Okay. I'm totally against reverse mortgages, which is another way of saying home equity loan.
What happens if Mom can't put $600/month away because of unexpected health problems or other unexpected expenses? What happens if she has a heart attack or stroke and her insurance doesn't cover all the hospital bills? What if she has a casualty loss and her homeowner's insurance doesn't pay for all of the damage?
I'll tell you what happens ... those expenses eat up her savings and she won't be able to use it to pay the loan and ends up homeless and living with one of the kids.
There are just too many unknowns in all of this for it to be a workable plan. And at the end of the road, Mom can't go into a nursing home and have a home in her name and other assets like a savings, unless she pays out of pocket for all of the expenses... and nursing homes are unbelievably expensive.
I do completely understand her desire to get out of debt. She doesn't want anything to happen to her and have her debts eat up her estate.
I don't know how old your Mom is, and the nature of these bills, so it's a little harder to offer advice. If she's got an IRA, and is under age 59 1/2, she can draw out some of that to pay medical bills without incurring the penalty for early withdrawal. But this only applies for medical bills. Otherwise, the penalty is pretty stiff.
If she's developed a plan to have $600/month to be able to save (understanding that this will only happen if the bills go away), then maybe she can develop a plan to save a smaller amount every month and still pay the bills.
I suggest she sit down and look at the bills. If she can scrimp just a little more than she's already doing, maybe she can pay off the least one a little ahead of time. Then, she could take the money she would have paid on that bill and apply it to the credit card that has the highest interest rate, while still paying on everything else. You'd be surprised what just a little extra paid in every month will do.
Also, have her look at her property. Maybe she has some things she could put into a yard sale. Maybe some of you kids could help her sell some things she just plain isn't using and so forth. If she could just get one bill at a time taken care of, maybe this huge loan could be avoided. I hope you understand my meaning, here. I understand that a yard sale here and there isn't going to immediately solve her problems, but it will maybe eliminate one bill.
That's the way debt stacks up, one bill at a time, so maybe it can be eliminated one bill at a time. The trick here is to keep from getting discouraged and stick to the plan. Also, she might consult with Consumer Credit Counseling. They are in the debt reduction business, and they can get creditors to lower monthly payments, lower interest rates, and so on. If she could get half of her creditors to do that, she'd probably be okay.
Another thing she can look at is placing the house in one kid's name. In that way, if something happens to her, the debts won't be applied to the value of the home and the rest of the estate. There would have to be some kind of agreement among you kids as to how things would be handled, you know, but it's possible to do a lot of creative things if everybody cooperates.
The main thing is to not create even more debt that may or may not be able to be repaid. I think the stakes are just too high for a reverse mortgage or a home equity loan. Too much can happen in between.
If I was in her shoes, I'd see about selling my car and maybe getting one that's not quite as nice, but still runs well, maybe selling any collections I had, and that kind of thing, then using the money from that to put toward those bills.
Anything but risk losing my home!