My Mother is $90,000 in the Hole

Question


Hi Scott,

I knew my mum had debt, but when she finally fessed up I was absolutely shocked. She owes $90,000 in credit cards and personal loans due to gambling and spending. She is aged 60, has $120,000 in super and earns $2,000 a fortnight. She lives with my brother and pays no bills. She has now agreed to turn around things around and has given gave her credit cards to me. Please help.

Helen

Scott's Answer


Hi Helen,

You should congratulate your mum for admitting the extent of her financial problems — that’s a really big step. No doubt she feels a lot of shame about her situation.

Now, you both need to be realistic about the hole she’s in: gambling addiction is a horrible disease that takes a lot of time and a lot of effort to treat. Having your mum hand over her credit cards is a symbolic step — kind of like an alcoholic tipping their booze down the sink — but it doesn’t stop her from going out and poking the pokies when she gets a craving.

Here’s my thinking: if your mum doesn’t have any assets, she could look at declaring bankruptcy. Reason being, after you’re declared bankrupt you can earn up to $54,736.50 per annum before having to make repayments to your trustee — and your mum earns under that.

In other words, she could stiff her creditors, wipe out her consumer debts, and keep all her income. Just writing that makes me feel physically ill — but that’s the dollars and cents of it.

Once she’s got that sorted, she has an even bigger hurdle to face: she has reached her preservation age, and she’ll be able to access all her super in five years. If she’s not on top of her gambling addiction, there’s a chance she’ll blow it. Then she’ll be the one who gets stiffed … by the casino.

Scott