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Ask Dave

Parents With Too Much Power

Jason gave power of attorney to his parents over his finances. He returned to $20,000 in debt. He's getting married and wonders if he should declare bankruptcy.

QUESTION: Jason in Salt Lake City left the country seven years ago for two years. He gave power of attorney to his parents over his finances, and while he was gone, his parents ran into some difficult times. He came back to $20,000 in debt and gave them another $20,000 of his personal income. He’s getting married and wonders if he should declare bankruptcy.

ANSWER: They stole $40,000 from you and still have a power of attorney in place. Holy crap, dude! I understand that your parents are thieves. This isn’t a time for understanding. I think these people have extreme misbehavior.

No, you’re not bankrupt, but you have to go get that power of attorney now. It means you have a big pile of debt since they aren’t going to pay it. How the debt shows up makes you want to go file bankruptcy, but it doesn’t make you bankrupt. The debt is legal. You’ll be held to it because you gave a power of attorney. They exercised it.

Your parents obviously have boundaries issues, and you obviously have a problem with dealing with your parents for some reason. You’re intimidated or something. You’re getting married, and you owe your wife more than that going forward. The number-one thing on your list is you have to sit down with your parents. You’re going to have to be very blunt. You’re going to have to have a backbone. You don’t have to be mean, but you do have to be blunt for the good of your wife. It’s not fair to your wife for your parents to be hanging out there with a machete over the top of your head at all times.

You have to get all of the information on these loans, and you start working them. You start with the fraud victim division and explain to them that if these accounts are not signed with a power of attorney—if they’re signed with your name—that you will not be paying them. If they are signed by your parents as power of attorney on your behalf, you are liable, and you will have to begin to work out deals with them. If they signed your name, they can’t do that as a power of attorney. They have to sign their name as power of attorney for Jason. One is identity theft; the other you’re bound to. If your name’s on there and that’s all, that’s straight-up identity theft. You file a police report and furnish a copy of the police report to the fraud victim division of those banks, and you don’t pay that bill. On the ones that they signed as your power of attorney, you’re paying those. That falls under you being 19 years old, stupid, and having parents who don’t have any character. And I’m sorry for that. That breaks your heart, but that’s where you stand. I’m sure they were great in other ways, but on this, they’re really scummy.

You’re going to get one of two reactions from your parents. You’re either going to get contrition and an apology, or they’re going to be so arrogant that they become defensive and angry. In that situation, you’re going to have to become much more direct for the sake of your wife. Do not allow your parents to abuse your wife. You’ve got to put a boundary in place.