My brother is really struggling with his finances, and it’s starting to affect everything. He moved in with me this past fall because he couldn’t manage on his own anymore. I just found out he has $25k in credit card debt (across three cards: Discover, PayPal, and one from his bank) and $15k in personal loans from two different lenders. His credit score has tanked to the low 500s.
Right now, he’s not working, but he’s starting a new job in two weeks. His only income at the moment is from disability, and it doesn’t even cover his monthly payments. I don’t know how to help him get out of this hole. Bankruptcy seems like an option, but he’s really against it, and I’m not sure if he qualifies because he still has a bit of money left from what our parents left him. My sister has been managing that, and she’s hesitant to give it to him because he’s been in this situation before, and that money was partly used to pay off his debt last time.
He struggles with talking to people and dealing with phone calls due to some mental health issues, so negotiating directly with creditors isn’t an option for him. I’ve tried stepping in, but they won’t discuss details with me since it’s not my account. Has anyone been through something like this? What’s the best way to help him get back on track?
Chapter 7 bankruptcy could clear out his debts if he qualifies. If he’s against that, he might be judgment-proof, meaning creditors can’t do much to him legally if he has no significant assets or income. Another option is to default on his debts and negotiate settlements one at a time when he has some money saved up.
@Uma
Bankruptcy is tricky because he’s really against the idea. Plus, there’s still a small amount of money left from what our parents gave him. My sister is managing that and doesn’t want to use it to clear his debts again like last time. Also, creditors won’t talk to me about his accounts, so I feel pretty stuck since he struggles with those kinds of interactions.
@Shan
Have you considered getting power of attorney or guardianship over your brother? That could allow you to manage his finances and talk to creditors on his behalf. It might be worth discussing with him and your sister to see if he’d agree.
@Zeek
I hadn’t thought about that, but it makes sense. I always assumed power of attorney was just for medical or end-of-life decisions. I’ll talk to my sister about it. Thanks for the suggestion!
Shan said: @Zeek
I hadn’t thought about that, but it makes sense. I always assumed power of attorney was just for medical or end-of-life decisions. I’ll talk to my sister about it. Thanks for the suggestion!
Glad to help! Look into both power of attorney and guardianship. One of them might be a better fit for his situation. Good luck!
Bankruptcy might be the best move for him. Just make sure he has a stable place to live and transportation before filing since those can be hard to secure immediately after bankruptcy.
Debt isn’t a moral issue, and there’s no shame in not being able to repay it. Lenders take calculated risks, and sometimes this happens. Help him find a bankruptcy attorney and support him through the process.
The $25k in credit card debt isn’t impossible to manage if he cuts up the cards and stops using them. Focus on making minimum payments on all cards but put any extra toward the card with the smallest balance first. Once that’s paid off, move to the next one. It’ll take discipline, but it’s doable.