Relative Needs Help!
by Dave Ramsey

My uncle’s wife died last year. An attorney handled probate for him, but I don’t think it was an estate attorney. He doesn’t know if she had life insurance, and now he’s left with medical bills totaling about $8,000. There are also credit card bills of $11,000. The house is paid off, but he wants to get a loan and consolidate the bills. He currently receives about $3,000 a month income between pension and social security, and he’s a little confused about financial matters. What can we do?

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Dear Dave,

My uncle’s wife died last year. An attorney handled probate for him, but I don’t think it was an estate attorney. He doesn’t know if she had life insurance, and now he’s left with medical bills totaling about $8,000. There are also credit card bills of $11,000. The house is paid off, but he wants to get a loan and consolidate the bills. He currently receives about $3,000 a month income between pension and social security, and he’s a little confused about financial matters. What can we do?

Sheila

Dear Sheila,

You’re right about one thing. A consolidation loan isn’t the answer to his problem. You need to sit down with your uncle and very clearly think through everything that’s going on right now.

Whenever someone passes away, their estate – anything they owned – stands good for any bills owed. In this situation, her portion of the house has to stand against her bills that she owed. If her bills go unpaid, the companies owed – medical or credit card – could take a lien against the house. That means if he ever sells it, they’ll take what’s owed from the sale before he sees any money.

But this is not a huge mess, and he can get out of it if he’ll make a plan and stick with it. You need to sit down with him and work out a really tight budget that he can live on. List all of his debts from smallest to largest and map out a game plan for how he’ll attack the debt every month. If he would live very frugally – on about $1,000 a month for a while – and use the balance to pay off debts, he could be debt-free in a year. If he’s lives a little higher on the hog it could take a year and a half.

You’ve identified the biggest problem here, which is disorganization and no game plan. Creating a budget is setting out realistic mathematical goals, and as a loving family member it would be a good idea for you help him work this plan – at least for the first few months.

Dave

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Call Medical Providers Posted by Sabrina from Arizona My sister-in-law passed away about two years ago. This left my brother in a similar situation. My brother assigned me as power of attorney to help handle his bills. I called all of the medical providers and explained the situation to them. Many of them wrote-off the amount due, because of her death. Many of them told me this is standard practice. Not all of them new she had died. Others reduced the amount owed. It is worth a phone call.