Dear Dani DiMarco,
I remember researching the topic of compulsive lying some time ago...and as to whose problem, often the liar will not even feel that he or she has any problem.
So that does leave anyone who loves this person with choices to face, and here are some facts to consider:
I read once that there are actual changes in the brains of compulsive liars. Also, while compulsive lying is not in itself considered a mental disorder, it is often associated with an underlying psychiatric disorder or addiction, including as Didge has mentioned, low self-esteem. And unless a person wants to change, they will always choose their addiction over their loved ones. So if you choose to remain with the person, you should be prepared to take second place to the addiction.
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This article was written by an addictions counselor; regretfully, the problem often does end up in your hands rather than the liar.