Monday, May 4, 2009

Brother's (Book)Keeper?


Dear Amy:

My 45-year-old brother-in-law has always been financially irresponsible. He filed for bankruptcy. Currently, he and his second wife live with my father-in-law and do not pay rent or help with any bills. My 90-year-old father-in-law's bank account is being depleted because of the son's irresponsibility.

My husband and I have always been responsible with our finances. Last week we received a message on our answering machine from a collection agency asking for my brother-in- law to be responsible and pay his bills.

This is the second such call we have received. He has never lived with us, and I am unsure of how the collection agency got our phone number.
I believe that my brother-in-law should be told that we have received this call and should take steps toward becoming responsible.

My husband says it is none of our business.

Who is right? — Frustrated

Dear Frustrated:
Your husband may know more than he is telling you.
For instance, it is possible that he has agreed to co-sign for a loan with his brother. This would explain how a collection agency had your phone number, and why your husband might want to ignore the calls.

You should ask your husband and call the collection agency to get to the bottom of your household's entanglement in his brother's finances. Your father-in-law's financial situation should be a priority for you and your husband. If you two have always been responsible with your finances, you may be able to influence and mentor your father-in-law to protect his dwindling resources.

If you don't tackle this now, it will fall into your lap eventually — and the situation will only grow more chaotic.

Amy is right that it's possible the husband/brother co-signed on a loan with his irresponsible sibling...which would mean they're all now in hot water. As she suggests, it would explain why he's unwilling to deal with the phone calls. However, if the couple has "always" been financially responsible, and this is the first time collection calls are coming to them (in other words, the husband doesn't have a history of slipping his brother cash behind his wife's back), it seems a bit of a harsh accusation to make...

The only loans I'm familiar with are federal school loans, so I don't know if this applies to other borrowing situations. But having just completed a bunch of exit interviews, I know that borrowers are required to give the names and contact information of "references" who will be contacted by the collection agency if the borrower defaults on their loan. I also know that these references don't have to give their permission or consent to be named on the form.

They're not co-signers--not responsible for the loan--but they will be contacted and unfortunately, suffer for the wrongdoing of others if the borrower can't be found or refuses to contact the lending agency to make arrangements to pay back the loan.

It's my (very uneducated) guess that this is what has happened....I hope the woman who wrote in will try to ask some open ended questions before assuming that her husband co-signed on a loan with his brother. And even more, I hope he didn't do that very foolish thing at all.

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