Help what to do with parents debt?

[sweetbee]

My parents have long been irresponsible with their credit cards especially my dad who has racked up almost 30k in debt. My mom has about maybe 15k in credit card debt but she is retired right now and my dad also close to retirement. They are very irresponsible with their finances. My dad is considering calling one of those debt companies that say they will settle and they get paid a fee for negotiating with creditors. I think that is a scam. What or how should I get started in helping my parents with their credit card debt? They are racking hundreds in interest fees each month. Dad considered bankruptcy but he can't afford it. They have Citibank, Discover, Macy's, AMEX, BOA credit cards. I've never been in this position and not sure where to start. I thought about calling each credit card and try to negotiate down the interest or principal but unsure how to do it. Mom has a fico score of 778. Dad I am not sure. They also need help with required roof repair and not sure how to help them with the 6k they need. To add, they can't post on here because their English is limited. Help please!

[Anonymous]

In my area we have a social services program that does LIHEAP. I dont know all the details or requirements for qualification. It's a program to help poor people do energy related fixes to their homes as far as I know. So, a roof would be in that program. Call around to your local social services places and see if that is offered in your area. It should be because I think it's a federal grant funded program.

[Anonymous]

I'll also say... dont rule out BK due to funds necessarily. I know my attorney only required so much down and then the rest could be paid prior to discharge. Even the filing fee could be paid over time. So, if they decided to file they'd stop paying those debts and free up money to pay on their bankruptcy. Just an idea. I'd talk to an attorney first.

[fishbjc]

Bankruptcy may be their best option.  They will have to stop paying on their cards and put that $ toward the fees.  Maybe you can help them with a proper budget?  TakeChargeAmerica is who I used once for debt consolidation.  It really was very helpful to me.  

[AZEsq]

Your best option to help them is to help them fund the bankruptcy. This close to retirement, the best thing they can do is make sure they are able to support themselves IN retirement. If they can't, that will fall to you. If they are stubborn and only told you because the creditors are calling, I'd tell them the truth, gently, but be prepared to let them do their own thing.

BK is neither easy nor enjoyable. Going through that process will help them realize they need to do better. You are correct that most debt consolidation agencies are scams and charge $ for something you could do yourself. But, the most pressing thing to me was their respective ages and debt levels; unless they are making 6 figures and have tons in retirement accounts, they should qualify easily for a Chapter 7. If an attorney tries to push a Chapter 13, find a new one. This truly is the best option for them.

They also need a budget. If their English is good enough to read and understand, they can try Dave Ramsey or You Need a Budget, but basically, they have to want to do better or they'll end up here again.

[IOBA]

There are two parts I went through with my folks.

Part 1 - they sunk, I had helped them out for years financially (even though income was SIGNIFICANTLY higher than mine), even loaned them a credit card.  Long story short, I came to my senses and stopped bailing thier butts out.  I did a budget for them.  I offered them the words to use to negotiate with creditors.  And I let them fall flat on their face.

Creditors shut down their credit cards.  Lines of credit were closed by the creditors.  Folks were forced to go to cash only.  They still asked for money.  I said no.

They FINALLY got their act together, after being turned down repeatedly, year after year, for a house refinance despite the home values in their area skyrocketing.  They refinanced their house, pulled out cash, and paid off a lot of debts.  Well, the lender made it conditional for the refi that the debt was paid off and the lender paid the debts off.  They were down to just a mortgage to pay.

Part 2 - my dad died.  The only debt they had was the mortgage.  They saved nothing.  Within a week of his death, the bank account was negative and direct debit payments denied.  I was forced to pick up the tab for gas and for food and for peronal hygiene items.  There were some expenses to be paid that cost thousands and thousands dollars.  I got stuck paying those to.

I did a new budget for my mom.  When her money comes in, I pay her rent, her set loan payment (to me), and give her a $25 a month allowance.  In her budget, there is money set aside to pay monthly medical bills and her cell phone bill.  Any leftover money is applied to her debt.

She HATES this.  But the agreement was she would pay me back, in full, BEFORE she can think about touching her money.  The allowance is for fun money - eating out, going to the movies, gifting - whatever she wants.  I cover the rest of the expenses with her income.

Once the debt is paid off in full, the next step will be to save for her funeral expenses.  She hates me for that too, but I don't want the financial burden when she dies.

Can you let your parents fall on their butts?

Can you work a budget and give them an allowance?  Would they stick to it?

[IOBA]

Why do you feel obligated to bail them out?

What steps are your parents taking to be serious about getting out of debt?

Have you seen any changes in behavior?  My mom is into instant gratification.  She spends the allowance as soon as she gets it.  I have done the exercises with her of getting her to make a draft budget, do a three month forecast, and track her expenses.  It's been months.  She still tries to con me into giving her her allowance early.   Nope.  

How much do you want to invest into THEIR finances?  How much energy?  How much time?  How much money?