Mom and dad moved to Florida about 5 years ago to enjoy retirement and golden years. Unfortunately this past year mom was diagnosed with dementia which has been progressing fairly quickly and requires round the clock attention. Dad on other hand was diagnosed with bone cancer last year and has been in and out of hospitals with limited mobility due to his disease and a fractured hip. His cancer plan has been limited due to various complications along the way but we finally were able to get his hip replaced last week and he is now in the hospital and rehab -we are hopeful we can begin chemo after this latest setback. I am in the process of getting them eboth eligible for Medicaid and have spent down most of their savings on in-home care and medical needs. But between the two they have significant credit card debt , over 100k. To be honest it's very upsetting to find out your parents financial situation when you have been blinded to any issues your entire life. Dad is lucky to have a pension, NJ teacher for 30 years, but is underwater in paying the debts and only squeeking by with the minimums and not paying these bills down. I have been reading alot and others have told me not to pay these bill's and just focus on medical and care for your parents. I have POA and dont want to do anything wrong or be negligent so was going to contact each of the credit card companies, but I am afraid if I do not pay these bills from what is remaining each month from my dad's pension, that it could affect Medicaid somehow, their mortgage on the house and they could lose their home or be evicted. Mom will have to go into a facility probably in the next year but hopefully dad has a few years left in him to stay in their house if he can survive the chemo. I have an elder care attorney who is helping me get them eligible for Medicaid but she is not really guiding me on their financial debt and has said we have to be careful not to defraud the creditors or move things which puts it out of their reach or I could be held liable for fraud. So how does a son help him mom and dad? Welcome any thoughts from the group. THANK YOU
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One thing I'm not so sure that I agree with, as far as not contacting credit card companies. Once your parents are both qualified for Medicaid, and their only income is social security and/or a pension and/or VA benefits, and all of that money, less a personal needs allowance, must go towards the nursing home........you can contact the credit card companies, by phone and by letter, and simply tell them the truth. You have to provide them with your POA. And, it can take at least 6 months before they charge off the debts, and then they send it to a collections agency. But, you are not personally responsible for paying your parents' debts, unless you have co-signed.
Speak with a bankruptcy attorney. If your elder care attorney cannot refer you to at least 2 different choices, who you can research online, then I would say that you have the wrong elder care attorney, but that's water under the bridge at this point.
Just a few things to add. Credit cards are unsecured creditors. They have no recourse to your assets unless they go to court and get a judgment; even then, they cannot touch social security. Not even pensions, I don't think. That's how OJ Simpson gets to keep all his NFL pension, despite a multi-million court judgment against him from the Goldman family. If the credit card company gets a judgment and garnishes your bank account that only has social security, you appeal, and get that money back.
Detailed Advice: I don't know what happens after bankruptcy, but please read this. If you have a credit card issued at the same bank where you have your checking or savings account, the bank probably has a "right of setoff"...... which means that they can automatically tap your bank accounts if you default on your credit card. It's one of those complex clauses within the paperwork you sign when you open an account. Please ask a lawyer about this. My advice? Never, ever get a credit card from the same bank where you keep your funds. Ever wonder why a bank that knows you never have more than $2500 in your account offers you a credit card with a credit limit of $5000 or more? Ever wonder why you keep getting mail asking you to open a new bank account with Capital One.......when all you currently have with Capital One is a credit card? Well, now you know.
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NJ teachers get a decent pension which may take Dad over the income cap Medicaid allows. You then may need a Miller Trust for the overage. This too a lawyer can help you with. Get one versed in Medicaid.
The house won't be counted as an asset but that and the car/s they own will have to be sold at Market Value. Not sure if Medicaid will allow the proceeds to be used to offset debts or will be needed for their care. A good lawyer should be able to answer these questions.