My mother is 78 year old and has accumulated a significant amount of credit card debt (14,000). This debt is spread across nine different credit cards with varying interest rates which she attempts to keep current paying minimum payments. She has used balance transfer options when possible to reduce interest rates. However, she has had some trouble at times and had late payments causing added fees. Monthly average income @2272 and bills (not including food and gas) average about $1700). This also does not include her credit card minimum payments which average around 375 per month. She does own her own home which was paid for until she obtained another mortgage to pay off prior credit card debt a few years ago. Her mortgage balance is about $78,000 with an interest rate of 4.75%.
My mother’s health is not good and we do not feel she will be able to continue in her sales job for much longer. She feels she has to work to make ends meet and this accounts for about $1000 in income each month on average.
We are trying to determine the best approach to handling her financial situation. She has life insurance policies with a death benefit of approximately $70k. Her premiums amount to about $220 of her monthly bills. Her thinking is this money would help to pay off the mortgage in the event of her death.
She is attempting to keep my husband and I from inheriting debt since she has willed her house to us. At this point, I don’t know how to advise her. We have considered obtaining the cash value of the insurance policies and using it to pay off some of her higher interest credit card accounts.
However, that will leave my husband and I with significant debt on her home once we inherit it. I know this sounds selfish but we can’t afford that kind of debt since we are both around 50, planning for our retirement and still have 2 children to get through college. I told my sister recently that I felt cashing in the policies is a good option but could mean the house wil l have to be sold at mom’s death. Though we don’t want to do this as it is our family home, we really don’t have a lot of options.
My siblings and I are trying to help her when we can but it has been difficult. I have 2 children of which one will be attending college in just over 2 years from now. My husband I currently make a combined income of approximately $80K so we are not in a position to help out a lot financially.
My question is should we cash in the policies to pay off some of the credit card debt or try to work out some type of settlement options with the credit card companies? Any advise you can give would be greatly appreciated.
Thank you in advance!
If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.My 78 Year Old Mother is Struggling Under Her Debt. - Dorothy by Steve Rhode