Team of pros can fix Mom's money woes

Next, I suggest using a reverse mortgage counselor to find out what amount she may be eligible for and if it will be enough to pay off her debts. She can find both types of counselors at Association of Independent Consumer Credit Counseling Agenciesor DebtAdvice.org.

If you choose an agency that is also approved by the Executive Office for U.S. Trustees, she can also get the required pre-filing bankruptcy counseling at the same place. She may not file, but the counseling will help clarify her options.

Once she knows her options and has a spending plan in place, I want her to speak with an experienced bankruptcy attorney. If your mom has used a local lawyer over the years, that might be the logical place to start for a referral.

From what you have told me, it sounds as though a Chapter 7 bankruptcy may be better for her.

A Chapter 13 will require her to make payments for the next five years and live on a very tight budget. If her income increases, she'll have to increase her payments. A Chapter 7 will wipe out most consumer debts if she is eligible, so she can start with a cleaner slate.

Only her attorney can give her legal advice and having all the information from the counselors will make it much easier for her to make a decision.