Mother In Law in debt

January 27, 2006 8:21 PM

Trouble with the in-laws: How can I convince my wife that we should not risk bankrupting ourselves to pay off her mother's credit card debt? What should we do to help them get out without endangering our own financial situation?

My mother-in law has managed to amass a staggering amount of credit card debt on a limited income. She owes $20,000 and is living on Social Security. My father in law, while not directly responsible for her expenditures, is probably liable for some of the debt. (Wisconsin, if law varies by state). Both of them are disabled and cannot work. My mother in law recently checking into the hospital with a blood infection. We are considering selling some of her purchases, but none of them have a particularly high resale value. The effort involved in selling them would not be a worthwhile return. We plan to have a thrift sale, but the weather here is not conducive at the moment.

What can we do to help the inlaws consolidate and payoff this debt? How can we avoid financial repsonsibility and entanglement with their debt? Is my father in law liable for debts he knew nothing about and did not co-sign on? If my mother in law succumbs to this blood infection or someother illness, what happens to this debt? If she recovers, how can we keep her from continuing to spend what she does not have? Can my father in law "disown" her and absolve himself of financial responsibility?

posted by anonymous to work & money (6 comments total)

Talk to a bankruptcy lawyer about them filing Chapter 7 bankruptcy. IANAL, but your f-in-l is probably equally responsible for the debts. If their only asset is their home, it should be fairly painless. After the smoke clears, further abuse of credit won't be a problem -- neither will have any.
posted by words1 at 8:55 PM on January 27, 2006

As an alternative to filing for bankruptcy (which may be good if you don't want them to have any credit) - do they own their own home? Depending on their age, they may be eligible for a reverse mortgage - that would give them a steady income so they could pay down the debt. The older they are and the more valuable the house, the larger the payments.

If she is just reckless with money because she always has been then your FIL may just be stuck. If she is being reckless with money because of the onset of mental capacity issues with age/health problems, then you may be able to petition the courts for guardianship. Either way, you really should talk to a lawyer that specializes in elder law - this situation is unfortunately not uncommon. They can help you decide about bankruptcy vs. other options.
posted by gatorae at 9:31 PM on January 27, 2006

You might want to check with a Wisconsin Aging and disability resource center.
posted by WestCoaster at 10:24 PM on January 27, 2006

I would think filing for backruptcy is the best way to go since you don't want her to amass more debt.
posted by eustacescrubb at 7:39 AM on January 28, 2006

If you gave her or him money to pay part of the debt, that wouldn't result in your risking bankrupcy or becoming responsible for the debt. You could legally stop giving them money any time you want.

That wouldn't deal with the problem of how she spends when she gets out of the hospital, of course. Your father-in-law is legally responsible for the debt, as well, whether she recovers or not. Presuming they're married.

It's unclear from the question: Does she have debt because she spends recklessly or because her income is not enough to sustain even a frugal lifestyle?
posted by duck at 9:49 AM on January 28, 2006

There may be non-profit credit counselors in your area. They negotiate with creditors (and sometimes can get interest frozen) and help arrange managable payments. This is a good way to salvage credit and deal with heavy debt.

That said, your mother-in-law's debt may be bad enough that they should declare bankruptcy. I don't know all of the drawbacks to this, other than, of course, they will have a very bad credit rating.

As for future spending, duck's question is a good one. Is this debt from just trying to get by, or from overspending (perhaps compulsive)? If the latter, I would advise your father-in-law to cancel all credit cards in her name, and to make sure she can't use his. Credit cards are necessary to get by, and it's best just not to have them if you are in debt.
posted by jb at 10:41 AM on January 28, 2006