MOM $30,000 IN DEBT

Dear Uncle Jim,
 
My mother is going on 55 years old. Her health is starting to fade. She works full time and right now is able to pay her credit card bills.
What happens if she would become disabled and no longer able to work? She is roughly 30k in debt to these companies. She is a widow and has no other income. Am I responsible for her payments?

(Unsigned)

                                                             * * * * * * *

Dear Unsigned,

Fifty-five is not exactly over the hill, nor are most medical problems "cadaverous." But, if mom has neglected her physical health as much as her financial health - time for a sit-down.

First address the medical side. An examination and prognosis is the first step. Then, a regimen best suited for her overall condition - medication, exercise, diet and whatever the medical professionals recommend.

Restoring financial stability has several paths.

Use credit cards solely for debt consolidation, lower interest transfers, and emergencies. Carry only a card or two for emergencies. All other cards must be put out of temptation's way.

Move debt to cards offering "teaser rates." Some cards offer 0% interest for several months on transferred balances. Look for rates under 10% after "teaser" period.

Contact the lenders and ask for a lower rate. If your credit rating is strong you should have little trouble getting a favorable rate below 10%.

The above tactics should not effect your credit rating. After a short period of time your debt will shrink and your credit rating will improve.

If you tell the credit card company that you need a lower rate to avoid bankruptcy, 6% is a very real possibility.

Debt forgiveness (wherein the bank forgives all or part of the debt) is a possibility. Amounts forgiven are considered taxable income.

Bankruptcy is a possibility but is usually neither necessary nor recommended. Consult an attorney before defaulting on payments. Obviously, there are financial and legal considerations.

Unless you are connected to your mother's debt as a cosigner, business partner or other encumbrance, you are very unlikely to have any responsibility for her debt.

Read other inquiries relating to debt post in this department.

Good luck,
Uncle Jim