Dear Debt Adviser,
My in-laws, who are both over 65, are living on Social Security. They have no savings, about $35,000 equity in a house valued at $70,000 and approximately $30,000 in credit card debt. I realize I must address their spending habits to prevent future debt and am working on a spending plan for them now. What and how is the best way to eliminate their credit card debt? Should they refinance? Should they take a home equity loan? Should I buy their house and let them pay me rent, not to exceed their current mortgage payment? Thanks in advance for your answer.
— Harry

Dear Harry,
I think your in-laws are lucky to have you. I’m more than a little concerned that you are the one writing to me, not the in-laws or their offspring. You are right on track with working out a spending plan. However, it is critical that the in-laws participate in this process. It will be much easier for them to stick to the plan if they feel it’s their plan, not yours.

You said they are over 65. I assume you picked that number because they are not over any other round number such as 70 or 80. Heck, for that matter, at 85 my father was a ball of fire! So most likely, they are far from feeble and helpless. In fact, they probably are still employable, at least part time. Some great community service organizations can help them re-enter the work force with confidence and dignity. Check with your local United Way or chamber of commerce for some recommendations.

Be wary of taking over their finances. Not having savings is a real problem, whether you are 65 or 35. If there is no really good reason for this lack of a nest egg, be doubly careful how much you offer to help. You are not a retirement plan!

Here’s my advice. Try it, then stand aside and see what happens.

First, have a long talk to help them see clearly why they have this much debt on credit cards this late in the game. They have to understand what they did so they can stop doing it in the future.

Next, have them put together a spending plan and include debt payments. Encourage them to include some part-time or even full-time work. Work stimulates, helps pay the bills and it’s harder to spend money while working than when idle.

They have so few assets that I’d be wary of tapping the house for funds via a home equity loan unless it is part of an overall plan to improve their financial situation. Your offer to buy the home and then charge them rent may sound like a dream come true to them. But think of the potential for the deal to become a nightmare for you if they can’t or won’t make the payments. You’ll have absolutely no practical recourse in that situation.

If they want to look into a reverse mortgage, I’d suggest you send them to a good HUD-approved HECM, or home equity conversion mortgage, credit counselor to see if that makes any sense. They won’t be alone! David Jones, president of the Association of Independent Consumer Credit Counseling Agencies, says he’s noticed a “major uptick” in older clients seeking counseling.

Paying the minimum amounts due on credit card balances can be frustrating and takes around seven to 10 years to accomplish payoff, depending on the lenders’ policies. Getting relief in the form of lower interest payments may make a real difference. Many lenders have hardship programs that seniors (and others) may request and for which they may qualify. These programs lower the interest rate on the balance due, which allows more of the payments to pay off principal.

If their reduced spending plan does not free up enough money to make some sort of significant payment on the debt, then bankruptcy may be a reasonable alternative to consider. Lastly, be careful of community property laws if your state has them and be sure to use a good attorney who is sensitive to elder issues if you go down that road.

Your in-laws have years of life ahead, and it is not too late for them to plan for them. Offer them advice, love, compassion and encouragement — but resist the urge to be their savior.

Good luck!

The Debt Adviser, Steve Bucci, is the president of Money Management International Financial Education Foundation and the author of ” Credit Repair Kit for Dummies.” Visit MMI for additional debt advice or to ask a question of the Debt Adviser go to the ” Ask the Experts” page and select “debt” as the topic.