Gambling Isn't Romantic

Sherry is calling because her parents borrowed $700,000 from family and friends. Her mom skipped the country, and her father is left with the debts. How does he start to pay off his debts?

QUESTION: Sherry in Los Angeles is calling because her parents borrowed $700,000 from family and friends. Her mom skipped the country, and her father is left standing with the debts. Her mother was hooked on gambling and used the money for that. Her father is making $60,000 a year. How does he start to pay off his debts?

ANSWER: It’s $700,000 versus $60,000 a year. This is a big hole and a small shovel. I guess there are two alternatives. One is that someone agrees to settle their debt to accept what they can get, and he somehow arranges to get them that amount. The other option is that he makes more money.

I feel bad for everybody in the story. There isn’t anyone in this story who’s going to win. Your mom didn’t win. She’s still addicted to gambling. Your dad is under a burden he’ll never get out from under, because this is not as much a legal obligation as it is a moral one. He could bankrupt on it and wouldn’t technically owe it anymore, but he’s still going to want to pay his kids and high school buddy back. He’s still carrying the burden of it for the rest of his life. I don’t see mathematically how these people get their money.

I would sit down with the high school friend and tell him that the best way your dad can pay some big chunks toward his debt is to get the little ones out of the way. Get his permission to set him to the sideline and try to knock out some of the little debts so he can get the mathematical and emotional burden of those off his shoulders. Then when he gets down to the last three, he can split it up among the three. The three big ones take care of 60% or 70% of this debt. The only benefit of that is it relieves some of the emotional trauma of having so many players who have gotten screwed over in this deal. Those three big ones aren’t going to get their money regardless of what plan we use.

Really, this is more about emotions and relationships than it is a legal debt that is being called due, and we’re trying to avoid a bankruptcy kind of a thing. This is more about how we can limit the pain of a very painful situation. If we can clear out some of the little debts, at least he won’t carry the guilt and the shame and the burden of having so many different families messed over.

He’s got to keep the life insurance. He’s not insurable at his age. I would keep paying that for sure, and then designate as a beneficiary some of that out to some of these people. Maybe the life insurance clears up a lot of the debt as a last act.

Jump-Start Your Goals!

Jump-Start Your Goals!

Get our 8-Day JUMP START series and weekly newsletter that are packed with articles and tools to help you win with money.

Learn to Beat Debt

Take Control of Your Money!

The best way to get out of debt and take control of your money is to make a plan! Financial Peace University is that plan!

Find a Class

Thank You!

Your 8-Day Jump Start is on its way to !