The Moneyist: My mother-in-law maxed out her credit cards and took out a reverse mortgage — how can we control her spending?

Dear Moneyist,

My mother-in-law can’t control her spending. She has maxed out all of her credit cards and has little in savings. She lives on Social Security and her deceased husband’s pension. She is only paying the minimum on her cards so they will never get paid off. She also has a couple of cards with balances that have been closed, but not paid off.

Her house has a reverse mortgage with negative equity and she just purchased a used car with a loan. She is 85 years old.

Also see: My mother has always lived off others and now she lives off me — she needs to sort out her life before I snap

I know we aren’t responsible for her bills when she dies, but what are we responsible for and how do we settle her estate? Can we just walk away from everything? She has about $20,000 in savings right now. If that were still available when she died, should we try to settle her debts?

I assume the bank would repossess the car. We just hope we don’t have to hire an attorney.

Thank you for your help.

Worried in Tennessee

Dear Worried,

If she lives to 95 and can’t pay her mortgage, your mother-in-law will be in trouble.

If she dies before you both, you will not be on the hook for her debt. Only those named on the credit-card account and mortgage are responsible. The estate will handle those debts. It would be wise to go through your mother-in-law’s papers now so you have them all in order. I assume her credit rating will prevent her from taking out any more credit cards, but talk to her about her debts and help make her see that she needs to make sure she doesn’t run out of money.

Your mother-in-law clearly has a problem that is not being addressed. All of this spending is just a replacement for something else. This is an opportunity to help her get her finances in order, but also to try to explore the reasons behind this compulsive spending. It may have always been there, but being home alone and not having as much ability to get around could exacerbate her loneliness, and whatever sense of isolation or depression that could be leading to her racking up so many debts.

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Older men are prone to this kind of behavior too. A 2014 study in the European Scientific Journal found that compulsive shopping affected 29% of male subjects over 60. “The research finds a significant correlation between problematic shopping and depression, proving in this way the existence of a link between how the person truly feels about his life and the use he does in relation with that of the shopping itself,” the authors from the University of Palermo found.

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The researchers make a case for becoming more involved in helping your mother-in-law run her domestic affairs. “If the elderly person lives alone, [she] should be encouraged to cultivate interests and take part in activities promoted by clubs, associations and parishes within the community. Part of the individual’s primary group is also [her] GP who, being a clinical person, is able to identify abnormal signs in the patient’s mood that could hide possible depression,” they added.

An estate attorney will settle your mother’s estate; it would make more sense to arrange that now and to talk to her bank. You could also talk to her about becoming her financial power of attorney. Compassion from you, a community for your mother-in-law and cognitive therapy goes a long way. Some 6% of women and 5.5% of men are compulsive spenders. It may help for your mother-in-law to seek out a group that deals with compulsive spenders.

Critically, it would help her realize that she is not alone.

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