My in-laws collision course with bankruptcy

Superfuse

I have slowly realised that my partner's parents whom are 62 and 63 are in loads of debt.

I have discovered that they were living in their overdraft, have half a dozen credit cards, a personal loan, a car on finance, several monthly payments for services they do not use and a mysterious standing order to Lloyds bank to repay some historical debt.

I convinced them to use what little savings they had to pay off their overdraft.

I informed them that there would be a £7500 final payment on their car. This was news to them.

I have uncovered over 30k of debt so far, they have no assets to speak of and live in a rented council house.

My partner was unaware of the debt and her brother has not been informed...... yet......

They don't have any form of plan for repayment or retirement.

To say that I'm concerned is an understatement!

I have been gathering info from them to establish the extent of the debt. Her father was offering up any info we asked for but sadly her mother is resisting giving up any details. It's possible that she's hiding more problems.

After her resisting setting up internet banking for her Sainsburys credit card yesterday (after setting it up for his); I decided to convey to them the seriousness of their financial situation. She had an idea of the extent of the debt but he was totally oblivious and understandably upset.

During the conversation I had to inform them that they wouldn't actually own their car after 3 years (£10k spent) and that they will probably never be able to give up work as they have no strategy for paying off the capital of the debt. The interest payments of random figures are generally repaid in a hap-hazard way at the bank or over the phone. I believe they pay £1500-£2000 per month on bills. 

During our discussion; I was told that she was planning to pay off the debt with her inheritance......from my partner's grandmother.........

I think Father will be open to making a plan but I think Mother will resist any change (internet banking/ direct debts/ budgets etc).

Our basic assistance so far has been seen more as an annoyance than assistance.

However, I feel like I need to assist as I can see the debt being a massive problem when they want to/need to stop work. They have not got the capability to make an action plan and I don't think they understand many aspects of the situation that they're in.

I don't know how it's going to play out...... Will all their debt just be written off when they get a bit more elderly?

As an added twist; they are entitled to the full Right-to-buy discount of around £80k on their £160k council house. It's a shame that they can not benefit from that.

My partner and I feel frustrated as her parents work hard and appear to have spent a lifetime financially undermining themselves. I am unsure as to what further action I should take if any.

Has anyone got any ideas? Should we try to steer them in the right direction despite the mother resisting? or should we just leave them to their fate? What happens at 70 when you have debt which you can no longer keep up with? They really need support as they do not understand numbers and interest rates and they do not look more than 5 minutes into the future.

Galloglass

There is a very informative guide from National Debtline that explains the dozen or so options available in England and Wales. Other home nations have different systems.

https://www.nationaldebtline.org/EW/factsheets/PDFs/ways-to-clear-your-debt.pdf

It makes a useful starting point for examining the options available. Even if there is no immediate change in behaviour, it sets the scene for later when they may want to take the matter seriously. 

The psychologists that work for banks and other lenders are well aware of these [ostrich] issues. Lenders are quite happy to accommodate such behaviour in return for interest and other charges. But when one breaks ranks and starts to push for repayment it all crumbles. Then you will have your in-laws attention and hopefully their thanks for broaching the subject early.  

monetxchange

I think it's nice to try and help them sort it out, but realise how frustrating it can be. I wouldn't say they're insane, just used to a life of haphazard financial planning.

The stuff about their retirement plan may be too much for you to take on right now, but you and your partner helping out doing a clean sweep of their bank account to cut bills and get rid of dead direct debits will help them enormously in the short term. Find out what this strange historical debt is and if it's still legal. Try and explain the deal with the car finance and get them to realise they're keeping it forever now, no more entering into credit. If they're anything like my parents, they'll also be massively overpaying for things like Sky packages and groceries being spent high on and then scraped into the bin when they went unused.

If it's too much and you feel you can't help out without passing judgment on past mistakes, you're better off standing back. I know from my ex's parents how hard it can be when someone doesn't want to listen to reason and just blames everyone else. Also put thoughts of who's getting what inheritance out of this too. At the end of the day the inheritance is a bonus not a right and you shouldn't proceed on what your partner should be getting etc and feeling resentment. It won't help anyone stay rational in this.

Good luck!

Disjoint

Good luck - It's extremely frustrating when you know you have common sense and they don't. 
I still don't understand my FIL sometimes when I try to help - remember that some people don't like to be helped. Try to introduce changes very gradually and be very patient. With my FIL I work in construction and after telling him it was a silly idea to repaint his house and especially hiring a gypsy that rang at his door. He went ahead anyways - botched job - overpaid etc... He won't acknowledge it because he wanted to prove a point that he doesn't have to listen to me (I had builders that could have done it for 1/3 of the price, properly, insured, etc...)
I've put in a dryer recently in his house, he refused point blank for me to do it originally. I told him it was for us and I would remove it once we move out (We are staying a couple of weeks with him while I am redoing my house). He later asked me if he could purchase it off of me...
You mentioned brother doesn't know about the situation. I would let him know asap and ask him for help. The more people gang up on them the less choice they will have. I am fighting the battles on my own and it's very hard. Strange situation I find as my parents are completely different and very clued up on money, my FIL is not and I have plenty of references as how he wastes money for the sake of wasting it because change is too much of a pain in the !!!!!!.

[Deleted User]

Superfuse said:

I have slowly realised that my partner's parents whom are 62 and 63 are in loads of debt.

I have discovered that they were living in their overdraft, have half a dozen credit cards, a personal loan, a car on finance, several monthly payments for services they do not use and a mysterious standing order to Lloyds bank to repay some historical debt.

I convinced them to use what little savings they had to pay off their overdraft.

I informed them that there would be a £7500 final payment on their car. This was news to them.

I have uncovered over 30k of debt so far, they have no assets to speak of and live in a rented council house.

My partner was unaware of the debt and her brother has not been informed...... yet......

They don't have any form of plan for repayment or retirement.

To say that I'm concerned is an understatement!

I have been gathering info from them to establish the extent of the debt. Her father was offering up any info we asked for but sadly her mother is resisting giving up any details. It's possible that she's hiding more problems.

After her resisting setting up internet banking for her Sainsburys credit card yesterday (after setting it up for his); I decided to convey to them the seriousness of their financial situation. She had an idea of the extent of the debt but he was totally oblivious and understandably upset.

During the conversation I had to inform them that they wouldn't actually own their car after 3 years (£10k spent) and that they will probably never be able to give up work as they have no strategy for paying off the capital of the debt. The interest payments of random figures are generally repaid in a hap-hazard way at the bank or over the phone. I believe they pay £1500-£2000 per month on bills. 

During our discussion; I was told that she was planning to pay off the debt with her inheritance......from my partner's grandmother.........

I think Father will be open to making a plan but I think Mother will resist any change (internet banking/ direct debts/ budgets etc).

Our basic assistance so far has been seen more as an annoyance than assistance.

However, I feel like I need to assist as I can see the debt being a massive problem when they want to/need to stop work. They have not got the capability to make an action plan and I don't think they understand many aspects of the situation that they're in.

I don't know how it's going to play out...... Will all their debt just be written off when they get a bit more elderly?

As an added twist; they are entitled to the full Right-to-buy discount of around £80k on their £160k council house. It's a shame that they can not benefit from that.

My partner and I feel frustrated as her parents work hard and appear to have spent a lifetime financially undermining themselves. I am unsure as to what further action I should take if any.

Has anyone got any ideas? Should we try to steer them in the right direction despite the mother resisting? or should we just leave them to their fate? What happens at 70 when you have debt which you can no longer keep up with? They really need support as they do not understand numbers and interest rates and they do not look more than 5 minutes into the future.

Have your partner's parents actually asked you for assistance with their finances?

Why do you think they would have more benefit of RTB at the ages of 62 and 63 than continuing to rent as social tenants?

[Deleted User]

People have very different ideas and views about debt; years of reading this money subforum have shown me that repeatedly.

It could well be that this couple don't particularly care about it, they clearly don't view it the same way you do and are happy to drift through like this until they don't have the money to repay what they owe; at this point they let all the demands come …..  markers get applied to credit files …… defaults ..... CCJ's …… nothing of any value to repossess ……bankruptcy chosen ….. and then they drift along in the way that is easiest.

Not my cup of tea but it definitely is to others. 

EimearF

Hopefully this conversation is the start to them waking up to their reality. I know my parents resisted my help - they even renewed their insurances when I wasnt there so I wouldn't try and get them a better deal. But now they actually ask for my advise when trying to sort out their financial matters because after resisting they thought about it and realised I was trying to save them money not boss them around! My point is their reaction is to be expected but they should realise you are trying to help get them into a good position.
You are doing the right hing by trying to help them, for them and yourself. You clearly care about them. They may need a DMP in a few years if their income reduces is retirement. 

ryanm8655

Catsacor said:

People have very different ideas and views about debt; years of reading this money subforum have shown me that repeatedly.

It could well be that this couple don't particularly care about it, they clearly don't view it the same way you do and are happy to drift through like this until they don't have the money to repay what they owe; at this point they let all the demands come …..  markers get applied to credit files …… defaults ..... CCJ's …… nothing of any value to repossess ……bankruptcy chosen ….. and then they drift along in the way that is easiest.

Not my cup of tea but it definitely is to others. 

I think you’ve hit the nail on the head there.

You’ve tried but I wouldn’t push it too much. As long as you aren’t guaranteeing the debts then what is the problem? Yes, it’ll suck to see them broke in retirement but I’d imagine they see it as an opportunity to have nice things before they’re too old anyway. If they have any health issues in old age then they’d lose all their assets paying for a home anyway. Not saying this is the route people should take, just that their situation isn’t going to improve significantly at their age. If they’re in that position then presumably they don’t earn a great deal anyway. I have family members who are relatively well off, have no mortgage but work to the bone still in retirement because they’re paranoid about not having enough money. They’ll leave behind assets for their kids but they’re not enjoying their retirement like they ought to be. In some ways that’s just as bad imo.

KxMx

I would back off until such a time as you are asked to help. 
At which point my advice would be speak to one of the debt charities. 
They will not get debt wiped off due to age, some lenders may agree to write some off but that is a big if.
Debt charities can help find affordable repayments or another solution with no emotional involvement, they may prefer that option over your advice. 

luxor4t

I know it is a frustrating  and deeply worrying situation - but there is not much that you can do to help them unless they both agree to cooperate. And from what you say, Mother is not keen.
They will probably come to see you as interfering /managing/ bossy etc etc and resent your attempts to help them. (Been there!).
Kxmx and ryanm8655 have nailed it: taking the step back is really the only thing you can do until they ask for help.

Emmia

Whilst I can see your frustration and I understand why you want to help them sort it out, I'm not sure that the financial position of your partners parents is actually any of your business. Provided you don't guarantee anything or get into agreements with them that affect your own financial position, I'd leave them to it. 

I realise you're frustrated, but it's like many things in life, you have to let others make their own choices and mistakes.