Debt consolidation/repudiation

[Simple Minded]

Recently heard from an acquaintance from long ago.

She relayed her story of gambling away her entire life savings, plus a $300k inheritance. She is currently $53k behind on credit cards, and owes another $22k in back taxes to the IRS.

On the bright side, she has a 401k with about $40k. But at age 56, with an income of about $35/hour, paying off the debts does not look feasible. Not all that attractive, so prostitution is probably out.

Sometimes, white privilege is just not enough for some folks.

Any thoughts? Blame it on "society" and flee to Canada?

[Nonc Hilaire]

She's bankrupt. She should pay off one credit card, give an attorney $500 and start over.

[noddy]

hide any remaining cash money with friends/family and then declare yourself bankrupt.

[Simple Minded]

She's bankrupt. She should pay off one credit card, give an attorney $500 and start over.

That's what I suggested. Trying to help, I contacted a debt consolidation company. Supposedly, $53k in credit card debt can be relieved for 52 payments of $705. A good deal. I told her that it would probably take at least $90k to pay off her debts, assuming she can be that disciplined for a long time.

Very bizarre. She has always been employed, and very careful/frugal with her money in all other areas of her life. But I guess the gambling monster was too hard to subdue. She shared she has had 7 or 8 credit cards for over 20 years, and now owes money on 17 cards, including borrowing $6k at 25%.

My first exposure to someone with a gambling addiction. All the other people I have known who had addiction problems have been drugs/alcohol.

[Simple Minded]

hide any remaining cash money with friends/family and then declare yourself bankrupt.

IIRC, she only has about $3k in cash.

[Nonc Hilaire]

Debt consolidation is just turning ten bad loans into one worse one with smaller payments.

[Simple Minded]

Debt consolidation is just turning ten bad loans into one worse one with smaller payments.

The dude I talked to said $36k total payments rather than $53k plus interest. Apparently, the debt can be paid back at 50% and the intermediary company gets 20% for handling the negotiations and paperwork.

She's in CA, and for some reason thinks she won't qualify for bankruptcy. She claims she will talk to a lawyer this week. Then again, she has lied in the past.....

[Simple Minded]

Latest update:

My friend said she talked to a lawyer. She is ineligible to file for Chapter 7 Bankruptcy, and that the cost to file for Chapter 13 is $4500 with no guarantees of acceptance.

According to what I have read, individuals are able to file the forms on their own.

I told her to contact additional lawyers and accountants, and call Social Services for help.

[Simple Minded]

update:

insanity prevails. my friend refuses to talk to any additional attorneys or debt consolidation company representatives. she is convinced that the resulting, temporarily diminished credit rating will be an insurmountable life long burden.

amazing. she continues to be a gambler, now gambling that by living in poverty, while working 60 hour weeks, and putting every penny towards debt payment for at least 6 years (I'm thinking she will end up paying between $120k and $220k to payoff $75k in debt) that her current credit rating will be maintained and that it will be a good thing.

I think she has been shuffling debt between 8-17 credit cards for several decades, therefore, it is a familiar habit, and therefore she finds it an "acceptable and comfortable" lifestyle.

I don't think she will be successful, but she is an adult, and it is her money.

an alternative lifestyle to be sure.

Am I being racist or sexist by trying to advise her?

[Mr. Perfect]

I look at debt like liposuction. If you don't change the underlying behavior the fat just comes back. No point in consolidating until she kicks gambling.

[Simple Minded]

I look at debt like liposuction. If you don't change the underlying behavior the fat just comes back. No point in consolidating until she kicks gambling.

That does seem self-evident to me. I suspect our parents are/were very similar in age and/or social status.

I have not gotten any updates lately, other than she has scheduled payments with the IRS and the state of CA.

She may or may not still be engaging in magical thinking in regards to credit card debt.

Since she is on the other side of the country, I have no idea if she is being completely honest or not.

[Doc]

Gambling addicts, like alcoholics, never quit until they have lost everything. There is nothing you can do about