The Outlaw In-Law

Jim says his mother-in-law ran up $30,000 in credit card debt in Jim's name. Jim had paid off all of his debt except for this. Should he move forward with Baby Step 3 and then go back and clean it up?

QUESTION: Jim in Birmingham says his mother-in-law ran up $30,000 in credit card debt in Jim’s name. Jim had paid off all of his debt except for this. Should he move forward with Baby Step 3 and then go back and clean it up?

ANSWER: There are only two ways to clean it up. One is for you to pay it, and the other is to file a police report and turn them in. She’s going to do this again. You have to report thieves that steal, that’s the only thing that keeps them from stealing. You say your wife gave your mother-in-law the first credit card. If you give someone a credit card, that’s stupid. If you steal identity, you’re a thief. There’s a difference.

Your wife would rather you guys pay $30,000 than have her mother face the music. If you are going to do that, then treat it like it’s your debt and put it in Baby Step 2. While you’re at it, go ahead and save an extra-large emergency fund, because this is going to happen again and you need to be ready to pay it again. In other words, that’s not the way I would handle it.