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Have anyone ever had to suggest the possibility of filing bankruptcy to a client? At what point did you look at their financial standings and realize they are in a hole they will never dig themselves out of? I have recently taken on a client who is in serious debt with many loans and some medical charge offs. One of the spouses quit their job and had taken a serious pay cut. However, when I first took them on and did some budgeting I found that it would take some time but it was doable to work on getting them back on the straight and narrow. They had a habit of just not paying their monthly bills and most utilities were in danger of being shut off. I have managed to get all utilities (except for one which is on a payment plan) up to date. However, the same spouse that took the pay cut has now quit the new job with no new one in sight. Even though I have given them a spending plan they do not follow it (I realize I cannot tell them how to spend). Funds that have been set aside for loan payment, etc.. are being pulled for spending. They will be falling behind again as the income is no longer there for to cover all of their needs. Unfortunately, I feel one spouse is on board with following the plan while the other is out spending. How do I approach this? I feel that my suggestions may be causing conflicts between spouses which is something I definitely do not want to do. Any words of advice would be appreciated.
This sounds to me like you are going to continue to beat your head against the wall. I would excise myself from this situation and recommend they talk to a financial therapist and/or consult with a bankruptcy attorney to see if they are good candidates. If they aren’t willing to follow your advice, you are just a detriment to them as you are taking additional financial resources out of the house and aren’t improving the situation (not for lack of trying).
I have a client who I was brought into help many years ago by the family as they were an elderly couple and the family was concerned about the debt they were seeing. Within the initial consultation I could see that they would never be able to cover their expenses or the minimums on their debt and recommended a bankruptcy attorney. With their age, we had the option to do nothing and just let the creditors come after them in court and hope they wouldn’t, but we ultimately decided to file in order to stop all of the letters and calls that were causing enormous stress. Not too long after filing, they were getting offers for low limit and secured credit cards. My client’s credit is back over 700 now and she get credit card offers all the time. Your clients can get themselves back in trouble pretty quickly if they aren’t willing to make changes and it will serve as a source of endless frustration for you.
I agree with Caitlin and have been in a similar situation where I said you can’t afford my services at this time and I need to step out. I find that if I frame the situation that in that way there is no hard feelings but rather puts the responsibility on the clients, where it belongs in this case.
Good luck with this.
Thank you for your advice in how to approach these clients. They will not take what I have to say very well at all but it is what needs to be done. I thank you for reassuring me that was I was thinking was the way to go.
Thank you for your input. Wording it in a way that puts the blame on myself for being a burden is a great idea.
Hi Jacquelyn,
Thanks for sharing this situation. It’s one I am currently dealing with as well and I agree with Caitlin’s recommendations.
FYI My client is a woman in her late 70s who became ill and got behind in her bills. She lives with her son in his 50s who is very concerned about the house being sold and losing everything. She was hospitalized and in rehab for approx a year and the son realized his mother was over $30,000 in debt with 6 credit cards. When she returned home, I was asked to help with the bill paying and was able to clean up the medical bills and paid property taxes after liquidating 2 of her insurance policies. But her income doesn’t allow for payment on the debt.
She insisted on not filing bankruptcy so I contacted a debt consolidation company on her behalf (Greenpath) who set her up on a payment plan which only took 3 of her overdue credit cards (which are currently in collections). I also contacted Elder Care legal service (who provide free legal help for seniors) and they reviewed the information and said my client was “uncollectible” and had no income outside of pension and social security to pay the debt.
Citi bank pursued a court case against her for the $5k and her son convinced her to respond to them. A second attorney agreed that she was not able to pay what they wanted and to just do the cease and desist letters and let it go. My client is ok with this but her son isn’t as he’s worried about what might happen and wants to hire an attorney to take care of this. I’ve decided to continue working with them only on the regular bill paying and will d/c Greenpath as that payment will be needed for this year’s taxes. Unlike other clients who have been scammed or there is fraud, the credit card debt was legitimate and the client had just transferred debt from one card to another, so there was no legal defense other than she doesn’t have the ability to pay.
Just wanted to say that we have these cases sometimes and need to determine what we can do and when we need to walk away. I have told clients that they can not afford my services, and I give options whenever possible. In your case, I don’t see that you need to take any blame for their situation. They are doing this themselves and hopefully you can share with them that their spending habits are putting them in a precarious position and you can no longer help. Thanks again for sharing!
Barbara Boustead
608-515-4083
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