My Elderly Mother is Struggling in Credit Counseling. What About Bankruptcy? – Tracey

“Dear Steve,

My mother is 77 years of age. Her memory is no longer the best for her finances and she gets confused as to who gets paid what and how much. the debts, even though she doesn’t even use the cards but one walmart for groceries the interest rates and payments have gone over the roof so to speak.

She used to pay a few dollars more than the minimum to keep the interest rates appeased. This worked for awhile, but she is on a set income of retirement and social security so raising monthly payments are about to make her go broke and straight into poverty.

When my aging mother said to me one night, sadly, it looks like I may have to find a job. She is a skinny frail women who doesn’t realize her limitations or chose to ignore to survive. She doesn’t care to much for change. So It’s hard to introduce her to knew ideas she never thought she would have to go deal with; I have tried a debt consolidation company “Pioneer Credit Counseling” they are a nonprofit company.

They don’t use loans to assist in credit payment plans. They work directly with the creditors for you and they send out proposals lowering your interest rates and payments a month. Then, a set payment amount is agreed by you as to what that amount would come out to be with all creditors listed payment amounts. Then PCC would call us let us know what that is and we must agree to it according to whether we could afford it. They turning out to be a nightmare and just as much trouble as the creditors themselves. There is 5 of them. Chase is a MONSTER to deal with.

I need a better solution, is bankruptcy really a better solution for someone her age (77). She said she has herd terrible things about bankruptcy. What or where do I go to teach her about it. I hope I will be able to find positive reviews. Any advise?


Dear Tracey,

In my experience a modern credit counseling program is best suited for someone who can make the minimum payments and is not substantially struggling. The person should be able to afford the credit counseling payment, continue to save each month, and be able to meet the ongoing financial obligations. if not, then we need to look at alternate solutions.

I find that many people pursue credit counseling because they are afraid of bankruptcy for one reason or another. They enroll to avoid bankruptcy and maybe not because it is the most logical solution for them.

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As far as credit counseling programs go, Pioneer will do a good job of sending out proposals and disbursing payments like others do. But let’s not get confused and think there is any negotiating going on here. Credit counseling programs pass on the plans the creditors will agree to, not force the creditors to agree to repayment plans that make the most sense for the person in trouble.

In essence credit counseling solutions are planned backwards. The creditor demanded payments in a credit counseling program are tried to be shoehorned into the persons budget when what should really happen is for creditor proposed payments to be put forward based on what the consumer situation can handle.

When it comes to bankruptcy, there is what people say and then there is reality. People say it will ruin your credit forever and is horribly damaging. The reality is bankruptcy is the only legal solution available to consumer that can force creditors to either accept affordable payments or eliminate the debt all together.

After bankruptcy it is possible to get both secured and unsecured credit again with planning. In fact it is not unusual for people to get credit offers on the same day they get their debt discharge notice from the court.

Based on what you shared about your mother it sounds like she does not have much in the way of assets, so planning for the limited income years ahead should be of more importance that trying to repair the problematic financial past.

If your mother pursued a chapter 7 bankruptcy and had her debt was discharged she would be better able to make it on her limited income. The chances of her landing a job and holding a job with her physical condition and memory, is not promising. So instead we need to focus on a solution that can set her up for success based on what she does have coming in.

There comes a time when managing finances is not the strongest skill of some of our parents. I watched my own mother struggle with that as she declined. For all of her married life, nearly 60 years, she managed the family finances like an expert banker. Near the end she was making silly mistakes like paying bills twice. It was sad to watch her struggle with it and be so stubborn in relinquishing control.

But in the end my wife and I had to step-in to help. When my mother passed away there was no way my father could manage the finances at 81. We took over managing his bills for him, completely.

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You will probably have to do the same to help your mother. Start slow at first reviewing the incoming bills, help her pay them, and balance the checkbook together. As she grows more comfortable with you doing that then you can take over more.

To put some sort of fence around a budget she can spend you could always open a second bank account and transfer money into that account for her to spend each month. Give her a debit card attached to that account to limit her spending. I don’t normally like debit cards and prefer credit cards but debit cards make better financial fences. When you are out, you’re out. Make sure there is NO overdraft on that second account.

You are an awesome daughter for trying to help her and I’m proud for you for doing this.

So Tracey, what we really need to do is get her to turn around and start planning for the future and stop trying to fix her past financial transgressions.

I’d suggest you read my post, So You Are Going to File Bankruptcy. That’s Good News. Congratulations.

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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