In Laws...runaway debt train
Date: Mon, 03/21/2011 - 08:21
My wife and I got married almost a year ago and we are fortunate to be on sound financial footing. Unfortunately, I was recently approached by my father in law, and his situation is polar opposite.
He confided in me that he has several credit card balances which total approximately $80k. He has refinanced the house several times and is currently $100k under water. Additionally, he has gotten himself mixed up with a company called "Economic Freedom Corp of America" basically a credit card scam company- and he has racked up $40k in debt with them- which is included in his credit card debt above. He has disputed these specific charges to no avail.
To further complicate the matter, my father in law has been clinically diagnosed (years ago) w bi-polar disorder, depression, and a myriad of other mental disorders. He is not capable of managing all of this, and I do not believe he was in his right mind when he made most of the decisions that got him into this mess. My mother in law is completely in the dark on the whole issue.
From an income standpoint- he gets approx $1550/mth disability. My mother in law brings in approx $3,000/mth. They have a house that is worth somewhere in the neighborhood of $200-215 in the current market.
Never being in this situation, I am not sure of how to help. Debt consolidation, bankruptcy, hiring an attorney, etc are ideas I have considered but not sure of the pro's and cons of each. I am also curious whether his mental condition could be a possible defense in this situation. I feel the need to get involved as this will eventually spill over into our finances. Thoughts/advice?
Greetings "SonInLaw", Responding to your statement "Debt conso
Greetings "SonInLaw",
Responding to your statement "Debt consolidation, bankruptcy, hiring an attorney, etc are ideas I have considered".
1. Sounds like a trip to the free meeting at the bk lawyer.
2. If you want to lose your in laws, loan them some money.
It will strain your relationship with them and certainly with your wife.
3. And it certainly sounds like his mental state could be a factor.
Ask the bk lawyer that question.
Please keep us updated as we want to know what is happening.
King "Kash" Jabba Labba
"To further complicate the matter, my father in law has been cli
"To further complicate the matter, my father in law has been clinically diagnosed(years ago) w bi-polar disorder, depression, and a myriad of other mental disorders"
I feel your pain. I have 2 bipolar daughters who cannot handle their financial affairs. I have power of attorney for both of them. The one daughter does NOT have access to money. Her money from a part time job and social services are deposited directly into a checking account to which she has no access. I pay her bills and give her money for her personal things, etc.
I monitor the older daughter's finances. I pay her bills and monitor what she spends, as she has 2 children. I have been slowly straightening out their credit for the past year.
I DO NOT lend them money. If you wish to help your in-laws, you might want to help them handle their finances. First step is definitely a trip to the BK lawyer. If they can get out from under this debt, then they can start out with a clean slate.
Bipolar disorder is an insidious illness that permeates everything. You are to be commended for helping them.
Thank you for your responses. So bankruptcy attorney sounds lik
Thank you for your responses. So bankruptcy attorney sounds like the consensus. Do bankrupcy attorney's always suggest filing Chap 11/Chap7 bankrupcy? Are there scenarios where they simply step in and mediate the consolidation/negotiation, help with the repayment plan, and protect against creditor phone calls, etc?
The sticking point, as I said, is my mother in law. She has an inclination that the finances are not rosy, but has no idea the degree (out of sight/out of mind) as she lets her husband handle. She is due a modest inheritance and has always assumed that would cover any shortfall. My concern is whether her pride would ever allow her to declare bankruptcy.
I don't know much about BK. I suggest getting a free consultatio
I don't know much about BK. I suggest getting a free consultation. As to your mother-in-laws' pride, it's better to go BK before receiving the money; otherwise collectors might be able to get their hands on some or all of the funds. Perhaps this might change her mind.
More Greetings "SonInLaw", Chptr 11 & 7 now have "means" test
More Greetings "SonInLaw",
Chptr 11 & 7 now have "means" tests.
Do a google search on both for the differences.
Chptr 11 is a fractional repayment plan over time.
How much? Depends on the means testing.
Chptr 7 is full discharge of most unsecured debts.
No tax liability on the "forgiven" debt.
But again, I ain't a lawyer and don't even play one on tv.
But please get to a bk lawyer......not a gp and find out your alternatives.
Good luck and please keep us posted.
Regards,
King "Kash" Jabba Labba