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Need Advice for Helping Family

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Anonymous
Not applicable

Need Advice for Helping Family

Background:
First off, I want to say almost four years ago I came onto this forum to ask for help with credit cards and was blown away at the response I got. I've been very fortunate in that time to get my loan situation from four accounts down to one (car, on track to finish in a year), gained a lot of breathing room with CL, balances continued to be PIF, and my score is great. I have 3k rotating in checking, 5k in savings, 5k in HSA, and some money in my retirement accounts. So sincerely, thank you to this community. 

Today, I'm hopping on to ask for help on behalf of the family (2 parents, 2 siblings, I'm middle child). The short of it is that my parents were impacted by covid and no longer have jobs. I was told by older sibling, who checks in on their finances, today that they have 10k in CC debt and are getting charged about $300 in interest every month. These past few years I've been trying to distance myself from my family more and more so that I could start my own life, but with the pandemic and them needing a place to live, I decided to move states to where they are and rent an apartment so that my parents and younger sibling could stay with me. Now my older sibling is asking for help with this and I'm just at a loss. I don't think it was near this bad before COVID, but they have had issues with money for as long as I could remember, and I actually "loaned" (Parents said it would be a loan, but I mentally accepted that I wouldn't see that money again) them $3.5k a month before the pandemic hit to pay off a loan. I wanted to finish paying off my car and start saving for my own house, but have accepted that wouldn't be a priority anymore. Older sibling said they can't touch their credit until business closes off in 6 months and is asking me to sign up for a no-interest transfer CC on parent's behalf. I really don't want to have my personal situation intertwined with my parent's more and more, but also can't just stand by and let the family fall. Are there any alternatives the community would suggest? 

I don't have all the details, but would greatly appreciate any help or direction that you guys can provide. Even "we absolutely need X info to give meaningful advice" or a "you're being selfish, just do Y" would be helpful.

Stats:
- Parents have $10k in Chase CC debt, about $300 in interest / mo, bad credit history, currently no income because of the pandemic
- Older sibling said they tried to apply for 2 CCs for parents (presumably to try to get a no interest card), but they were declined
- I have a money each month ($500) I was starting to save towards a house that I can shift to help pay down the CC
- $5k in my personal savings (This is my emergency fund that everyone has suggested. I built this for the worst of emergencies, but maybe this is one of those situations ?)

Considerations:
- We're trying to stop the bleeding. The interest is just way too much to allow it to continue accumulating
- I want to help, but I also want to avoid intertwining our financial situations anymore than necessary

Questions:
- How would the community suggest I approach this?
- Are there any other programs or avenues regarding financial hardship during the pandemic that I should look into for my parents? I've looked a bit and saw that Chase has a thing for COVID, but it's essentially just a payment deferral and that interest would continue accumulating. 
- Are consolidation loans and the like possible without an income? I don't know much about them.
- Would you recommend that I put my savings towards this?

I know this isn't even close to being the worst situation out there so I hope everyone is doing okay and getting by. It's been quite the year.

Message 1 of 9
8 REPLIES 8
Remedios
Credit Mentor

Re: Need Advice for Helping Family

@Anonymous  no one marked your post as spam. When new members make as many edits as you did, it can trigger spam filter. 

Message 2 of 9
Anonymous
Not applicable

Re: Need Advice for Helping Family

Oh gotcha, sorry about that!

Message 3 of 9
Remedios
Credit Mentor

Re: Need Advice for Helping Family

Do not use your savings. 

This unfortunate situation shows you what happens when there are little to no savings.

Also, do not put this debt in your name via applications unless you are resigned to paying it all off. 

Personal loan without verifiable income and employment is going to be a tall order. 

Those Chase cards, how are they split between your parents? Is one AU on both cards, or do they each have one? 

That requires a bit of clarification. 

 

In WA state, BECU is currently offering two types of low(ish) apr personal loan for those affected, so if they happen to live in WA, they can try that route. 

They can apply from out of state, but that's frequently marred by verification problems.

 

Do your parents have other cards, do they have negative info on their reports from before pandemic? 

If they do, there might be an existing offer to do balance transfer. 

New accounts for them probably aren't possible due to loss of employment and income, so it's worth looking if there are any offers on other cards. 

 

 

 

Message 4 of 9
chiefone4u
Established Contributor

Re: Need Advice for Helping Family

Times are tough.

 

Based on the information shared, this might be the perfect time to file bankruptcy? No income, bad credit and debt that has massive interest charges.

 

As cold hearted as it may seem, I wouldn't use my savings or take on debt to cover your family's debt.

 

This pandemic has already caused your family financial hardships that will take year's to recover from; it doesn't make much since to sink your own ship.

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Message 5 of 9
sxa001
Valued Contributor

Re: Need Advice for Helping Family

First off I am very sorry to hear that your family is in this situation.  There are so many families impacted by COVID in a variety of ways. 

It sounds like your parents and sister are already living with you and that you have taken steps to make sure that they have a place to live.  I agree with the others I would be very careful about moving debt into your name or taking on their debt using your savings.  You have gotten yourself in a better position and taking on the debt will set you back. 

Bankruptcy is an option.  I suppose a lot depends on the age of your parents and the type of work they were doing and are capable of doing.  How long do they plan to live with you? In reality if they were able to start working again even a low wage gig might help them get out of debt in a year if they live with you over the next year if that is an option. 

It really isn't the best situation to be in, but I would think saving for the house is important, especially if you are planning to have your parents live with you long term as you will likely want to have a place with a bit more space for them.  



Message 6 of 9
tacpoly
Established Contributor

Re: Need Advice for Helping Family

Definitely do not deplete your savings and do not put the debt in your name. Take the cc from your parents -- they shouldn't be spending money. Then consider paying $400/month towards your parents' cc debt and save $100 towards your house fund. When your older sibling is able to contribute in 6 months, you can reduce your part.  See if your parents can get an interest rate reduction from Chase.

Message 7 of 9
sccredit
Valued Contributor

Re: Need Advice for Helping Family

Have your parents call Chase and explain they have been affected by COVID. Most companies have hardship programs. 

Message 8 of 9
OmarR
Established Contributor

Re: Need Advice for Helping Family


@Anonymous wrote:

Older sibling is asking me to sign up for a no-interest transfer CC on parent's behalf.


 

ABSOLUTELY DO NOT DO THIS!

 

You are correct in not wanting to interwine your family's financial problems with your own financial status. That is the worse thing that you can do and it is NOT at all "being selfish". At first glance, it can seem and sound like self-preservation, but here is a semi-alternate view:

 

Right now, you are your parents anchor, or rather, their "rock". I will be the nay-sayer and say that I also disagree with you throwing ANY money at their credit card balances. Do NOT do this. You have done the right thing by giving them shelter, running water, heat, and possibly even filling the fridge with groceries so that everyone can eat. You need to maintain that cash-flow, stock up on it, and keep it in reserve. As of right now, it looks like you will be supporting 3 people for a while.

 

I get the logic and the want to "stop the bleed" on the interest, but you have done more than your fair share and I, sir/ma'am, am commending you for it. Your parents are adults and they need to own this part of their lives. 

 

Is there any reason why they cannot work? DoorDash, Uber, Lyft, Instacart, grocery store, etc?

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Message 9 of 9
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