My father-in-law is in a nursing home that costs $7,000 a month. We have spent through all of our savings and retirement f...Read more
That does sound like a difficult situation. You should be able to work something out with the credit card companies, but your in-laws probably can’t walk away from the debt altogether. The first question is whether your mother-in-law was a signatory on the credit cards as well as your father-in-law. If not, you’re in better shape because she’s not responsible for her husband’s debts. If your mother-in-law is on the debt, then the transfer of the interest in the farm could be deemed "fraudulent." This doesn't mean that there was any fraud involved, but the credit card company could consider that she transferred the farm to avoid paying a debt. This could also be true of the house if you and your wife paid less than fair market value for it. The consequence of this is that the creditors could reach the property.
The 401(k) account is protected from creditors, so spend it last.
We recommend contacting each of the credit card companies to see what you can work out. If they won’t negotiate, then at some point you may need to simply stop paying the cards and wait to work something out when and if they sue. This may result in a lot of dunning calls. You can tell them to stop bothering you or your in-laws. It is a good idea to see if there is any service in your area that offers help with creditors or you can consult with a local bankruptcy attorney (or both). In fact, except for the fraudulent transfer issue, bankruptcy may turn out to be the best protection. Again, a local bankruptcy attorney could advise you on this.