Q: I have a difficult situation on my hands and I am hoping you can give me your thoughts.
My husband and I just learned that his parents have a large amount of credit card debt. The amount is almost as much as they earn in a year. They are in their 60’s and do not own a home.
They were recently late on a payment and now the interest on their biggest credit card debt has gone up to 30 percent. Each month they pay the minimum payment, plus $10 to $15. They understand that at this rate they will never pay off their debt. I believe they have a life insurance policy that would pay it off after their death.
The biggest problem is that they are unwilling to reduce their spending, and are mainly concerned about making it month-to-month.
I’d like to suggest to them that they talk to Consumer Credit Counseling Services, but I am concerned if they negotiate lower interest rates and a lower payment, they will see it as having more cash each month to spend.
I almost feel that it is best that they are stretched so thin because it leaves no room for additional spending — they literally have no credit available.
However, I’m worried about what will happen when my father-in-law cannot hold a job (my mother-in-law is 70 and does not work). His only retirement money will be from the military and Social Security, and I don’t believe this will be enough to pay their bills, or have money for food and shelter. He plans to work until he dies, but I just don’t see that as being realistic.
Ilyce, I know that there is no easy solution for this, but we are trying to do what is best for his parents. Is it our job to convince them to change their ways? My husband thinks they will always live this way, after all, they have lived this way for over 40 years.
A: Your in-laws need to sit down with someone to figure out what they can do — if anything — about their debt problems. They can keep doing what they’re doing, living paycheck to paycheck until they die — or until something worse happens, like your father-in-law is incapacitated and he and your mother need expensive nursing home care.
If you think your in-laws will never change their ways, then you should just let them spend their way into bankruptcy court. But if you think this spending problem is something relatively new (say, the past 10 years), then you may want to help them understand why they are spending like demons and perhaps a counselor of sorts can help bring this back under control.
Your husband needs to be the point person on this since it’s his parents. If he has siblings, they should sit down with their parents for a family meeting. At this meeting, your husband, his siblings and parents should go over his parents’ income and expenses and take a long, hard look at their debt. They should look at what his retirement income might be, and if they can take social security now — while your father-in-law is working — in order to help pay back some of the debt.
Finally, your brother and his siblings should try to determine if your father-in-law and mother-in-law are able to manage their money properly. Some people never learn how to manage money. It’s possible that they simply can’t keep track of the numbers and need someone to step in to pay their bills and manage what they need to live on each week.
I know that role reversals are difficult issues in families. It’s also hard to sit back and watch loved ones self-destruct. While your husband does owe his parents help, he doesn’t have to watch their finances blow up and then pick up the pieces.
There are more aggressive things he can do, such as forcing his parents to face their own financial mess now — while there is still time to wipe the slate clean.
Please don’t fall into the trap of cleaning up after your in-laws. You must focus on your own family.
Good luck, and please let me know what happens.
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