since they are retired…… i would not suggest this lightly…. but , can they just walked away from those debts?

so what if they get blacklisted….. they have 30k peso monthly to spend….. and they don’t ever get to use any credit cards at all….

upon further reflection….. how did this come to pass? i mean, they do have credit cards before they retired, right?… nabaon na ba sila previously when they were still working?….. if not, nakapagtataka, since they have credit discipline then, how come once retired, nawala discipline…… can retiring make someone stupid ?

addendum……

just curious, 4 credit cards and a credit of 450k? ….. that means at least 2 gold cards, or 1 platinum card in the mix…

banks usually gives those to high net worth individuals…..

I just watched the Confessions of Shopaholic and towards the end of the movie, Becky sold her material possesions to pay off for her debts

I hope the children will try to come up with a quick solution as interest charges climbs up. Let the children get their act together and for the last time let’s try to bail out mom and dad from the hole. After all it wasn’t their choice anyway. They had miscalculated their new status, being retirees.

1.) After cutting the credit cards, try to pay at least the minimum on all four…and if there is extra cash, put it into paying off the credit card with the highest interest rate (to save more on compounded interest charges)…. 2.) Move back in to the old house and then either sell or rent out the new house. If the new house were sold, then the entire debt could probably be wiped off; they can always try re-building a new house later, or perhaps just re-model the old house. On the other hand, if it were rented, then the additional cash inflows should help cover at least the minimum credit card payments to avoid additional fees that will unnecessarily increase the total debt amount….

First, find out how the P450,000 debt was accumulated to further understand their spending habits and identify those that can be reduced or totally cut-off. For all you know, the parents might be spending a lot for their maintenance medications and other necessary essentials.

I like the “everybody should feel the pain so that lessons are learned” thing. So, I propose a portion of their P30,000 allowance be used to pay-off the debt. If there is someone who could buy all the things they need (groceries, medicines, etc.) or pay their bills (electricity, water, etc.), limit their allowances, and give them just enough money for emergency purchases.

Cut the cards. Talk to the bank. Sell the other house (preferrably to the siblings).

[...] may include a personal loan from the children (with interest but lower than 42%), loans from the Social Security System (I will not recommend borrowing from the Government Service Insurance System) or salary and [...]

If its credit card debt, nothing to worry about? What can the credit card companies and their collectors do if they dont have money to pay? Guess what nothing! Its unsecured debt and even if they bring them to small claims court, it’ll take years before its resolved. My only advice is to transfer all the parents assets to the siblings.

@ pinoypimp

that’s exactly what i meant earlier…. and if the parent are blacklisted after…. they still have 30k living expense to rely on….

Cut the cards and don’t pay if they do not have the extra cash. Save the allowance for their necessities. No one goes to jail because of credit card default payment. They are retirees who do not need good credit standing anyways…. I suppose.

To add to number 2, if not all cards are overspent, consider Balance Transfer, which usually offers lower interest rates. However, this needs very detailed and very careful planning.

Also, time to take out those TDs, SSAs, retirement funds, mutual funds, equities, etc that does not earn more than 42% annual interest and add that to your debt payment budget, which I will explain below.

To add to number 3, if you really can’t make yourself sell that engagement ring, consider pawning it, as long as the interest rate is not more than 42% per annum.

Both BT and pawning are debt, and should be treated like your other credit card debts, but with lower interests. This should be included in you plastic debt elimination plan which I will explain below.

To add to number 4, first allocate a reasonable debt payment budget monthly, ensuring that this will cover AT LEAST the minimum dues (say P20,000). Just to be realistic and to keep you sane, not all your income should go to debt payment. You’ve got to live your life too, you know, however this time it will be simpler. That is why a monthly debt payment budget is needed.

Then don’t just divide that amount equally against all 4 credit cards. Here is my plastic debt elimination plan. Use that budget to pay the minimums in all cards, then any excess will go to the card with the highest interest rate. Once card 1 is paid off, continue paying the minimum in the remaining cards, then any excess to pay off card 2, still keeping the P20,000 budget. Any savings you have at the end of the month, can always be added to next month’s debt payment budget. Continue this until you have paid off all cards.

Note: The minimum due for any pawn debt should be the amount to recover the item (tubos amount), divided by the number of months you are given to re-claim it.

This debt elimination plan is open for suggestions.

@pinoypimp

And thus the birth of the current global credit crunch.

With great debt comes great responsibility.

Nobody gets jailed for unpaid debt, if there was no bad faith on the part of the borrower. People get jailed for estafa, when the borrower intended to deceive from the very beginning. This is partly the fault of credit card companies who gladly lend to people they very well know are spending beyond their means and cannot afford to pay. The worst they can do is to blacklist the borrower and take his assets as payment. But they have to go to court before they get any asset. If I were the borrower, I’ll give them my old car and say this will save you from costly litigation. Take it or leave it.

Btw, many years ago a large commercial bank was threatening to sue me for unpaid credit card debt. I said my credit card was cloned. They did not believe it and insisted that I pay. I said take me to court, I will pay if you win the case. Almost 10 years now, I’m still waiting for the subpoena.

a classic case of trying to define one’s self through material things…

@ peter

credit card companies should exercise prudence in giving out those plastic…..

the subprime mess started out something like this…… agents wanted to make the quota to have commision…. this might serve as a lesson to both parties…..

for the banks…. do a credit investiation first…..

for the borrowers….. don’t swipe if you can’t afford….. or else, no swiping anymore

my father even spends worthless thousand of pesos of my mothers pension for his Grill in the house… our house looks like a cemetery now with all the huge steel bars around…maybe when they get old some just overspend..

I dont understand. His parents should have realized they cant pay when they reached 50k in debt (or even less). Why did they allow it to balloon to 450k? Why 4 credit cards? Doesnt make sense unless its medical (as suggested by one comment here) or because of emergencies. But I doubt it coz they were ashamed to have it known to their children.

There are some good options posted here. They might want to try some of them.

Question: Wala ba pension parents nila? Are they totally dependent to the 30k allowance?

walk away, let the multinational learn the lesson from their greed. itong mga credit card company rin kasi, mapanukso. tinutukso tayong magwaldas ng pera, kasi kikita sila ng 5% per transaction. ask the retailers, sasabihin nila na 5% ang kaltas sa kanila, kaya lahat na bilihin ay nagiging mahal at lalong naghihirap ang ating bansa dahil sa mga sakim na nagpapautang.

@tony

Your post reminds me that my parents also overspend. They spend more than 45k monthly (dont know what they spend on - I probably should check.). Whereas my family spends 25k monthly. Comparing my parents live with my single sister. Only 3 of them. And there are 6 of us. And they spend almost 2x what we are spending. The good thing though is that my parents hate debt. But their retirement fund is dwindling fast.

Unless you want to settle in an island devoid of civilization, walking away is not an option. You can run but you cannot hide. A credit is like a mirror, once broken, the crack remains, mighty hard as you try to repair it!

I was observing about the lifestyles of many Pinoys, sometimes we think as Credit Card as a Cash (or an Asset) that we can spend until we achieved the credit limit (in our mind, it’s the total cash we have).

Please, please, please, change that mindset, for your own sake as well as for your family.

However first things first, pay the debts in a way that all family members will agree, everyone will need to make to sacrifice but there will always be a smart way to resolved this.

Think out of the box, there is always a best way to solve problems.

you can do it, and let this be a lesson for everyone.

People

There is no excuse to walk away from debt. Does the word “delikadeza” mean nothing today? Don’t people value their name nowadays?

If you know you can’t handle incurring debt, then walk away from the point when the card is offered, and not when they come knocking at your door to settle your OBLIGATIONS.

It’s like saying that you are blaming the blacksmith that forged the knife you used to stab yourself.

@Ruel, that 5%/6% fee that the acquiring bank charges the merchants is an interchange fee. Basically, the merchant is making more profit by having a card POS in their store now that a lot of people hold plastic. And this fee should NOT be charged to the consumer (us!).

For example, the profit a merchant gets from a particular consumer good is P20 when paid in cash. When that good is paid with plastic, 6% of P20 should go to the acquiring bank since they maintain the infrastructure. That leaves 94% of P20 for the merchant. Given that consumers buy easily with a plastic, at the end of the day, the merchant still makes more money despite paying an interchange fee.

A more simpler example. It’s just like a jeepney driver paying boundary to his operator. He earns because he has a jeepney to drive.

So the acquiring bank is not the one ripping you off, but the merchant.

Hope this clears it. Feel free to ask questions if I did not explain it clear enough.

Your parents are entitled to live out their lives in comfort. The person who left their child to the grandparents, can solve the problem quite easily…… here’s how

All strategies you mentioned are good. But the truth is we are only talking of 450K pesos here. That is less than 10K US$.

Get a bank loan , pay off all the debts, and then you can just pay the bank in the US or whatever country you are living in.

Why will you allow you parents to live below the standard they are used to. Remember your child is with them. You owe it to them to maintain their standard of living.

Be the provider that you should be and take care of your family.

Do whatever you need to get that done and all will be OK……….

The parents are childish, if they expect to have their children give them bailouts.

sans medical expenses, the payment should be made on their 30k allowance, it can immediately be cut to 25k or less and then match the same amount to pay the card bills regularly but at 450K card bill the interest alone will be horrendous. It is best to sell jewelries, properties, before considering going into loan.

I also provide for my parents an d Ihave long ago sat down with them discuss the money issues and do’s and dont do’s. we have better relationship now as we have already sorted out those issues.

gary

tanong lang po

1. can the bank write-off the credit card debt of a person if it was incurred 10-15 years ago?

2. are credit card debt inheritable?

3. can the bank really seize the properties of the debtor?

[...] When mom and dad are in debt trouble [...]