Parents are used to looking following their children, but sometimes children also need to watch over their parents, especially when they are getting older. That’s what Angèle had to do with her 78-year-old father, who was $24,000 in debt.
For four years, Bertrand confided nothing to his daughter regarding her precarious financial situation. His wife Rolande has cancer, which over time has caused many unforeseen expenses (medicines, travel, parking at the hospital, eating out, etc.), since they live an hour from the hospital Center.
The couple can only count on their retirement pensions of $3,400 a month and they had to resort to Bertrand’s credit cards to meet these additional costs.
Another ordeal awaits Bertrand, as he knows that his wife’s health is rapidly declining and that she will soon be gone. In addition to the difficult mourning that is coming, he will also have to assume all the debts and his wife’s life insurance ($15,000) will not be enough to absorb them.
“I finally got over my embarrassment and discussed it with my daughter. I no longer knew how to get out of it and I see the moment coming when I will no longer be able to provide for my basic needs,” says Bertrand. Very worried, Angèle therefore recommended that her father consult a licensed insolvency trustee firm. She accompanied him to the appointment and took the opportunity to ask questions.
Heavy expenses related to medical treatment
Angèle examined her father’s accounts and found that balances of $24,000 had accumulated on his three credit cards. Since her parents are married, she was concerned regarding whether her mother might end up responsible for these amounts. “To determine who is responsible for a debt, you have to check the name indicated on the credit opening contract. Marital status has no impact in this regard,” explains Pierre Fortin, Licensed Insolvency Trustee and President of Jean Fortin et Associés. Here, only Bertrand is responsible.
Given the household income and the fact that they had to assume expenses related to medical treatment, the most appropriate solution for Bertrand is bankruptcy. It will last nine months, during which he will have to pay an amount of $170 to the trustee, for a total of $1,530.
Rolande not being responsible for the debts, she will avoid bankruptcy. If she had to do so, the syndic would however have had the obligation to ensure that she is truly capable of making such a decision (this also applies to the consumer proposal).
The consumer proposal, a solution?
Theoretically, Bertrand might also have opted for the consumer proposal. But even if it had only lasted 36 months, it’s still four times longer than bankruptcy. “When faced with a choice between bankruptcy and a proposal, the person’s age and plans are factors to consider. For example, if you plan to buy a house or start a business in the near future, the proposal has certain advantages in terms of credit. Otherwise, the short duration of a bankruptcy, often nine months, makes it more interesting”, mentions Pierre Fortin.
ADVICE
- If you have any doubts regarding your parents’ financial situation, do not hesitate to raise the issue in a frank and open discussion with them. Know that very often, a request for a loan from a parent is a harbinger of financial difficulties.
- Taking control of your finances is just as important at age 30 as it is at age 70. Make sure you have an up-to-date will, a protection mandate and that your life insurance policy adequately protects the people you care regarding.
- Because they have more difficulty obtaining credit, seniors generally only have access to their credit cards, which have very high interest charges. Be careful not to fall into the spiral of debt.
