Money and Family Don't Mix!

w414q101

I just got a call from my wife, she is very upset and is at a loss for ideas. I'll give you a bit of back story.
We invested in a house a few years ago through my wife's father; he was doing property development and needed some investors. We bought a house, took out a loan, gave him the money. He went on to fix it up and let it out to tenants. The mortgage payments for our investment house comes from my wife's account, so her father would put the money in every month to cover the payment - and never a penny more.
We agreed that after two years, he would give us a lump sum of £8,000 to put towards a house we could buy for us to live in, and we'd move the rented property's mortgage to a buy-to-let.
However, with the credit crunch (recession, really), he's gone completely bust. He has lost all of his houses, all of his tenants have been evicted, and he owes nearly £1,000,000 to various mortgage companies and investors.
We're the only family that have invested with him, and a few months ago when he had no place to live (being flat broke), he came to live with us, sleeping on our living room floor. He told us that no matter what, he would do what ever it takes to ensure that he would keep his end of the deal with our mortgage payments. We agreed that we would collect rent directly from the tenants, and he would pay us the difference of £210 a month, to meet the monthly payments.
Ever since then, he has put the money in late, which makes us have to use our reserve money to make up the payments. This month, he has only now, five days late, put in £80. This was only after we told him that we had run out of reserve money, and we had to put our food money towards the mortgage.
He did not apologize, or say when he will put the rest of the money in. He does not communicate with us.
It sounds fairly straight forward, doesn't it? The problem is that he's clinically depressed. He works night as a tiler (hard physical work, and he's over fifty), so it's difficult to get in touch with him. And we're afraid that if we get angry with him, it may push him deeper into depression. He is seeing a therapist, and is on medication, so he's getting help that way.
We went to see him for the first time in about two months last weekend. He's living in a tiny caravan in London, and showed us his grill, which seems to be the only thing he has in his life that he can take pride in. It put tears in our eyes to see him like that.
What do we do? We want to get angry and tell him off, but it would only make him worse off. If we tell him to forget it, then we put ourselves into some serious financial problems.
I'd love to hear some suggestions, and I can provide more back story as well, including the mum and the son, who was the business partner.

Primrose

Oh dear! I feel so sorry for you and can well understand why Money and Family don't mix. My own experiences of getting financially involved with family have not been good and I understand that you now feel very torn. Your f-i-l is obviously not defrauding you deliberately and sounds as if he is in a parlous state so I can only suggest that you sit down with him, away from other members of the family and have a factual and brainstorming discussion about how you can retrieve anything from the ruins of this situation. I would also try and get an agreement in writing if you haven't already done so. Is there a conflict with wife and son? What contributions are they making to the debate? It's fairly obvious that anybody in the building trade at the moment is finding it almost impossible to earn a living. Does he have any other skills? Is he receiving some debt advice? The Citizens Advice Bureau should be a first port of call. His depression is no doubt caused by the overwhelming situation in which he finds himself and I fear realistically you will mentally have to write off your investment (even if you don't admit this to him) whilst trying to support him emotionally. It may be that bankruptcy is the only option for him, but he needs some proper debt counselling advice and perhaps this is where you can best help him, if only so that he doesn't feel he is facing the situation alone.

w414q101

Thanks, Primrose.
The other family members do tend to add to the problem.
My wife has only one brother, so it's a small family. Her brother worked with his dad in the property development business. He is quite young (24) and is unbelievably arrogant and self-centered. He was the best man at my wedding, but I have not spoken to him in over a year - neither has my wife. He refuses to accept any responsibility for the company's collapse (he 'paid himself' too much, avoided all taxes, and spent all of the investor's money on clothes and computer games for himself), and refuses to have anything to do with the aftermath. He is currently living with a girl who pays for everything for him, as he refuses to get a job. He has single-handedly caused more heart ache and grief than anyone. At least my Father-in-law is showing some remorse and is working hard to put a roof over his head. His son just walked away from his family, and doesn't even care his father is suicidal.
The mum, she is a great person, who certainly doesn't deserve any of this family grief. She has worked for decades as a midwife, supporting her husband and son when they needed it. She is being sued for negligence (which is a case she will win, she did her job perfectly), but because there is no insurance available for midwives, she is having to spend her retirement fund on defence lawyers.
She is having a difficult time coping with this and her husband's depression, and her son's ignorance. She feels the need to escape, and also to show her husband that he's walking a thin line towards divorce (mixed metaphor, I know). She is taking a leave of absence and is going to Egypt to be with family. She will be gone for several months.
As for my FIL's skills, he is working. He had sought out advice from CAB, and they are helping him deal with the mortgage companies and the investors. To give him credit, he refused to be housed and go on the dole. He has returned to his trade as a tiler, and is working every day.
I think maybe it would be good to visit him without any other family members nearby. At the end of the day, I do love him - he is my father-in-law, and my surrogate father, as my parents live in Canada. Perhaps I can help him with his cashflow, and help him make some good decisions.
I've worked with him before, he's not a bad person, he's just made a lot of bad choices.

NAR

I think you know the answer already. You know he is not a conman, is genuinely sorry (unlike his son) to have dragged you into his mess, and is doing his best to earn money to keep his head above water, albeit that he is struggling badly financially.
Some guidance, a shoulder to lean on, some hope for the future is exactly what he needs to try and get him out of depression. If you feel you can be that person, then at least discuss the options with him and then see if you can work with him.
Good luck.

Primrose

Sounds like your in-laws are really struggling against the tide at the moment with a situation not helped by their son. I guess all you can do is be there for your f-i-l and visit him as often as you can so he doesn't feel abandoned, especially if his wife is away at the moment. Often at these bad times it's only the support of family which can stop somebody going under, and depression is a very difficult state to deal with. Regular supportive phone calls will help too.

margaretclare

She is being sued for negligence (which is a case she will win, she did her job perfectly), but because there is no insurance available for midwives, she is having to spend her retirement fund on defence lawyers.

I know this isn't what you're asking, it's a side issue, but ask your Mum to contact the Royal College of Midwives. They have lawyers, for just such a purpose. They were very helpful to me when I was made redundant (yes, really!) in 1992.

No midwife should practise her profession without some cover, it's far too dangerous, and this is what the RCM do.

HTH

smartpicture

I agree that thre's no point being angry with your fil, he sounds more like a victim of circumstances who is doing everything he can. You can hope that he will be in a position to pay what he owes one day, but for now it's a case of accepting that you & your wife are responsible for the mortgage for now and will need to find a way to fund that - you may want to look at the Debt-free board for ideas on how to cut back your other costs if this might prove difficult.

To be fair, you can't expect to make an investment with that kind of return on a guaranteed basis, investments = risks and unfortunately the market has moved against you. That was the risk you took when you made this investment, so you can't really blame your fil for that. The son is better cut out of your lives until he grows up a bit.

Can I ask why you haven't seen the fil for 2 months, is it because you're (quite reasonably) feeling angry and upset? It sounds like he desperately needs your help to get through this, and also for your own sakes it's better to be in constant contact so you would what the real situation is.

One other thing - if you're not already on a BTL mortgage, but have a tenant, you're on slightly iffy grounds if the mortgage company find out. Does your house insurance company know? And who is the tenants contract with, as you need to know your obligations in that direction?

w414q101

We hadn't seen him because he was sort of in hiding. I think he's too ashamed to see us. This just made it that much more difficult when we did see him. When we saw what his living conditions are, we both felt some serious tugs on the heart. It is a real shame he has had such a degradation forced on him.

We know we're on iffy ground with the mortgage, but we are working on changing that when we have the house in good enough shape to re-market. (That's a whole other thread, btw!)

MIL is registered with the RCM, and she is getting help from them, but it unfortunately doesn't cover everything. She has stopped practicing.