10/16/2005
Advice from Nashville's leading Financial Aid Advisor Dave Ramsey
Dave Says
By Dave Ramsey
Author of:
Financial Peace and
The Total Money Makeover
"Widowed mother headed for
bankruptcy!"
Dear Dave,
My dad died recently, and my mom has never had any dealings with their finances. They filed bankruptcy once before, and it looks like things are a mess again. She’s got credit card debt of about $86,000, owes $127,000 on the house and $14,000 on the car. She’s been off work for a few months on medical leave and only has about $1,700 in the bank, but when she returns to work she’ll bring home about $35,000 a year. I don’t want to recommend bankruptcy, but I don’t know what else to do.
Laurie in Phoenix, AZ
Dear Laurie,
I wouldn’t file bankruptcy today. I put bankruptcy in the same category as divorce, you do everything you can to avoid it. Bankruptcy is not some kind of debt repayment program, so it’s not a good thing. You guys are in the middle of some heavy grieving, and you don’t want to make any major life decisions right now.
The first things your mom needs to concern herself with are the basics: food, clothing, shelter, transportation and utilities. She can work through this, Laurie. I’ve seen people work through a lot worse with a lot less. Much of this depends on how quickly she can turn the corner from this devastating loss she’s experienced. But right now she just needs some time to heal, you know? She needs hugs.
Here’s an idea, Laurie. Why don’t we just throw all those credit card bills in the trash and forget about them for a month or two? I’m not talking about your mom dodging her bills permanently, but let’s postpone them in a way that provides her time for some healing and a little financial education. If MasterCard calls, don’t answer the phone. Get a caller ID and if the call’s from out of the area, don’t answer.
Once these things have happened and she’s back to work, then you can sit down with her and more accurately access the situation. Hopefully, by then she’ll have enough fight back in her to attack this thing wisely. It’s going to be tough, though. The kind of situation you’re talking about may take three years to clean up.
- Dave
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