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My Mother Was Recently Widowed and Lost Half Her Income. – Mo

“Dear Steve,

My Mother who is 68 yrs. old was recently widowed. Her and my step-Father were already on a limited income. She gets s/s beniftits of approx $800.00 per mth. Along with a small Retiremet check of $110.00 per mth. She will now loose the $900.00 of my Step-Fathers S/S income. Basically Half of her Montly income wiped out.

The Death benifits fom his life insurance was enough to pay for the funeral and leave my mother with a small cash pay-out. Somewhere in the range of $1500.00 to $2000.00. Together they have approx. 13,000.00 in Credit card debt. Her minimum montly payments are about $275.00 per mth. Can you help me with your knowledge? So I may attempt to dig her out of this whole? I am willing to help her. However, I need some advise on the best way to cut the debt? Lower the High Intrest on the cards And Lower the payment so We can set her up an budget.

Her home is paid for. She has 2 used Vehicles both pad for. However, Neither Vehicle holds enough value to secure the debt balance. And in my oppinion a Personal Loan secured by Autos, The intrest rate would still blow her out of the water.

Even though The Intrest Rate would dropped dramatically , We Really Prefer not to mortgage the home or take out an equity line of Credit to Pay-off the cards thus turning un-secured Debt into Secured Debt. I would like to add that she presently has A-1 Cerdit and is Current on all her household bills including the Credit Cards. We are simply attempting to head this off at the pass so to speak? In order to avoid late fees, and higher intrest rates in the coming months.

I guess my question to you is this. Are there any Government plans in the Bail-out projects, that would provide some relief for Eldery widowed individuals. Perhaps something in place that we could negotiate the principal down and cut or eliminte the Intrest?

Mo”

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The Answer

 

Dear Mo,

There are no government backed plans to reduce what she owes or eliminate the interest except bankruptcy. Bankruptcy is a legally sanctioned solution.

A debt management program or credit counseling program may be able to reduce her interest rates but the payments will stay about the same as they are now. I don’t know how much of a help that is either.

Are you willing to help her make some of the payments on this debt? But with her limited income I’m wondering how much, if any, she can really afford to pay each month? I’m concerned that any solution that will require her to make a monthly payment to dig herself out of this hole will simply be too much for her.

Was this debt joint with her husband or only in his name?

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big Hug!

My Mother Was Recently Widowed and Lost Half Her Income.   Mo
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P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

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 Mother Was Recently Widowed and Lost Half Her Income. - Mo by

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Shiloh Dreem

    my father passed away at 85 last month. My mom is 85, on limited income with only social security, she is awaiting my dads pension. Creditors are harassing us via phone and letters. I have informed these credit card harassers that we do not own any property, have no estate and these credit cards were solely in my dead fathers name. My mom has limited income and we pay $1400 rent. We had to take up a collection just to have the funeral! A debt collection agency, Phillips and cohen, had the nerve to call me at 8:30 at night while at church. I literally had a panic attack. I just spoke to them last week about the situation and they were nice and hung up. What can I do? The lawyer just tells me to write a letter explaining my dad has no assets or estate and he is the sole signer. Any cosigned cards I have agreed to pay for since they are in me and dads name.

    • http://GetOutOfDebt.org Steve Rhode

      Shiloh,

      Follow the lawyers advice but get some additional official death certificates and include those with the letter to the creditors. That usually takes care of the matter.

      Steve

  • mo

    Steve, Thanks for all the free advice I really appreciate your efforts. One more question. Do you think there is a possibility to work directly with the creditors. Bank of America & Chase. Advise them of her situation and see if they would work out a Debt settlement and allow her to make lower payments that would actually work toward paying off the pricipal on these cards? Or will I get the run around and be wasting my time?

    • http://GetOutOfDebt.org Steve Rhode

      Mo,

      A possibility, yes. But if you want a payment plan then a debt management plan will be the answer. It’s just that a process already exists for this with the creditors so they know what to do in the system to keep interest rates reduce over the five or so years of full repayment.

      If you are looking to pay back part of the total owed right now you will unfortunately need to fall 90 to 120 days behind on the accounts before you’ll get the best settlement offers. Those offers will be for single settlement payments or up to six payments. Creditors are doing slightly different things at the moment.

      The big issue is that in the intervening months she will be in collections, she will get collection calls, her credit will be shot and she might be sued. As you can see, it is a huge risk.

      Steve

  • mo

    Yes, I am willing to help her with this. And like you, I agree her ability to pay now is minimal. So let me ask you this? Her home is free of any leans now. If she went the route of Bankruptcy. chapter 7 or 13 will they place a lien on her home for any repayment plan?
    Or, would we be better off taking a mortgage out on the home securing the debt at a much lower intrest rate. And setting her up on a 10 year mortgage or how equity loan and keeping her crdit rating in good standing?

    • http://GetOutOfDebt.org Steve Rhode

      Mo,

      I think as long as you watch over the loan, then a loan makes more sense. However, you might want to investigate a traditional mortgage and a reverse mortgage to check all your options. With a reverse mortgage she can take cash out now and not have to repay it.

      A “reverse” mortgage is a loan against your home that you do not have to pay back for as long as you live there. With a reverse mortgage, you can turn the value of your home into cash without having to move or to repay a loan each month.

      The cash you get from a reverse mortgage can be paid to you as:
      • a single lump sum of cash;
      • a regular monthly cash advance;
      • a “creditline” account that lets you decide when and how much of your available cash is paid to you; or
      • a combination of these payment methods.

      No matter how this loan is paid out to you, you typically don’t have to pay anything back until you die, sell your home, or permanently move out of your home. To be eligible for most reverse mortgages, you must own your home and be 62 years of age or older.

      You can discuss the pros and cons of a reverse mortgage with a HUD approved reverse mortgage counselor. You can find one near you by clicking here.

      Steve

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