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The Boston Globe

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The Color of Money

Before helping parents, get a picture of their finances

During a recent online discussion, one reader titled his post “Big, big problem.’’ It was not hyperbole. And his problem is one being faced by many adults. They are finding that their parents’ finances are a hot mess. Equally frustrating is the realization by these adult children that they don’t have enough money to fix it.

Here’s the situation with my reader: His parents are in their 70s. They want to sell the family home. But it turns out they owe $230,000 on a house with a market value of about $280,000. They bought it in 1979 for $100,000. Clearly, it should have been paid off.

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The reader didn’t say what happened, but I can guess.

And here’s the kicker. The parents owe $100,000 in credit card debt. Yes, you read that right.

“Their monthly minimums on credit cards are $3,500 or more. I think they are buying groceries on credit because there is no cash left over after they pay bills.’’

So the questions for me were:

- If they filed for bankruptcy, could they keep the house? “They own a few small income-producing properties (also with mortgages). But the income that comes in goes straight out with the credit cards and mortgages.’’

- Will credit card companies work with them? “By this I mean accept less than 50 percent of what my parents owe them?’’

If you are in a similar situation, before you do anything, sit down with your parents and get a full picture. Find out all the expenses and financial obligations they have compared to the income they have. Then you can explore what options your parents have and then help them set up a long-term financial plan.

First up is the mortgage. Find out if your parents qualify for a mortgage modification. Go to www.makinghomeaffordable.gov. It’s the government’s initiative that helps homeowners get mortgage relief. On the site, you will find a link to housing counselors approved by the Department of Housing and Urban Development. You can also call 888-995-HOPE (4673).

As for the credit cards, work alongside your parents to approach the credit issuers and see if they are willing to work out a deal. If they can’t get a debt reduction plan on their own, go to www.debtadvice.org. Once on the site, click on the link that says “Start Your Counseling Session Online.’’ I suggest you click all the services for your parent - credit/debt, budgeting, bankruptcy and housing counseling. Then you type in the ZIP code to find a credit counseling agency.

If they file for bankruptcy, they would have to work with an approved credit-counseling agency anyway. You should also help them find and consult a bankruptcy attorney. To search for a bankruptcy attorney, go to www.findlaw.com.

If your parents are struggling financially, do your best to help as much as you can, but don’t be dragged in that hole with them.

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