My Twenty Year Old Daughter is in a Terrible Financial Situation. – Sam’s Mom

Sam’s Mom

“Dear Steve,

My daughter is 20 and what credit she has is already bad. She lived with a boyfriend (and friends) for two years and now has moved back home. Her current job is in the food industry on a college campus so that job will be gone when the school year ends.

We have already used her tax refund to pay off local utility debts (we paid the utilities directly and not the collectors). Her bank account was closed with a negative balance which was due to excessive use of a Debit card (because the bank provided unsolicited – and unknown – overdraft protection!) – there is approx $200.00 to repay the bank. From what I can tell she has 3 medical debts totalling approx $2,000.00 that have been passed to collection companies.

With the current job market (or lack thereof), there is no guarantee that she will find a job outside of the food service section which seems to remain at the minimum hourly rate for part-time hours. Should we first attempt to contact the medical providers to arrange payment? As far as I can tell, she has avoided all collection calls.

I know this will not be easy, but I want her to own up to her debts – and mistakes – in the hope that she will learn better money management. If the medical providers would each be willing to accept $20 to $30 monthly payments, that would be a start – with additional, occasional payment when expenses allow. (My daughter is hoping to take some Community College classes this fall and will need to start saving for that, too.)

I know that this is not as serious a financial situation that so many others are dealing with, but we have been blessed with steady jobs and incomes and have not dealt with collection companies before. So many of my daughter’s friends seem to think nothing of ignoring old debts and establishing new ones – while starting and quitting various jobs because they interfere with their free time! We are hoping that our daughter will not accept their views on finances – and feel that her moving home to pay off debts is a good sign.

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Sorry to probably provide more info that you need, but I appreciate that you are here to offer your help. I hope that this gives you a bit of background to our situation.

Can you suggest a workable plan to repay the medical debts from a minimal income – and could this be done with the medical providers instead of the collection agencies?

Sam’s Mom”

Dear Sam’s Mom,

Being a parent myself, I know how stressful all this can be to watch. The good news is that she is much better off living through this pain early in her life and learn from it.

You could call the original medical providers, if they are local doctors, but if the accounts are from a hospital and in collections then dealing with the collectors first is fine.

The key for your daughter is that she not promise to enter into any payment plan that is not reasonable for her to be able to make the payments month after month. The collectors can ask for whatever they want, but that is not going to alter what she can really afford.

Let’s say, worst case scenario, that these debts lead to her getting sued. So what. Her credit is already shot so it can’t get a whole lot worse.

Make her face her debt and deal with the pain, deal with reality and if it all gets to be too much and she gets sued, she can go bankrupt to end the suits.

I think you’ll need to get her to get a consolidated credit report to see if there are any other surprise debts out there. Use the consolidated credit report link, it’s the one I use for myself.

Thank for being a good mother by not bailing her out. And by the way, moving home is an excellent sign that she is owning up to this situation if she is going to use the freed up money to repay her debts.

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Big hug for you and give one to your daughter for me.


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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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