even half of his cc debt that would increase my utilization by about 50% which I really don't want to do but at the same time I want to help him out. A part of me says to let him deal with his debt on his own and learn the hard way again. When I say again is because about 10 years ago he defaulted on his first car loan and that tarnished his credit for 7 years. In 2007 he bought another car with a 5 year loan and like 20% interest rate. I asked him why he didn't just rent a car for a couple days or week when he was not on the road. His answer was that it didn't really cross his mind at that time and wanted a car of his own. Now he regrets making an impulse purchase since he has paid 4 times what the car is worth now. If only he had run it by me I would have talked some sense into him and convinced him to rent a car when needed and save up money to buy a car with cash.

If you got this far thank you, so after sharing my brother's situation what do you think I should do? Keep bailing him out or let him learn the hard way again?

Re: Need advice with my brother's situation

visorboy1974 — Thu, 02 Feb 2012 10:44:50 GMT

I was with you on helping him out until I read about the HSBC deferred interest coming up. If he didn't have incentive to pay something off before the interest kicked in, he still doesnt have an appreciation for money. Is the car worth anything? If it is, I'd check out paying it off now and getting out of that crazy interest rate.

Re: Need advice with my brother's situation

LS2982 — Thu, 02 Feb 2012 10:59:21 GMT

@Anonymous wrote:
My brother is a truck driver and just became unemployed after working with the company for about a year. His credit cards are pretty much maxed out, he has an auto loan with only about 5 more payments left and perfect payment history. I helped him with this month's car payment by putting it on my credit card and will probably help him out with the remainder 4 payments.

To make matters worse he has a Best Buy card and he took advantage of the 18 month financing deal which just expired so he is going to be hit soon in a few weeks with about $900 in deferred interest. I told him if he can get HSBC to waive the deferred interest I would transfer the balance which is about $2,500 to one of my credit cards. So far he talked to one HSBC rep who said they will waive half. I am reluctant to pay off the balance unless all is waived and also having second thoughts of even doing it since my utilization would go up causing my score to go down a bit and no clue when he would pay it off. I have talked to him about possibly filing for bankruptcy for the $8k in cc debt he has if he can't get a job in the next 6 months. He got mad at me for even suggesting it saying he will eventually pay off the debt. I need advice on what the best course of action is for him and me as well with helping him out.

His credit right now sucks because of maxing out his credit cards, late payments on a few cards, and a couple collections. I am thinking of telling him to let the credit cards default and if he gets back on the road in the next 3 months he can try to work out a settlement with each creditor to pay off the balance minus all interest/fees and hopefully report current for the months he was late.

Aside from his current situation I have helped him out in the past financially by lending at least $5k over the last couple years when he ran into financial problems. I'm younger than him by 10 years and have managed my finances pretty well. I have owned a house since 2003 and have had credit cards for about 10 years and have a perfect payment history. I have no car loan since I paid cash for my car with my savings. I have bailed him out in the past with credit cards by making minimum payments for him and even put a few of his car payments on my credit card.

Right now I am carrying over $7k on my credit cards with a few having 0% APR and if I was to transfer even half of his cc debt that would increase my utilization by about 50% which I really don't want to do but at the same time I want to help him out. A part of me says to let him deal with his debt on his own and learn the hard way again. When I say again is because about 10 years ago he defaulted on his first car loan and that tarnished his credit for 7 years. In 2007 he bought another car with a 5 year loan and like 20% interest rate. I asked him why he didn't just rent a car for a couple days or week when he was not on the road. His answer was that it didn't really cross his mind at that time and wanted a car of his own. Now he regrets making an impulse purchase since he has paid 4 times what the car is worth now. If only he had run it by me I would have talked some sense into him and convinced him to rent a car when needed and save up money to buy a car with cash.

If you got this far thank you, so after sharing my brother's situation what do you think I should do? Keep bailing him out or let him learn the hard way again?

I think some tough love is in order. That's the only real way you learn and change the way you think of things. If this was just one time i'd say help him he is your brother, but it's obvious he hasn't gotten that "frugal" mentality yet.

Re: Need advice with my brother's situation

CreditScholar — Thu, 02 Feb 2012 11:51:14 GMT

Let him fend for himself. To put it bluntly, its his fault he was living so close to the edge. It's a no-win situation and it's not your problem. I wouldn't help anyone if they had that attitude, brother or not.

Re: Need advice with my brother's situation

Anonymous — Thu, 02 Feb 2012 13:10:04 GMT

Let him learn how to manage money the hard way but support his neccessities along the way. You could help his credit by adding him as AU on your card( but don't give him a card). This way you don't risk tanking your own credit while digging him out of hole faster. I think the amount owed is too small for filing BK so settle for less might be a better solution.

Re: Need advice with my brother's situation

smc733 — Thu, 02 Feb 2012 13:27:57 GMT

I'm with the others. A very unfortunate situation, but do not drag down and lose all you've built up due to your fiscal responsibility because of his lack thereof. 0% financing something he didn't have the money for is NOT responsible. I am taking advantage of a 0% offer myself currently, but I have the funds to pay it off 3 or 4 times over if I wanted to.

He ruined his finances, don't let it ruin yours. Force him to deal with it himself, if he lost a home, etc... of course I could understand being welcoming in that sense (I would never turn away family), but I would not give him money or credit. (Think about it, letting him BT to one of your cards is essentially extending him credit, would ANY creditor give him credit right now?).

Good luck to the both of you.

Re: Need advice with my brother's situation

boomhower — Thu, 02 Feb 2012 14:13:21 GMT

Help him with the truck. He's so close to having it paid off it would seriously suck to have it repoed at this point. He's going to need transportation if he's going to work to pay you back for what he already owes you, not to mention I couldn't in good consense let that happen to a family member if I was in a financial position to help. Screw the credit cards. He can work that out on his own.

Re: Need advice with my brother's situation

jamesdwi — Thu, 02 Feb 2012 14:34:09 GMT

@boomhower wrote:
Help him with the truck. He's so close to having it paid off it would seriously suck to have it repoed at this point. He's going to need transportation if he's going to work to pay you back for what he already owes you, not to mention I couldn't in good consense let that happen to a family member if I was in a financial position to help. Screw the credit cards. He can work that out on his own.

Re: Need advice with my brother's situation

luvsandyshores — Thu, 02 Feb 2012 17:34:01 GMT

I'm in a similar situation. It's hard to not help family members when you are in a situation to do so.

Definitely help with the truck payments. Don't worry about the CCs, they're his problem. If he's a truck driver, he shouldn't have too much of a problem finding a new job. If he gets one fast enough, he'll be OK - he might have a few lates, but that's part of his learning process.

Re: Need advice with my brother's situation

seattletravels — Thu, 02 Feb 2012 17:45:28 GMT

That's a tough one. It would be hard to let a family member go through that. Do you have any plans to purchase a house or car in the near future? If not, I don't know that I'd be able sit by and watch. You could always make him sign a contract to be paid back by a certain date - or make regular payments. My brother and I recently loaned some money to one of our sisters and made her sign something that she would have us paid back with her tax return and if it didn't cover the balance, she would have to have the remaining amount paid back no later than May. You could do something similar and if he doesn't pay you back - there's always People's Court.

Re: Need advice with my brother's situation

blklnamru — Thu, 02 Feb 2012 17:51:40 GMT

@jamesdwi wrote:
@boomhower wrote:
Help him with the truck. He's so close to having it paid off it would seriously suck to have it repoed at this point. He's going to need transportation if he's going to work to pay you back for what he already owes you, not to mention I couldn't in good consense let that happen to a family member if I was in a financial position to help. Screw the credit cards. He can work that out on his own.
+1

+2. if you can help with the vehicle... rest he should learn on his own; you cant keep bailing him out, otherwise he'll expect it everytime and the time after that.

.02

Re: Need advice with my brother's situation

improvingmycredit — Thu, 02 Feb 2012 17:58:11 GMT

I was in a situation similar to yours. It's always hard when dealing with family members. Me- I'd pay off the truck if you can afford it and make him pay you back when he can. Let him deal with the other credit card debt on his own. It's never easy and having transportation ensures he can become employed again and be self sufficient. Don't sink your own ship.
You're a good brother/sister even contemplating being so giving of yourself.

Re: Need advice with my brother's situation

SoulMaster — Thu, 02 Feb 2012 18:06:40 GMT

@improvingmycredit wrote:
I was in a situation similar to yours. It's always hard when dealing with family members. Me- I'd pay off the truck if you can afford it and make him pay you back when he can. Let him deal with the other credit card debt on his own. It's never easy and having transportation ensures he can become employed again and be self sufficient. Don't sink your own ship.
You're a good brother/sister even contemplating being so giving of yourself.

+1... sort of.

If he only has 5 payments left on his truck, he should also have a stack of equity. Personally, I'd tell him to sell the truck, buy a good used vehicle for $2K-$4K (there are dozens right now) and use the rest of the equity to pay back his debt.

I'd also run to B&N and buy two copies of the book "Total Money Makeover" by Dave Ramsey. Give one copy to him, and read the other copy yourself. There is a great section on bailing out relatives. Another book I read called it "Outpatient Economic Welfare", but I can't remember which one that was.

I'd help him w/ food/power, if absolutley necessary and I was in a position to do it. But, I'd want him to write me a full financial plan first and I'd literally take him grocery shopping and pay the power bill myself. No Starbucks!

Lastly, if you're thinking of financing any help you give him rather than just giving him cash to help with necessities, you might not be in the position to help him. It's a rough call, good luck!

-SM

Re: Need advice with my brother's situation

redwalker2929 — Fri, 03 Feb 2012 00:09:03 GMT

I agree with many other in regard to helping him pay off the car. With multiple late payments ( 60+) days?? and collections on his record, I feel that his credit is already screwed.

Re: Need advice with my brother's situation

Anonymous — Fri, 03 Feb 2012 00:46:24 GMT

Well of course just my opinion, but, if i were you i would take care of the car since it is close to being paid off. They will take it and that would just mean deeper holes then now.

I woould under no circumstances touch any of the credit card or other debt. They cant put him in prison for it, and the worst they could do is maybe try to get a judgement and get at non- exsistant wages, and even that is doubtful.

He has had ample opportunity to learn and putting yourself in credit limbo will not help either of you. There comes a time when you have to learn that spending money you dont have has a whole big lot of downside too it.

Sounds like you have applied all those things in your life that he needs to learn.

Good luck to you both, but stick to your own interests when it comes to those credit cards of his.

Re: Need advice with my brother's situation

Booner72 — Fri, 03 Feb 2012 01:56:34 GMT

I think you are enabling him to continue bad fiscal responsibility. He knows you will bail him out, so he doesn't give a crap and doesn't try, or care.

I wouldn't think about going 50% utilization to pay off his dumb debt.

It sounds like you love your brother very much. I love mine, too. My bro is a total mess and I am letting him use my carecredit to go to the dentist. He did this before, but paid me every month.

I've had to go to Alanon meetings to deal with my codependency with my brother - and I had to learn to just let him make is own mistakes - Luckily he went to rehab and things are a ton better. So I feel your pain. It's the guilt that drives us. We shouldn't feel guilty, but we do.

Re: Need advice with my brother's situation

Anonymous — Fri, 03 Feb 2012 02:30:00 GMT

i will help him with his truck payments only!!! because his your brother and we all need love and help from our family member!!!

Re: Need advice with my brother's situation

Anonymous — Fri, 03 Feb 2012 05:43:17 GMT

First thank you all for the feedback and advice....

@ visorboy1974 I believe he had good intentions to pay it off before the end of the promotion but he hasn't made much for the past 6 months or so due to the company's truck breaking down or getting short driving trips. Regarding his car it's not worth much and there is only about $2k left to pay off so there's no point in trying to add $2k at once to my credit card.

@ LS2982 I agree tough love should be in order, I guess I just have a soft spot for certain members of my family. He is a good brother but not the brighest when it comes to managing money. Before he dug himself in this financial hole he would spend money right and left. He would give money to my parents and buy stuff for family members on credit. I have told him on several occassions that he should be saving money for tough times like these.

@ dookdig He is currently an AU on one of my Amex and just added him as an AU to my new Amex but he doesn't have the cards. I'm concerned about keeping him as an AU if he defaults on his credit cards and Amex F/R me because of his credit.

@ smc733 I agree with you on him needing to learn to be responsible with credit but foremost learn to save up money for tough times.

@ boomhower I am helping him out with the car payments and I agree with him working out the credit cards issue later. My mom has been making some of the minimum payments and I helped him out with making a minimum payment on the Best Buy card which is how I found out about the deferred interest hitting soon.

@ luvsandyshores I am definitely helping him out with the car payments and he drives an 18 wheeler cross country. He says Jan/Feb are the slowest months of the year so odds are against him right now. I haven't gotten a chance to ask if he can apply for unemployment benefits for now.

@ nwokcguy regarding your suggestion I think it's out of the question, for one he already owes me about $7k plus he is currently on the west coast while I am on the east coast.

@ blklnamru you are right he may get used to me bailing him out since I have in the past....it was my idea to do the balance transfer but I don't want to do it now since I thought about it more clearly and the position I would put myself by doing so.

@ improvingmycredit I am definitely helping him out with the car payments and more than likely pay it off in the next couple of months by charging the payments to my credit card until he gets back on his feet. I come from a big family and have always helped family members financially.

@ soulmaster there is no equity in the SUV, paying it off and selling it won't do any good for him....he practically lives out of it right now. Regarding the books I doubt he would read them.

@ redwalker2929 yea his credit is poor right now...he has the walmart card and fico score is 598

@ chris123nTx yea definitely wouldn't let him default on his car loan since it's almost paid off and thank you

@ booner72 yea I feel bad about my brother's situation and want to help but I don't want to put myself in a tougher spot financially or take a chance of hurting my credit that I have worked hard to maintain

@ julio87 definitely helping him with the car payments...I was just needing some advice on what to do with his credit cad debt

After reading all the replies I have come to the conclusion that he should not worry about letting the credit cards default...he can always settle with them before they write off the cards and hopefully delete the lates with the settlement.

Re: Need advice with my brother's situation

RyVision — Fri, 03 Feb 2012 07:23:08 GMT

Fusion;

I couldn't let my brother default either if I were in your position. The thing I would consider would be making his MINIMUM payments for a month or 2 (verses paying off the SUV right away) until he got a job. He might have to deal with the 900$ deferred interest but that's kind of his fee for letting it go (you can't be expected to jump in and pay it ahead to avoid the interest). You probably added him as an AU because you cared about his credit improving. The $900 (lack of planning fee) and warning from you (as well as the situation, with the 900 being like a bought lesson) might be enough get him to throw his money at paying things off instead of elsewhere.

A good truck driver can almost always find a decent paying job, they just sometimes don't seem to always have a lot of common sense. He's lucky he has a brother willing to help him figure that part out (I've seen a lot of truck drivers that don't know how to handle money, I think part of it is stress from the job). I also know they're paid fairly well if they have a good record in the biz and experience. (I am guessing he has a CDL).

You might also want to gently remind him he can always ask you about credit or a major purchase idea being you've done the research into credit and might be able to give some advice. Unless you have the means to cover his current debt without it affecting you (and few people can do that), you're either going to have to be a bit of a teacher for him about credit or he'll keep making the same mistakes.

My guess is right now he's angry at himself over the situation and hates asking his little brother for any help, yet again. So you get to be the calm voice of reason explaining HE can fix it if he uses some of the information you've researched and learned, it just takes time and focus.