Sisters debt. Bank of Mom and Dad.

notakid

My sister and her husband have always been bad with money, they brought their house for 42,500, got into a hole and remortgaged and now owe 77,00. The bank will not consider any further remortgage.

Two years ago they borrowed 2,000 off my parents for their car. (EDIT I got this wrong it was around a grand and they paid half of!)My parents are not well off, my father has a small private pension, just enough to make sure they can not claim any supplemently benefits, they live very frugally but they do have savings.

My sister and her husband now have outstanding debts of 38.000 plus their mortgage. I think my sister has been trying to tell me but I've been unsympathetic as they earn between them 60,000 per year, 3 times as much as me and my husband. We find money tight too, and I thought we were just in the same boat and she was complaining needlessly.

They have approached my parents to loan the money of 38,000. My parents are happy to give the money and I'm behind the idea too as I love my sister and don't want her to suffer.

However, due to their track record my father is worried he is just plugging a hole and as soon as this is paid the debts will start to mount up again. I have no idea what they spend the money on. They haven't made any large purchases and their kitchen/car/bathroom/house all need updating however they have two small children a newborn and a 5 year old. My sister also suffered very bad depression around 10 years ago which contributed to the problem.

He is thinking of buying their house off them thus removing the mortgage dept. I think this is a bad idea. Firstly because that is the affordable debt and secondly that even if the house is in his name he would never evict them so the deed would be worthless.

I think my parents should just clear my sisters debts and be done with it. My father is thinking buying the house and paying the debt! I don't think this is a good idea either as they have proved they can't budget with a clean slate on everything they will just go back to their old ways. I know that is his worry too.

Any suggestions on how to make them accountable? Ways my father could enforce the debt? I have suggested a charge against the mortgage but the debt is more than the equity in the house.

Any suggestions will be gratefully received. Its making my Mom ill and as she is suffering from cancer already I would like to help put their minds at rest.

I would like to add that my sister and her husband are super people. I do not begrudge them the money but I want ways to make my parents feel that they are not throwing good money after bad.

Soubrette

They are almost certainly throwing good money after bad (sorry ) If nothing bad happens from poor decisions that we make then we are not likely to change our behaviour, that is not a conscious decision to spite the people trying to help us, it's an unconsious one imo, because there is a big up to spending to what we like, when we like and no down if someone rescues us.

The best way to help people like your sister is to get them to phone CCCS or CAB and make an appointment to discuss their finances and they have to get themselves out of the hole they've put themselves in.

There is lots of things that you can do to support them while they are going through this journey but paying off their debts is, imo, not useful.

liney

You Dad is right: of course they will continue to run up debts while some else pays them!

What they need help with is a Debt Repayment Plan instead of asking pensioners, parents or not, who are already living frugally for money.

They are not children. They should not be running to your parents to bail them out. They should be facing the conscequences of their actions.

CH27

No way should your parents clear her debt.
It would be throwing money away.

I think it's absolutely disgusting that they have asked your parents & have worried them.

JoJoB

Is your sister aware of other options that are available to her such as debt management plans (whereby an agreement is reached with creditors to freeze the interest and charges and pay off the debt over a longer period for a smaller payment each month)? If she goes down the DMP route she should be able to keep her house if that's the worry she has.

Payplan and CCCS are the major approved DMP agencies who don't charge big fees like some of the others. An IVA may also be mooted as an option.

Your parents money will just go towards perpetuating the problem I'm afraid, leaving them with no savings and the root problem not really addressed. I'm suprised your sister has such a cheek to be honest - I got into a lot of debt but it didn't occur to me for one minute to ask family to bail me out. Her problem, of her making, let her deal with it. Sorry if that sounds harsh but it is the only way she will get to grip with her finances in the long run - and she need not "suffer" if she gets the right advice and tackles it soon.

Worst case scenario - bankruptcy, forced to sell house. Unlikely if they are in negative equity though. Bankruptcy sounds terrible but at least it would be a way of wiping the slate clean without your parents losing THEIR money.

More likely scenario - a debt management plan. Your sister goes through payplan, CCCS or CAB. Her monthly income and outgoings are calculated and what is deemed "surplus" is offered to her creditors as the monthly sum she can afford. This usually needs to be an offer of at least £100 per month divided among her creditors (for payplan at least). In an ideal world her creditors will then freeze charges and interest (though this in practice means a few months of wrangling) and the period that the loan has to be paid of is extended, meaning that your sister would have more manageable monthly payments. Oh and she can't take out more credit while on the dmp - which should be seen as a positive thing and will force her to live within her means.

I really think the DMP route is the sensible one for you all to consider together - it makes her take responsibility for her own debt and forces her to take control of her finances without her suffering the upheaval of having to lose her home etc. And stops the inevitable repercussions of her running up more debt after using up all your parents money. None of you want your family relationships damaged and I really think they will be with such large sums involved.

Spendless

Considering they have only paid back a small proportion of the £2k borrowed, I think it's a possibility that a larger sum won't get re-paid. As others have said it also teaches them nothing about building up debt. What about pointing them in the direction of this site and in particular the debt free wannabe board? Or could you go with their SOA with them (if they wouldn't be too embarrassed)?

You sis may not have a wonderful net income despite how big their salary looks depending on the way it's divided up eg if your bil is a 40% tax payer and/or he has a negative tax code due to a company car. Are they also paying childcare?

belfastgirl23

A tough situation for everyone.

Agree with the others that your sister needs to go the debt management route first. If, as JoJo indicates, there is a point where a DMP can't work and they would have to sell the house because they can't repay the debt then this is where your parents could step in to at least make the debt manageable by DMP.

If they just give her the money they are doing the equivalent of buying sweets for a screaming toddler - pacifying without actually addressing the root cause. There will be a point when they won't be there to help your sister, maybe you need to make this clear to them, that at this stage they need to help her address her problems, not enable her to keep ignoring them. It would be a lot easier for them to give her the money but much worse for her longer term.

Of course if they do end up on a DMP your parents could help out a little from time to time if they can afford it. People on a DMP really appreciate small gestures - paying for a weekly shop or a school uniform. If your parents pay off the outstanding money then they can't make these gestures.

Also I would say think about yourself a bit. Your dedication to your sister is admirable, but bear in mind that if your parents spend all their capital on your sister, this is also your inheritance. I am not saying this to be mean and I hate squabbles over this sort of thing, but I think your parents need to consider this at least a little when making their wills. If they've already subsidised your sister to a high degree then this needs to come out of her 'share'. Otherwise it is possible that this could cause fractures down the line, particularly if your sister continues to come to you for financial support after your parents pass away.

Sorry to be so blunt on the last bit but I think it's best to deal with this sort of situation before it arises.

And good luck.

Edited to say that your parents also need to recognise that this isn't a loan, it's a gift. There's no point in thinking of it as anything else, if they haven't paid back the £2k they won't pay back the £38k

kazwookie

Tell your sister to stand on her own feet, if she and her hubby earn £60k or so, what are they doing with it all.

Sit with sister and do a soa with her so she can see whare the moeny they do have is going.

notakid

Thank you so much everyone for your replies. I'm seeing my sister later on today and I'm going to suggest we make an appointment with debtline and also going to show this thread and the one I did in DT (as I live there!) to my Father as it has been invaluable to see others opinions.


My sister doesn't have any childcare costs as my parents look after her children.

I think in my sisters defense that she suffered severe depression around 10 years ago and was unable to work for a year, this started the problem and also I think she has never really got over the illness thus compounding the problem with money.

Errata

Your mum has cancer and your sister is mithering for money? It takes a pretty brass necked daughter to do that.
Tell your sister to stop adding to your mum's stress, stand on her own two feet and - with her husband - sort her finances out. If they're clever enough to earn £60k between them, they're clever enough to sort themselves out.

notakid

Errata wrote: »

Your mum has cancer and your sister is mithering for money? It takes a pretty brass necked daughter to do that.
Tell your sister to stop adding to your mum's stress, stand on her own two feet and - with her husband - sort her finances out. If they're clever enough to earn £60k between them, they're clever enough to sort themselves out.

To be fair you've hit on a bit of a sore point for me. I've had some personal troubles too but have made sure my Mom knows nothing of them and then my Sister dumps all this on the table!

However, I know its because she can't think of a way out. I wish I'd been a little more sympathic when she had broached the subject. If I had, maybe she would have come to me first instead of dumping it on my parents.