DEAR BRUCE: My son has credit card debt. He quit paying a year ago. The nonpayment, late payment and interest have now been placed on the account over the original charges. A debt-recovery company has purchased the default. The group has offered a settlement offer for the original charges. This seems like a good opportunity to settle this account. What steps should be taken to ensure this is indeed a settlement and will close this financial fiasco? -- J.D., via e-mail

DEAR J.D.: While you didn't indicate that he hasn't done it before, I'd be willing to gamble that he has. If you pay off his debts, you're just rewarding his bad behavior. That having been observed, since the debt-settlement company has purchased his account, not only would they be willing to settle for the original charges, but very likely significantly less. You call this a financial fiasco. It appears your son has acted very irresponsibly. The first thing you ought to do is head off that irresponsible behavior. If you choose to settle this, I'm sure you can negotiate it for a substantially less money since this company very likely paid only pennies of the dollar for the account.

DEAR BRUCE: My mother died and left her half of her land/home to my middle sister, so she would always have a place to live. She was mentally ill. Unfortunately, mother trusted my oldest sister's husband to handle her estate. He took full power of attorney on the property and put it in his wife's name. When my middle sister died, she had credit card debt of $40,000, which I believe is on my deceased mother's credit card. They had full knowledge that she was using the card. They paid the payments, I believe because it was easier to pay a small monthly amount than to give her out the money my mother left for her. I still own an eighth of the home and property. They want to sell the home. I think the money should be used to pay off the credit card debt and hospital bills of my middle sister. They are greedy and want the money. Since they transferred the home to my oldest sister's name before my middle sister died, does the credit card company have any claim on the house, or did they get away with what I believe was borrowing money from the credit card company with no intentions of it being paid back? They stopped paying the credit card and hospital bills when she died. To add to this, the land is titled in undivided interest. They say they are going to go to court and have my eighth marked off so they can sell it. Mr. Williams, I can't live with knowing they used my mother's good name and credit to cheat the credit card company. I wanted to get a copy of the deceased's credit report, but you have to go through the executor to get it. Well, he certainly doesn't want me to see it. I want to do what is right. I do not know which credit card company it is, but I do have their Social Security numbers. -- D.C., via e-mail

DEAR D.C.: You have my sincere sympathy for this convoluted family affair. As soon as money looks available, everyone has their paw out. It is very difficult to sort out. Why your mother chose her son-in-law to handle her estate is a different matter, but that is done and she is no longer around to change that arrangement. You mentioned that the property is in your sister's name, but then you point out that you have an eighth undivided interest. I think what you're saying is they want to go to court and have eighth subdivided from the property, but since it's undivided, you would have to agree to that. All things considered since you feel so strongly about your mother's name, credit, etc., you really should seek the services of an attorney who will help sort this out. Your heart's in the right place but whether you can afford this type of an activity is yet another matter. It would appear, if everything you say is accurate, that there have been some egregious violations that should be addressed.

DEAR BRUCE: In the best of times, our Michigan home appraised for $425,000. We had the home appraised last week at $345,000. Our mortgage loan is under 5 percent interest rate, 15-year fixed, with $130,000 still owing. Both of us may lose our jobs this year either by being terminated or when the automotive tier 1 file for Chapter 11. Today, each of us would get a severance package of $90,000 and $70,000; this could change in the future. We are contemplating refinancing with cash out at about 5 percent, 30-year fixed, closing costs around $3,000. We would put the cash into a short-term CD or a savings account and not touch it if we keep our jobs. We would also be able to offset a bit from a cash-flow perspective by taking a greater mortgage-interest tax deduction -- almost double. Our credit rating is 790. We are 50 and 52 years old, 25 years with the company, have about $50,000 in cash and $350,000 in 401(k). Previously, majority was in stock, which is why we have so little now compared to 2000. Kids are through with college and are on their own. While it's not easy to predict whether we are going to be terminated, say chances are greater than 75 percent within the next six months. If we're fired and can't get jobs locally and can't sell the house, which seems a real possibility, we thought we could use the cash out to make our mortgage payments or, worst case, take the cash and give the house back to the bank if we found jobs somewhere else and could not sell the house. We have no credit card debt, no car loans and our combined income is around $225,000. Do you think this is a good idea? We thought we would take out only the amount that would equal our current payment, or around $100,000. This seems like it would give us more options. -- J.B. Michigan

DEAR J.B.: I think you're starting to panic when panic is nowhere near called for. You mentioned at the end of your letter that you could give the house back to the bank. That is insanity. You say that the house appraises now at $345,000 and you owe $130,000. That still leaves you with over $200,000 in equity. Let's assume that you had to sell it for $50,000 less than that. You'd still have $150,000. Yes, the house may have to be sold for less but you could clearly sell it and still walk away with a considerable amount of money. The idea of refinancing right now doesn't make a whole lot of sense, either. You have a 5 percent loan, and you could pay off the mortgage should you chose to do so. You also could rent the house in the event you had to leave, albeit at less than it should rent for. Your credit is good, you've got a substantial amount of cash, you're looking at a buy out and you may not lose your job. All the way around, you're paying a huge amount of interest on problems that you don't have. At the very least, don't even think about letting the house go into foreclosure. That would be the height of foolishness. I am sure that there will be a lot of finance people out there saying "Hey, if you're going to let it go, call me." Frankly, I would be one of them.