Relative in Credit Card Debt ?

[Fat-Tailed Contagion]

Trying to help relative with information only regarding their situation.

$6500 in credit card debt, being sued in small claims court and was served notice.

She has no assets other than paid off old car worth a couple thousand dollars.

She is not working and taking care of a young child.

She is married but husband has no income right now.

What options does she have?

[papiper]

One of the two (at least) has to get a job. At least the hole right now is not very deep.

[sailaway]

Check with local organizations. My Mom volunteers on a committee that makes small grants based on a straightforward application.

If they haven't already, they should also be applying for SNAP and other benefits so that they are not relying on credit cards to meet basic needs.

It doesn't sound like the spouse is the father of the child, but both spouses should consider looking for at least part time work.

[torso2500]

Assuming there isn't any reason to invalidate the debt or suit-

she can try to negotiate a settlement with the creditor. She can lay out how little she has that a judgement could attach to (look up what is protected from civil judgements in her state). Typically you'd need to have some lump of money to offer for a settlement.
If she is truly judgement proof and not really on the cusp of obtaining much assets, then things may not change much if she simply doesn't pay anything. She should attend any court dates regardless.

[GoldStar]

I assume she is being sued for not making minimum payments?

1) she can ask her Boglehead relative (meaning you) for a loan to pay back the debt
2) you can help her/husband find a job with income so that when the company wins in small claims they are able to pay back the debt
3) declare bankruptcy - maybe not worth it for small debt. Will cost almost as much to file as to remove debt.

Prior to #1 or #2 you may be able to negotiate to get debt reduced.

[turtlebug]

What makes up the $6,500 in credit card debt? Is any of it medical debt? Regardless, she can contact the debtor(s) and ask for a discount or payment plan, check to see if she qualifies for financial assistance programs, debt forgiveness, or local, state, and federal government programs and/or apply for charity care or financial assistance, even if the debt is in collection or she has been sued.

[student]

A good forum for credit card issue is https://creditboards.com/forums/index.php

[HoneyDew]

Realistically this only gets exponentially worse without income. He needs to go get 60+ hrs throwing boxes at Walmart, target, local grocer, etc. Not sure the age of the child but she can also find ways to make an income assuming their housing situation allows it (childcare for other children, pet sitting, hair, nails, etc). If her husband can’t secure 60 hrs then he can get 40 and she can do 20 hours when he gets home. I’ve seen friends and family let their tiny rough spot turn into a deep hole because they thought certain jobs were beneath them because they didn’t pay what they used to earn. Right now there is zero household income. That needs to change today…

[bombcar]

Whatever she does, do NOT let her skip court.

Even if all she does is show up and ask for an extension, it's way better than not showing up.

Some income needs to be realized, somehow.

[Fat-Tailed Contagion]

Whatever she does, do NOT let her skip court.

Even if all she does is show up and ask for an extension, it's way better than not showing up.

Some income needs to be realized, somehow.

Thanks, can you explain this further?

What should she say?

What is the process?

[Fat-Tailed Contagion]

Whatever she does, do NOT let her skip court.

Even if all she does is show up and ask for an extension, it's way better than not showing up.

Some income needs to be realized, somehow.

Thanks, can you explain this further?

What should she say?

What is the process?

[Fat-Tailed Contagion]

What makes up the $6,500 in credit card debt? Is any of it medical debt? Regardless, she can contact the debtor(s) and ask for a discount or payment plan, check to see if she qualifies for financial assistance programs, debt forgiveness, or local, state, and federal government programs and/or apply for charity care or financial assistance, even if the debt is in collection or she has been sued.

Not medical related purchases.

Thanks for the heads up on other programs - where can they go to find out what kind of assistance programs?

[inittowinit]

Given the details you provided she is likely "judgment proof" and may even be able to successfully defend the lawsuit. You should have her contact an in-state debt collection defense attorney or legal aid nonprofit that does debt collection defense ASAP. If she was sued she will only have a limited window of time to respond, otherwise she will lose in a default judgment. Go go go!

[bombcar]

Thanks, can you explain this further?

What should she say?

What is the process?

What to say and the process can be found elsewhere, or by consulting a lawyer or a nolo book.

The main reason to at least APPEAR is that if you don't, you could end up with a default judgement, which is now much harder to reverse and get out of.

[mrmass]

What makes up the $6,500 in credit card debt? Is any of it medical debt? Regardless, she can contact the debtor(s) and ask for a discount or payment plan, check to see if she qualifies for financial assistance programs, debt forgiveness, or local, state, and federal government programs and/or apply for charity care or financial assistance, even if the debt is in collection or she has been sued.

Not medical related purchases.

Thanks for the heads up on other programs - where can they go to find out what kind of assistance programs?

Usually the city and/or state. There are welfare programs, fuel assistance, food stamps programs. Each state is different.

[Maverick3320]

Seems like option #1 is for someone in the family to start providing an income, otherwise all this talk about what to do about the credit card debt is just shuffling the deck chairs on the Titanic.

[White Coat Investor]

Trying to help relative with information only regarding their situation.

$6500 in credit card debt, being sued in small claims court and was served notice.

She has no assets other than paid off old car worth a couple thousand dollars.

She is not working and taking care of a young child.

She is married but husband has no income right now.

What options does she have?

Get a job.

Declare bankruptcy and get a job.

Get a big check from you and get a job.

Send hubby to work.

Apply for government benefits.

Some combination of the above.

I'd start with a job if it was me.

Sorry to hear you and your family member are going through this. It doesn't sound fun at all. But the problem here isn't these relatively tiny debts and a lawsuit. The problem is there is no income for this family. Fix the income problem and everything else goes away very quickly.

[Fat-Tailed Contagion]

Given the details you provided she is likely "judgment proof" and may even be able to successfully defend the lawsuit. You should have her contact an in-state debt collection defense attorney or legal aid nonprofit that does debt collection defense ASAP. If she was sued she will only have a limited window of time to respond, otherwise she will lose in a default judgment. Go go go!

Is there a fee for that service?

[HoneyDew]

Get a job.

Declare bankruptcy and get a job.

Get a big check from you and get a job.

Send hubby to work.

Apply for government benefits.

Some combination of the above.

I'd start with a job if it was me.

Sorry to hear you and your family member are going through this. It doesn't sound fun at all. But the problem here isn't these relatively tiny debts and a lawsuit. The problem is there is no income for this family. Fix the income problem and everything else goes away very quickly.

Honestly I think we can all agree this is an income problem. This doesn’t require bankruptcy. Also it isn’t OP’s responsibility to bail them out of a situation the relative caused. If the OP chooses to give (not loan) some money to help out family in hard times that’s their prerogative. But ultimately this family needs income now. If the husband is disabled then he can apply for benefits and watch the kid while wife gets 40+ hrs a week.

[DN28]

I’ve been in a deeper credit card debt hole than this one, and the answer for me was:

• Negotiate a payment plan with creditors. This stopped interest from accumulating. A debt consolidation agency helped me arrange this. Once the plan is in place, stop using credit cards.

• Get a better job, and gradually increase income.

• Be relentless about paying down the debt. Don’t miss any payments.

It took a few years to dig myself out. The silver lining is I no longer find credit cards tempting. I use them like debit cards now.

Your relative’s debt is still relatively small, but can grow quickly if they miss payments and accumulate interest. Encourage them to nip this in the bud now, before it becomes a millstone around their neck. They need a job, and the sooner they get one, the sooner they can move past this.