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Message
Helping a family member with debt issues.
Posted on 8/17/18 at 12:00 pm
Posted on 8/17/18 at 12:00 pm
Advice requested - TIA
1. I don't expect this money back - it will be considered a gift.
2. I don't have time to handle this myself and willing to pay for help.
3. Seeking a debt professional to contact numerous creditors to resolve debts of +/- $50K
4. Finally - this is a solid person that wrecked his financial life taking care of 2 parents that have both died within the last 3 years. Sometimes bad things happen to good people, which is the situation here.
1. I don't expect this money back - it will be considered a gift.
2. I don't have time to handle this myself and willing to pay for help.
3. Seeking a debt professional to contact numerous creditors to resolve debts of +/- $50K
4. Finally - this is a solid person that wrecked his financial life taking care of 2 parents that have both died within the last 3 years. Sometimes bad things happen to good people, which is the situation here.
7
Posted on 8/17/18 at 12:18 pm to AncientTiger
Sounds like the credit is already wrecked, have you already eliminated bankruptcy as an option?
Posted on 8/17/18 at 12:43 pm to deeprig9
I struggle with bankruptcy, I realize its out there for reasons such as these. My family believes in paying our bills, I guess that is the struggle for me.
Probably not bad advise, allow them to file bankruptcy and give the cash as a gift to start a new..... thanks
Probably not bad advise, allow them to file bankruptcy and give the cash as a gift to start a new..... thanks
Posted on 8/17/18 at 12:50 pm to AncientTiger
quote:
4. Finally - this is a solid person that wrecked his financial life taking care of 2 parents that have both died within the last 3 years. Sometimes bad things happen to good people, which is the situation here.
I'm not saying he isn't a good person, but how old is this person and what kind of money did they spend to hit $50k in debt? Were they already $25 k in debt or more and this just put them over the top?
My point is there are plenty of good people that are bad with money. If this person is 50+ and $50k wrecked their finances then I'd be extremely leery here. That person is not good with money most likely.
I'd strongly consider paying off something specific for them. Knock that out as a gift. If they have 10 different bills I wouldn't just give them money I mean, I'd pay off 2 of them as a gift. Call it a day.
Someone that's over the age of 30 or so needs to figure out their financials on their own for the most part. Its hard to help someone out unless they are truly asking for help.
Posted on 8/17/18 at 1:00 pm to AncientTiger
Have you seen the actual financials? I appreciate the idea that family member was a devoted caregiver, but that’s a pile of debt. Unless you understand how it was acquired, you’re not in a position to help prevent the cycle from recurring. Did neither of the deceased have any assets that can be used to help out? I ask, bc if the caregiver inherited the family home, I’d advise selling and using the proceeds to settle up and start fresh. If money management is a long term problem for the caregiver, he/she might be better off in a small apartment rather than in a house with the inevitable large maintenance costs (roof, AC, flood insurance, etc)
Too many people hang onto real estate that has the potential to bankrupt them. Yes, rent is “wasted money”, but it is also completely predictable, easy to budget, and won’t saddle the resident with a surprise $10k AC replacement on the hottest week in August.
Too many people hang onto real estate that has the potential to bankrupt them. Yes, rent is “wasted money”, but it is also completely predictable, easy to budget, and won’t saddle the resident with a surprise $10k AC replacement on the hottest week in August.
Posted on 8/17/18 at 1:00 pm to baldona
quote:
I'm not saying he isn't a good person, but how old is this person and what kind of money did they spend to hit $50k in debt? Were they already $25 k in debt or more and this just put them over the top? My point is there are plenty of good people that are bad with money. If this person is 50+ and $50k wrecked their finances then I'd be extremely leery here. That person is not good with money most likely. I'd strongly consider paying off something specific for them. Knock that out as a gift. If they have 10 different bills I wouldn't just give them money I mean, I'd pay off 2 of them as a gift. Call it a day. Someone that's over the age of 30 or so needs to figure out their financials on their own for the most part. Its hard to help someone out unless they are truly asking for help.
Thank you for taking the time to respond. Family & their sacrifice which you are not aware, are more important than money. Their struggles are $50K if their struggles are $100K I would correct that too- I make money, I’m healthy & I’m able to help.
Posted on 8/17/18 at 1:17 pm to hungryone
quote:
Have you seen the actual financials? I appreciate the idea that family member was a devoted caregiver, but that’s a pile of debt. Unless you understand how it was acquired, you’re not in a position to help prevent the cycle from recurring. Did neither of the deceased have any assets that can be used to help out? I ask, bc if the caregiver inherited the family home, I’d advise selling and using the proceeds to settle up and start fresh. If money management is a long term problem for the caregiver, he/she might be better off in a small apartment rather than in a house with the inevitable large maintenance costs (roof, AC, flood insurance, etc) Too many people hang onto real estate that has the potential to bankrupt them. Yes, rent is “wasted money”, but it is also completely predictable, easy to budget, and won’t saddle the resident with a surprise $10k AC replacement on the hottest week in August.
Thank you for taking the time to respond. This is therapy for me. We are discussing elderly that lived into their ‘90’s, which essentially, with care needs requirements outlived their monies. This family member paid out of pocket, cashed in retirement funds to care for parents. We are talking about love over money - I may need to work a extra year or so to help, but you only have family once.
Posted on 8/17/18 at 1:19 pm to AncientTiger
What he is asking is how were their finances prior to the "care giving event" if they had bad financial issues prior and the event was the straw that broke the camels back then i would be reluctant to just give money to "fix" the issue.
If there is an underlying issue present, you will be doing nothing more then enabling them, and they will be in the same situation down the road, just triggered by another life changing event"
again, we dont know the specifics of the family friend, but before throwing money at an issue, make sure that money will fix the issue, and not jut put a temp patch on it.
If there is an underlying issue present, you will be doing nothing more then enabling them, and they will be in the same situation down the road, just triggered by another life changing event"
again, we dont know the specifics of the family friend, but before throwing money at an issue, make sure that money will fix the issue, and not jut put a temp patch on it.
Posted on 8/17/18 at 1:19 pm to AncientTiger
I don't know enough about your family member's situation such as income, assets, other liabilities, etc., so any advice I give would likely be wrong so I'll pass on giving you advice.
But I do want to point out if you give your family member $50,000 you may be on the hook for paying gift taxes. The annual amount anyone can gift to another individual is $14,000 without paying gift taxes.
You can stretch that a bit if you're married. Both you and your spouse can give $14,000, total $28,000, without a gift tax liability.
If your relative is married then you and your spouse can each give $14,000 to your relative and his spouse. That means you can give a total of $56,000 without having to pay gift taxes ($14,000 X 4).
How the IRS would find out you gifted more than the annual exclusion amount? I have no idea.
But just be aware of possible gift taxes and don't let yourself get jammed up with the IRS just because you're being generous and helping a relative.
But I do want to point out if you give your family member $50,000 you may be on the hook for paying gift taxes. The annual amount anyone can gift to another individual is $14,000 without paying gift taxes.
You can stretch that a bit if you're married. Both you and your spouse can give $14,000, total $28,000, without a gift tax liability.
If your relative is married then you and your spouse can each give $14,000 to your relative and his spouse. That means you can give a total of $56,000 without having to pay gift taxes ($14,000 X 4).
How the IRS would find out you gifted more than the annual exclusion amount? I have no idea.
But just be aware of possible gift taxes and don't let yourself get jammed up with the IRS just because you're being generous and helping a relative.
This post was edited on 8/17/18 at 1:27 pm
Posted on 8/17/18 at 1:27 pm to AncientTiger
Well good on ya for helping Cousin Ed or Nancy. As I said before, how best to help depends on the debt. Mortgage past due, car loans, credit cards, ? What is owed and to whom....
Second part of this help is Cousin Ed’s own retirement planning. You don’t want 20-30years to pass and become Ed’s caregiver who has to dig a debt hole to keep Ed out of the nasty nursing home.
What is Ed’s potential for future income? Is it better for him to declare bankruptcy and then you help by making several annual $15k gifts that he squirrels away for retirement?
Don’t just think about the immediate debt....think longer term.
Second part of this help is Cousin Ed’s own retirement planning. You don’t want 20-30years to pass and become Ed’s caregiver who has to dig a debt hole to keep Ed out of the nasty nursing home.
What is Ed’s potential for future income? Is it better for him to declare bankruptcy and then you help by making several annual $15k gifts that he squirrels away for retirement?
Don’t just think about the immediate debt....think longer term.
Posted on 8/17/18 at 1:34 pm to AncientTiger
quote:
I struggle with bankruptcy, I realize its out there for reasons such as these. My family believes in paying our bills
quote:
Probably not bad advise, allow them to file bankruptcy and give the cash as a gift to start a new
So you are willing to help them get out of debt, but would consider letting them file bankruptcy and then giving them cash after the fact? If you believe in paying your bills, help them get to a position to pay their bills. Regardless of how nobly it was acquired, it was debt that your family member took on with the promise to pay it back. It will take discipline but can absolutely be done.
If bankruptcy and/or settling balances is counter to your beliefs, you can and should provide support in other ways.
Posted on 8/17/18 at 2:21 pm to AncientTiger
quote:
I struggle with bankruptcy, I realize its out there for reasons such as these. My family believes in paying our bills, I guess that is the struggle for me.
I'm with you. Chapter 13 might still be an option though. It allows restructure of all debt, freezes balances and allows the petitioner to make affordable payments for five years.
Chapter 7 is the "walk away and not pay anything back" bankruptcy and it is extremely difficult for a wage earner to qualify for nowadays.
This post was edited on 8/17/18 at 2:23 pm
Posted on 8/17/18 at 5:06 pm to AncientTiger
Thank you everyone! Our board today has opened opportunities & options for me. To be honest, I have been in a rut not knowing what to do.
I’m still looking for a debt professional without paying $200 hr attorney fees.....
I’m still looking for a debt professional without paying $200 hr attorney fees.....
Posted on 8/17/18 at 5:34 pm to LSURussian
quote:
But just be aware of possible gift taxes and don't let yourself get jammed up with the IRS just because you're being generous and helping a relative.
Can't you use more than the annual amount but it will just count against your lifetime exclusion?
Posted on 8/18/18 at 11:51 am to slackster
quote:I've never heard that idea before so I'll have to let someone else answer it.
Can't you use more than the annual amount but it will just count against your lifetime exclusion?
Posted on 8/18/18 at 12:08 pm to LSURussian
The annual exclusion is now $15,000.
The lifetime exemption is available, but it has estate tax ramifications.
OP will need to consult the advice of a CPA.
The lifetime exemption is available, but it has estate tax ramifications.
OP will need to consult the advice of a CPA.
Posted on 8/18/18 at 1:36 pm to AncientTiger
Where was the rest of the family to give support when he was caring for his parents and wrecking his credit?
Posted on 8/18/18 at 4:46 pm to southernelite
You get my e-mail
Posted on 8/18/18 at 6:55 pm to tduecen
No
Did you get mine?
Did you get mine?
This post was edited on 8/18/18 at 6:56 pm
Posted on 8/19/18 at 9:30 pm to southernelite
Not enough specifics provided for accurate advice, to be honest...
This post was edited on 8/19/18 at 9:32 pm
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