Helping Parents in Debt. or Not?

ednamekin on 14/08/2019 - 14:24
Last edited 16/08/2019 - 21:45

Getting on the back of this post, as I'm watching something similar happen to my own family:
https://www.ozbargain.com.au/node/476489

Sorry in advance if the information seems all over the place, but I'll do my best.

Question: What are my options on sorting out unemployed / in debt parents?

Situation: Asian background (so there's a cultural tradition of looking after parents). I live with my wife in a house, parents live with me, and so does brother. Mother's a housewife, father unemployed last 3 years. I find out a couple weeks back that the parents have almost nothing to their name, and a whopping $40k in debt spread across a personal loan and 3 credit cards (interest between 12 to 20%). They used to pay me rent, but stopped 1.5 years ago. Brother doesn't pay rent, but he's giving around $500/month to parents to stay on top of their minimum repayments. I've made them cut a few stupid expenses (like a cleaner and Foxtel ugh), and fixed expenses are down to around 500/mo if any rent owed to me is excluded.

I have some savings, but looking at their capacity to repay, anything I give them would not be returned, hell there's 1.5 years of rent to pay first. Also I'm not sure if I am liable for any of their debt as their child, maybe they should just go bankrupt and be managed by a trustee.

Options I have thought of:

  • Purchase their furniture (they own 60% of the house furniture, if I take it off them they can use the funds towards debt, and I also control the furniture)
  • Give them money to get out of debt (lost money, puts myself in worse position)
  • Seek ways to evict them (I've only seen articles on parents evicting their kids, not the other way round)
  • Power of Attorney over all their finances?
  • Set up a formal loan agreement with them where I act as the debt consolidation loan provider (don't know how much this will hold up)
  • Bikies (not a nice one, may damage the house)

Edit: added a poll, removed eviction as that was a stupid thing to even include (and the list isn't exhaustive anyway).

Edit2: Thank you for the poll votes, and detailed commentary and assistance. Have a rough plan going forward, have spoken to brother and he's good with it, now to take on the parents over the weekend.

Poll Options

  • 15
    Purchase their furniture so they can use funds towards debt
  • 27
    Give them money to get out of debt
  • 173
    Get them to declare bankruptcy
  • 5
    Power of Attorney over all their finances
  • 1
    Set up a formal loan agreement with them where I act as the debt consolidation loan provider
  • 25
    Bikies
Financial

Comments

    • ednamekin on 16/08/2019 - 21:42

      Finally here!

  • Peck on 15/08/2019 - 21:01

    Beware of quicksand. Also beware of mercenary Asian parents. Just give parents rent free, and charge bro. rent. Parents need to realise that there are consequences to what they do financially. And so do nothing else!

  • denny_mrl on 15/08/2019 - 22:03

    Hi OP,

    Life is difficult, don't make it worse.
    Take a simple approach.
    Declare them bankrupt and look after them well afterwards.

  • leiiv on 15/08/2019 - 22:25
    -1

    They have sucessfully raised you to where you are now. When did it go wrong along the way?

  • netjock on 15/08/2019 - 23:10

    A lot of advice. Best opinions are:

    1. How did the debts come about, if they were for good reasons like they were too proud to ask you for money or took it on because of you then lump it.
    2. Are they really that irresponsible with spending, is the cleaner to help you out and Foxtel for you too considering they are living in your house.
    3. If it isn't the above two how can you control the flow of credit, pay it off (interest is dead money) stop the flow of credit.
    4. Unless absolutely required don't do the bankruptcy, eviction or taking control of the furniture. That is just poisoning the relationship.

    Good luck.

  • harley on 16/08/2019 - 00:11

    Not sure if it's been mentioned, since I didn't read all the replies: another option is to send them to a free financial counsellor or a community legal service who knows their debt laws for advocacy/negotiation with the creditors.

  • fozzie on 16/08/2019 - 07:17

    Can I ask why you want your parents to pay rent but not your brother? That is strange.
    Anyway it’s probably best they declare bankruptcy. You shouldn’t even think about evicted them, they are your parents. They Should sort themselves out though, as they shouldn’t be a burden for you.

    • ednamekin on 16/08/2019 - 21:44

      My brother's contribution to them is effectively his "rent".

  • wozz on 16/08/2019 - 09:03

    I think they need to see a financial counsellor.. If you get them out without any repercussions and they aren't massively changing their spending habits, then debt probably isn't going to stay away :/

  • Typical16-bitEnjoyer on 16/08/2019 - 09:08
    +3

    OP, stay right out of it the financial side of things. Don't give them money. Don't lend them money. Don't speak to them about money. Don't speak to any of their creditors. Offer them your roof and moral support only.

    Point them towards a financial counsellor. Let them give them professional advice based on experience suitable for their situation.

    https://www.moneysmart.gov.au/managing-your-money/managing-d…
    http://www.ndh.org.au/

    If they're over 50, have no assets, no employment, bankruptcy is a very real and viable consideration. It may sound like a dirty word but bankruptcy exists precisely for this sort of reason. They're in a hole that's nearly impossible to dig themselves out of.

  • centrelink on 16/08/2019 - 11:10
    +1

    As a person who is funding the in-laws living in Australia from China, I advise you to NOT support parents in anyway at all. They should be the one who should be paying for themselves and let their in-laws use their own hard earned money however they want. NOT paying for a house with your own money!

  • weezlebub on 16/08/2019 - 11:32
    +1

    Awwww, I would have thought there would be some more fun comments …

    How about:
    1. get them to take out more credit cards
    2. live on thier credit cards while saving money
    3. get them to declare bankruptcy (preferably as individuals, rather than combined)

    If they're not going to re-enter the work place, there's no reason not to go bankrupt, wipe the slate clean

    • john_conner on 17/08/2019 - 04:23

      You can’t get more debt without income.

  • saltysalt on 16/08/2019 - 13:34

    I love that your mum is a housewife, your dad is unemployed for three years and you had a cleaner? What the hell is going on in your house?

    Honestly do you even speak to them? Considering getting bikies on your parents, what is wrong with you? You deserve to be in this mess.

  • capslock janitor on 16/08/2019 - 13:51
    +1

    No TLDR?
    Visit Centrelink

  • greatlamp on 16/08/2019 - 14:59

    I would be taking over their finances.

    If they are living rent free and have no bills living in your home how can they not make ends meet?

    Surely they are eligible for some gov assistance if they can't find work.

  • Sage on 16/08/2019 - 22:11

    too long. didn't read.

  • john_conner on 17/08/2019 - 04:22
    +1

    https://www.afsa.gov.au/insolvency/cant-pay-my-debts/income-…

    Logically bankruptcy is the best option.
    - Parents will be forced to face their reality
    - The money you would have used to pay their debt can be used to support them (realistically you probably won’t kick them out)
    - This is still classed as helping them with their debt. Arguably paying their debt is not going to help them (in the long term anyway).

    If you are supporting them, then they should probably pitch in with the house duties.

    Centrelink sounds good until they can find work (hopefully the Asian pride thing doesn’t get in the way). Best of luck.

  • DemocracyManifest on 17/08/2019 - 10:43
    +1

    Organise for them to declare bankruptcy, and set up centrelink for them and get them to pay you rent, even a small amount so they aren't taking the piss. They won't be able to get loans out, win win.

  • SlavOz on 17/08/2019 - 10:56
    -5

    This probably hasn't been mentioned yet - but why don't your parents just move back to where they came from? They obviously haven't learned to adapt to life in a major city or country like Australia. They should just move back home where living is likely a lot cheaper and more manageable for them.

    Not sure what this would do to their debt, but I imagine if they're not in the country they can't be legally pursued. It's a win win win. Your parents sound like they would be much happier back in their own culture, the debt would be a non-issue, and they would be out of your house. Convince them to do it. Instead of paying off their debt, send them money every month for basic living expenses. This would cost a hell of a lot less than paying off their debt and/or financially supporting them to live here. Living costs are cheap as in most Asian places.

  • happirt on 17/08/2019 - 18:02
    +1

    No matter what anybody says, one way or another, the younger generation WILL be forced to support the ever growing aging population, no matter what their beliefs.

  • Baa on 17/08/2019 - 21:55

    I support the in laws financially, but only after they declared bankruptcy to clear out old business debt.

    Else we would have just ended up paying down their debts - was best decision ever made and everybody is much happier.

    • ihbh on 18/08/2019 - 09:27

      and everybody is much happier.

      Except the creditors.

  • [Deactivated] on 18/08/2019 - 13:31

    Shame on you !

  • icejester on 18/08/2019 - 15:11
    +2

    Don't declare bankruptcy for 40k debt

    Get a paying job
    Australia's minimum wage is $21 per hour

    Both of them doing some work will get the debt down within 1.5years

  • andyhwl on 18/08/2019 - 20:49
    +1

    I am Asian. I understand your frustration. Being torn between being a good son and bearing all the weight will send you into depression. Look after yourself and wife first; take her out and buy her flowers, everything she deserves. Don't feel guilty on this part at all.

    Regarding furnitures, would they sell them anyway? They might have consider them yours.

    You can't get rid of them but can get rid of yourselves. Do you own or are you in a position for another property?

    You just can't pay their debts. You have to tell them to get rid of their heaviest debt first. I don't help my parents with their debt apart from mortgage, really the house will be mine in the future anyway. I also will make sure they have food to eat too. Give them crap for extravagance, but treat them to nice things occasionally.

    If your brother is half decent person, you can discuss it with him and need him to help more. Does he have a full time job? 6k per year only just covers his own rent, so he needs to actually help more. If not, then power of attorney to you is important; get your parents to understand your hardship and write a will, because your brother would otherwise get equal share.

    Despite you want to lower cost, you might want to life and trauma insurance for them too. They are aging so might cost more when they start having medical issues.

  • kaz8743 on 18/08/2019 - 21:09
    -3

    this thread is disgraceful

    • Trying2SaveABuck on 18/08/2019 - 22:34
      +3

      Why?

      OP is in a difficult situation there is financial/moral/emotional elements to it.

      I value family but i accept there are lots of people out there that dont….

      I also respect that 'giving' people who are bad with money more money to help them is almost ALWAYS a bad idea

      There is probably an element of guilt for just posting this from OP because (paraphrasing Dumbledore) hard to stand up to you enemies, even harder to stand up to your friends and can feel almost impossible to stand up to your family!

      • kaz8743 on 19/08/2019 - 21:43
        +2

        i would peel my entire skin off for my parents, whats money? i'd be happy to have my parents stay with me forever and i'd give them all the comfort i can afford , i wouldnt even think for a split second that my parents are burden on me .

        • Trying2SaveABuck on 19/08/2019 - 22:03
          +1

          You are kind of missing the point it isnt just about money his parents has a serious problem that can be just as destructive as gambling or drug addiction….

          the truth is OPs parents need help - OP realises there is an issue has put up with it for 3 years because (i assume he loves his parents and brother) but the situation seems to be getting worse.

          I would of helped my parents no matter what but i also know my parents would of never been stupid enough to ruin there life via poor financial choices like having a cleaner when they dont work and spend money on a credit it card they could not ever afford…

        • ozbargainer888 on 26/08/2019 - 15:52

          Also you’re assuming that everyone’s parents would do the same for their kids and have good relationships.

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