My Niece Has Such Out of Touch Magical Thinking About Her Debt.

“Dear Steve,

I asked a question a couple of months ago and you helped so thanks.

This question is not for me.

My niece is 40 and moved back home with her parents after her divorce about 10 years ago. Her ex has custody of their kids with the youngest being 17.

Over the years we (her mother and I) feel like she has developed paranoia and maybe even become schizophrenic. She refuses to see a doctor so we’re just basing it on her symptoms. But she has mental probelms of some kind. One of her illusions is that she’ll have her own house one day and all three kids will live with her.

Now she has accumulated some credit card debt and owes a small car lot money. She works as a home health aide, barely making minimum wage, and goes from job to job because she has either been late too often or doesn’t show up for one reason or another.

Nothing seems to phase her. She gets another job and it’s the same pattern. Her ex has railroaded her in court and she has to pay him child support until the youngest turns 18, though she can barely support herself.

She’s tried to be self employed, starting a landscaping business and now she’s looking at real estate. She sends money to TV ministers who call constantly; she believes she has to pay them so she’ll get a miracle.

She doesn’t even have her GED so good jobs are not likely; she wouldn’t stay with a good manufacturing job she got a few months ago.

Her ex had a landscaping business so she does have some experience there. Her mom and dad have bought her cars and fixed them up and paid for a couple themselves, but this can’t continue.

Now just this week she was served by Capital One for a $5,000 credit card and by a used car lot.

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Her first court date is in a month. Capital One called her and wanted to make a deal to avoid the court; they ask for $1,000 by the 28th. She got scared and agreed to $500. I doubt she’ll have $5 by the 28th.

It was recorded but I think if anyone listened you’d be able to tell she was intimidated and scared. She has no concept of money or anytthing in reality but without her seeing a doctor, our hands are tied.

I don’t believe she would be held liable if the courts knew her condition but how to prove it. I hate to see her treated like this but what can we do to help? I’m sorry this is a jumbled mess to figure out I’m sure, but her life has been like a roller coaster.

It’s not that any of us have ignored her situation but she never listens to our advice and goes ahead. Even the disaster that happens doesn’t stop her from making another one.

Is there a legal recourse to rid her of these debts and prove that she’s not capable of making any financial decisions. We’re thinking bankruptcy and I’ve told her once she files, she can’t take on any more debt of any kind, especially credit cards. What do you think will likely happen to her legally if she refuses to seek a mental health specialist?


stressed woman

Dear Cayze,

Your niece certainly exhibits some of the same debt issues I’ve seen about in people that are bipolar.

I think this is a classic case of the debt is the symptom and not the issue. All the action and help in the world is not going to work unless she first addresses her underlying mental health issues.

Her magical thinking and lack of awareness are very disturbing in the face of her current situation.

Once we can get her help and assistance for her mental health issues, then we can better deal with the debt.

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Let’s say she filed bankruptcy today to deal with her current debt. There is no reasonable expectation she would not go out and repeat the pattern again. But this time she would not be able to file a chapter 7 bankruptcy for seven years and be stuck with the debt.

It might be smart if you and her mother could make an appointment to meet with a local mental health professional and get there assistance in how to best get her help.

Please post your responses and follow-up messages to me on this in the comments section below.


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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.
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3 thoughts on “My Niece Has Such Out of Touch Magical Thinking About Her Debt.”

  1. Thanks Steve for your suggestions and to you too Dona. Talking with a mental health person is a good idea and we hadn’t thought of going alone but were trying to get her to go. I told her the restrictions on bankruptcy, that she would not be able to take out additional debt and she assures me she won’t get in this situation again. But I know she’s made promises before to creditors and because of her mental state, it’s like another personality takes over and she’s in another mess. My sister and I are dealing with ignorant family members who believe we are damaging the reputation of the family by trying to declare her her mentally ill. Her father is the main obstacle. It’s maddening to try and help her when he and his siblings are only worried about ‘how it looks.’ and her ex has taken every advantage of the sitaution that he can; he knows she’s not right mentally but he has a court date set up every time she’s late with child support. He himself lives off his parents and a settlement he received years ago from an injury on the job. He’s perfectly able to work side jobs getting paid under the table. When does ‘what goes around’ actually come around? LOL So quite a few are contributing even more problems.

    • Until you deal with the underlying mental health issue I would not believe she will be able to keep her promise of not getting into trouble again.

      If she is bipolar, without treatment her periods of being way up will lead her to do things without consideration.

      Bankruptcy at this stage will only put her in a worse position.

      The father is just being pridefully ignorant.

  2. I agree that bankruptcy might fix today’s problems but it won’t stop her from repeating the same patterns. It sounds like she really needs some help mentally – maybe a family intervention? You’d have to map out some sort of a plan first, to present her with – something with small steps and logical conclusions (including seeking mental health help). Wishing your family the best of luck. It sounds like she’s lucky to have you.


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