What should my parents pay or not pay?

[skives]

So I had a thread about co-signing my parents mortgage but I talked them out of refinancing.

They will most likely be filling chapter 7 bankruptcy.

What I’d like to know is they have some doctor bills that range from $25 to a few hundred dollars. My dad also has an Apple Watch being financed through att and on his plan and a interest free type of loan through Huntington bank. The Watch and loan total about $582.

Chase bank is setting up escrow on his current mortgage but they had to pay back property taxes for him and my dad is afraid in order to pay they back his escrow will be twice as much as he figured for at least a year.

attached is his budget. The mortgage part is correct with escrow being doubled.

should the pay those doctor bills off or let them going to the bankruptcy and should he pay the loan and Apple Watch off? Should they be saving all the money they can incase the escrow is double what he thought? He has already agreed to cancel his DIRECTV.

[kork13]

It sounds like the double-escrow is a done deal, to cover the back taxes. Assume that's what will happen, unless you can talk to the bank & convince them to stretch the escrow repayment over 2-3 years vs. 1yr.

My general understanding with bankruptcy is that if there's a loan against any physical thing (car, boat, house, Apple Watch, etc.), you need to either give up the thing, or retain the debt ("reaffirm" is the BK term I think) & eventually pay it off. Me, I'd tell him to let the fancy watch go. Between the payoff & extra line of service, it'll probably cut their (high for just 2-3 people!) cell phone bill by at least 30%.

For the doctor bills... Either he negotiates a quick settlement with the doc's office, or that get put into the BK (good motivation for the office to negotiate -- either get something, or nothing).

Regardless of all the rest, they need to save up as much cash as they can, as quickly as they can. They'll need to pay the court & attorney fees for the BK, have some cash on hand up potentially negotiate with whatever debts they intend to reaffirm, and most importantly, build up a sizeable cushion so they don't do this to themselves for a third time in the future... Other side of that coin: by enforcing a savings plan, they'll be learning to live below their means.

Have they cut up all of their credit cards? If recommend that as well -- they clearly have a hard time being responsible with that ready access to debt.

[Fishindude77]

I'll say it again ..... Perfect scenario to work the Dave Ramsey plan.

[kork13]

I'll say it again ..... Perfect scenario to work the Dave Ramsey plan.

Seriously.... They really are a perfect fit for it. That's one of those times that I'd offer to buy the course for them (something like $150 for 1 year of access, or something in that range), and set them up with it. Even go to the classes with them if that's what gets them there & participating.

[disneysteve]

They're behind on their taxes and buried in credit card debt but financing an Apple watch and leasing a high end vehicle all while contemplating bankruptcy.

Yeah, Dave Ramsey for sure.

If they file bankruptcy again (I believe you mentioned that they've done it before), in 3-5 years max they will be back in debt and no better off than they are today. They need to cure the disease, not just treat the symptoms.

[skives]

I understand where you guys are coming from and I’ve been very hard on my dad for this because it was all him. My mom knew nothing about this. There’s a lot more that goes into this than everyone here knows and right now I don’t have the time to explain it.

I told my dad this morning he should only pay bills that income food or a roof over his head.

[bjl584]

I understand where you guys are coming from and I’ve been very hard on my dad for this because it was all him. My mom knew nothing about this. There’s a lot more that goes into this than everyone here knows and right now I don’t have the time to explain it.

I told my dad this morning he should only pay bills that income food or a roof over his head.

I agree.

Do what they have to do to keep fed and a roof over their heads.
Put everything else on hold until you have time to come up with a plan that works for everyone

[scfr]

Let mom handle everything financial from here on out. You can help her. Dad is 100% hands off all financial decisions going forward. You keep mentioning your dad's budget, and his mortgage, and what you're talking to him about. Yet mom knows nothing about what dad is doing, and dad has admitted he's messed up. What they are doing isn't working. Mom needs to be in charge!

[Petunia 100]

Why has Mom not been involved in her own finances up to this point? Is she willing to become involved?

[myrdale]

First I would get the taxes caught up, at least to the point I don't have to worry about loosing the house.

Second I would pay the debts smallest to largest. If they have a $25 doctor bill go pay it!! Its one thing if they have truly been struggling for five years. It's a whole other thing to just let all these little bills pile up if not. I've got a hard time accepting excuses for people not paying off bills that are <$200. There is something they can cut to pay these off.

Lastly they both need to be on the same page about the household finances.

[LivingAlmostLarge]

Can they get another job to pay off the taxes faster? Even something simple like some babysitting, newspaper delivery or reselling.

[skives]

So I have a question whether I should have a talk with my parents about their money or just leave it alone? They filed chapter 13. They’re on a payment plan for three years. I believe they will also filing bankruptcy on something in my moms name this year.

My thought is the only way they can be safe money wise is to sell their house and buy a new one with cash. Then they can live off their $5,500 a month SS and pension. The house is worth $472k to $631k according to Zillow and they owe about $200k. They are 74 and 78.

I just don’t know how selling a house during bankruptcy works.

What do you guys think? Should I bring it up or let them do what they want?

[disneysteve]

So I have a question whether I should have a talk with my parents about their money or just leave it alone? They filed chapter 13. They’re on a payment plan for three years. I believe they will also filing bankruptcy on something in my moms name this year.

My thought is the only way they can be safe money wise is to sell their house and buy a new one with cash. Then they can live off their $5,500 a month SS and pension. The house is worth $472k to $631k according to Zillow and they owe about $200k. They are 74 and 78.

I just don’t know how selling a house during bankruptcy works.

What do you guys think? Should I bring it up or let them do what they want?

Unless they specifically come to you asking for help, I would stay out of it. You can't help them until they are ready to be helped. You can't make them do the right thing. It's awful to watch people destroy themselves, but it's their lives and their decisions to make unfortunately.

[bjl584]

So I have a question whether I should have a talk with my parents about their money or just leave it alone? They filed chapter 13. They’re on a payment plan for three years. I believe they will also filing bankruptcy on something in my moms name this year.

My thought is the only way they can be safe money wise is to sell their house and buy a new one with cash. Then they can live off their $5,500 a month SS and pension. The house is worth $472k to $631k according to Zillow and they owe about $200k. They are 74 and 78.

I just don’t know how selling a house during bankruptcy works.

What do you guys think? Should I bring it up or let them do what they want?

You can suggest it for sure, but not sure how receptive they will be.
I don't know how selling a house during bankruptcy works either.
They might need an attorney if they want to go down that road.

[myrdale]

So I have a question whether I should have a talk with my parents about their money or just leave it alone?........

What do you guys think? Should I bring it up or let them do what they want?

You can help them develop a plan. They have to have the want and discipline to work it. When this thread was started six months ago, I thought you were talking to them about these things then. Given that they filled bankruptcy it doesn't sound like they want to do the heavy lifting it's going to take.

Good luck.