As POA, if I file bankruptcy for LO, what are repercussions? Pros vs Cons?

Update. We decided against the bankruptcy option. Mom's had more medical expenses and requires more supplies and a private aide for 2 hrs a day so I can work - I GOT A PT JOB! - pays pays peanuts, but better than zero. Plus, gives me a break from home so I'm much better at home. It's as a construction helper, and I'm learning some skills. It's also like a free gym membership, lol.

We decided to default on the credit cards. The bank calls ME - don't know how they got my number- I just tell them that she has medical bills and will pay when she can. They closed both credit card accounts. GOOD! Mom was upset about not paying the cards at first, but she finally accepted it after I explained several times that my husband and I can't foot her bills.

I changed the way we pay things too and re-evaluated her monthly reimbursement to us, though right now her entire SS ck is paying for the 2 hr/day custodial care that insurance won't cover. Mom bears the brunt of her own costs now, and I'm applying for aide through the state which is also a Medicaid application. Still haven't off'd that bed. So many other things going on since she fell again, went to a crappy rehab, and is home again now in very bad shape. Also looking into hospice care at home and making a plan for when that will be needed.

Thx yall for all the advice and sharing your stories, etc.

Oh boy, is this familiar. Went through the same scenario with my Dad a couple of years ago. Mom had died in 2016, but they had maxed out their credit cards paying for her medical expenses because they were in the Medicare "donut hole" and couldn't afford her insulin without charging it. I'm Dad's Medical Power of Attorney, but was able to get all of this done with no problem. Your Mom would have to be able enough to go visit the attorney, appear in court, and sign papers. If your Mom can't do any of those, then you may need a Durable Power. But then again, an attorney could set one up for you in a matter of days. We found a Bankruptcy Attorney who did everything....filing, advising, court hearing, etc. for a flat fee of $1300. It is well worth it to spend that money to get one, because the credit card debt will eat your Mom alive. Shop around for attorneys, and look specifically for Bankruptcy ones, because they have the routine down pat. Unfortunately, this whole scenario is becoming WAY too common for seniors who just can't afford to live on their social security when savings run out, and those credit card companies will stand around like vultures while they pile up charges. We discharged about 28,000 in credit card debt for Dad, and now he can afford to pay the monthly bills he has. If you live in a large, populated area, try calling your state Bar Association and maybe they can send you a list of Bankruptcy attorneys in your area to call. If the Bar Assoc. doesn't have one on a list, don't call them. They don't put the scumbags and those who are close to getting disbarred on those kinds of lists. Good luck!

Your mom no longer has a house and there's no other assets like insurance policies, savings accounts, stocks, etc...
Default on the credit cards and the bed. Stop paying the bills on both. Let the bills and all the interest keep running up. You (or should I say your mother) will start getting the harassing phone calls from debt collectors and notices in the mail that look like court documents. They're not. They are from collection agencies. Ignore them.
At some point usually around a year or so after the credit card bills and the company financing the bed stop getting paid, they will agree to settle with your mother for far less than she owes. You wait until they make an offer you find agreeable. And they will make such an offer because they don't want to have to sell the debt to a collection agency because they get only pennies on the dollar when they do.
Your mother's credit will be ruined for a few years, but it sounds to me like it's ruined already. The credit cards and bed company will work with her to collect something and you won't have to spend the money or jump through the legal hoops to file bankruptcy for her. Sometimes this is what has to be done. After a couple of years credit card companies will start sending your mother offers to get credit cards with low credit lines and very high interest rates. Don't accept them.

Sounds like a good plan. Especially since you guys are having to foot the bill for a lot of the things she uses. I would definitely talk to an attorney.

Update. I broached the bankruptcy option with Mom. She's thinking about it, which is positive. Until she agrees though, I'm waiting before contacting a lawyer.

In the meantime, I'm going to start paying costs directly through her bank account as much as possible instead of using ours.

I'm also going to move her checking to a different bank because her two credit cards are with that same bank.

Thanks for all the good info, yall.

A few more facts to answer questions yall asked:

I have Durable POA and POA Medical. Mom also has an Out of Hospital DNR, an Advanced Directive, and a Right to Refuse Treament document. I will need to review the DPOA for bankruptcy language.

FYI, Mom was a legal secretary for 40+ years. In one of my former lives, I was a certified paralegal specializing in banking and debter/creditor law; very familiar with corporate bankruptcy from the creditor side.

The stuff in storage is half her crap and half our belongings we had to store in order to make space for her in our home.

Expenses we've incurred include the minor remodel- widening doors and adding a door to an open gameroom to make it our new bedroom since we gave Mom the master suite downstairs, ramps into the house, and the cost to create closet space for hubby and I out of another room upstairs. My general contractor is a great friend and didn't charge for any labor; so it's materials costs.

Mom has mobility and ADL issues. Most of the money we've spent is equipment and furniture/bathroom aids insurance won't pay for (or the what they do pay for is inadequate). I have had to buy hospital bed size sheets (fortunately, my brother bought her hospital bed because the standard one insurance provided did not meet the doctor's script for her medical needs). I've had to buy her special underwear for daytime, pads, depends for nighttime, chucks, tissue out the wazzu, and many other little things that add up. I also took out a prepay cremation and pickup policy just last year. I put $500 down and pay $50/month on it. I pay for her scripts, parking at doctors and hospitals, but she covers the little doctor bills that medicare doesn't cover. I also hired a weekly cleaning/disinfecting crew because I can't do all that too.

I may have left out that I'm Mom's caregiver 24/7. I am not paid because, well, she has linited funds -so what's the point. I also manage all her care and schedule with doctors and Homehealth. I'm their primary point of contact. Mom can't handle her affairs post stroke. When she does, it makes it worse for all of us. It's easier to work her life around OUR life instead of the other way around. I'm a bit OCD and I need stability and order in my life. Left to her own devices, Mom creates chaos.

Yes, I'm concerned about my personal liability if she should file bankruptcy. I will contact an attorney and yall's points, opinions and experiences have given me some good questions to ask.

If I have to discharge the debt she owes us, sobeit; we'll never see that money anyway. I mostly keep the spreadsheet to show her and CYA to my brothers should there ever be a question in the future. Family. You never know. Things are good now, but money handling can be a sticky wicket.

Idk if I'm on her credit cards, but I "keep them for her." I'm on her bank account, not by choice, but because she put me and one of my brothers on it a long time ago. Apparently, it's legal to put people on your account WITHOUT permission, but not ok to take them off without ALL "account holders" present. Found that out a few years when my brother wanted off the account. BOA said we all had to be present and sign release papers. Pretty hard to do when the three of us lived in three different states. We managed to remove him after Mom moved here and my brother came for my son's wedding.

Anyhow, I didn't charge her for moving here (GA to TX) because the cost was inconsequential to me. My BIL on my hubby's side is a mover -and a SAINT; he loves my mom and all mom's. He said he'd charge me $1. My brother (I have 2) the one who also bought the hospital bed gave me $1,000 to give to my BIL. So, I used that to pay for their accommodations, all meals, and then insisted he take the rest as a tip for his crew.

I've been very blessed.
I realize that I should have been paying as much as possible thru her account, not funneling thru ours.

Babz, heed the advice of Katydonnelly, who knows bankruptcy law as a practitioner in that practice area.   And see a consumer bankruptcy attorney.  Elder law attorneys may have knowledge of, but are not specialists in bankruptcy law.  It's a field of practice unto itself.    And if you take this route, you'll need all the legal help a good consumer bankruptcy attorney can provide.

Katy, you raised a very good point about fraudulent transfers.

Imho, I believe that you will require a Durable Power of Attorney in this instance.

If she does not have Dementia, then she could file her own bankruptcy. She is not allowed to pick and choose which credit cards are excluded. All creditors have to be listed within the petition.
If she has a zero balance, then it does not need to be listed. If creditors were inadvertently omitted, the three credit reports receive notice of the filing and creditors would automatically close the accounts (even accounts in good standing). However, your mother will be solicited for new credit almost immediately after filing the bankruptcy.
I recommend meeting (over the phone) with various counselors (most will offer a "free consultation") to get an idea of what they would charge and the benefits that a chapter 7 would offer.
I would also recommend selling her personal belongings in storage and use the funds to retain counsel. Otherwise, the trustee would be able to sell the items to pay the creditors. Keep track of what was sold, since it would need to be disclosed in the Statement of Financial Affairs Q18 of the petition.
Do not reimburse yourself for the $12K in expenses, since that would be treated as a fraudulent transfer and the trustee could ask for those funds back. It could also be an issue with Medicaid. I do recommend using her debit card to pay for food, medications, clothing, and doctor visits. Pay for those items, before paying other credit card bills.
Depending on how much she receives from all sources, SSI, retirement, and family contribution, she may qualify to have the petition done for free through Legal Aid. They would require the court filing fee to be paid which is $338. Katy Donnelly - Ch 7/13 Bankruptcy Attorney in ND Ohio

First and foremost, Way to go with the spread sheet. I did that for my Mom also. We never had to add to her income for her, but I understand you problem. First I would talk with a Elder Attorney, find out just what you are liable for - I do not believe it is any of her bills. But find the answers, and ask them about the Bankruptcy idea and if she will never be independent living again, then just get rid of the storage unit (it is useless). And as others have said, Medicaid would step in if she can document all the information they will. Again the Attorney will help with some of that. Then step back and remember you need to be sure you are okay in the long run. And spending all you money to see to your Mom is not the way. Start with the Attorney and good luck. I am sure there is a resolution to all this.

I see this as a tough situation. First, why is she with you and not being cared for in a facility where Medicaid would take care of the expenses. I don't think you are in a position to cover her expenses and should not be expected to. I don't know all the legal ramifications here but I would talk to an eldercare specialist and do some detective work with the professionals who deal with things like this and know the medicaid rules. You need information now - before you do anything that could put both of you in jeopardy down the road.

How often does she "visit" the stuff in storage? If it's not often, she doesn't need it, and you need to try to sell what you can - hopefully with her permission, but without if you have to. If you get the most sentimental stuff out, then just stop paying on it. They will get rid of it, I think. (I am honestly not sure how that works, so ignore me if that would cost you more money.) I read that the average value of materials in storage is usually exceeded by the cost of storing them in about four months of payments. Offload that ASAP. If she bankrupts, you have to list what she "owes" you as one of her debts, and that too will be cancelled. My brother bankrupted on my mom many years ago, and he owed her like $12,000 because he was bankrupting on his other creditors.

IF you can swing it, I'd consult with an elder law attorney, or look up consumer credit counseling for guidance for going the big B route. IT's not the end of the world to file bankruptcy, but of course if it can be avoided all the better, especially for you. Good luck with it all....

My parents were in a similar situation a few years ago. I also considered bankruptcy. I chose a different route. My father is the one with Alzheimer’s my mother the one with money problems. They were $25,000 in Credit card debt, had a really big car payment and we’re behind on their mortgage and other bills. Here’s what I did..
1. I got conservatorship and guardianship of my father. All of my parents retirement income is in his name with the exception of one Social Security payment my mother gets..
2. I used a debt consolidator call led Greenpath Financial to cancel and reduce all the interest payments on my mothers credit cards. I now pay one monthly (much lower) payment to them which they disperse to all of the creditors.
3. I contacted my mothers credit union that financed her car. I was able to arrange one monthly payment to be missed. I think it’s called a financial hardship request.
4. I contacted my parents mortgage company and went through a loan modification process. I was able to show their financial hardship and have the loan modified into a lower payment. Their home payment is now $200 less every month.
5. I created a estate account, because I was required to buy law. I use this account to pay all of my parents bills which are now automated. I allocate enough money for my mother to buy groceries and have some spending money for the month. If she needs more I can transfer money into that account from the estate account.
6. I sold my father‘s truck which he could not drive anymore anyway. With that money I was able to pay off delinquent bills and put some money into savings.

this wasn’t an easy process and it took many months to get everything in order however I think it was better than filing for bankruptcy in our case.

If you Tell your mom you are doing this out of love and concern for her future and well-being as well as taking the stress and worry away from you maybe she will understand. I know how feisty seniors can be : ) I did have support from my husband who helped with those conversations and she eventually came around. Sometimes hearing it from somebody that’s not your child is received better.

I wish you the best of luck I know how stressful this can be but I guarantee you if you were able to get control of your mother’s finances everyone will feel a load off of their shoulders.

If she is living with you, then yeah, you have to take charge. See a financial, advisor you can trust.
Can you sell that bed and some of the items in storage?
If you can lose that storage bill and the bed payment, you would be better off.
You have to tell her no on spending.
Do not sign your name to any of her debt( I am sure you know that).

Your mom has to live with the consequences of her actions. That is why bankruptcy lawyers exist.

Take away all access to your mother's money now. Give her only a reloadable debit card with a small amount that she can use for sundries. Get rid of everything in storage - sell it if you can - and stop paying for storage. Also get rid of items - sell as much as you can - that you are storing since stored items are rarely used or needed.

Stop paying for things for your mother. Buy food and pay utilities from your accounts because everybody needs those. Make sure her medications, medical items and personal care items come from her money. I would suggest pre-paying for mortuary services so that is paid for when she passes.

Consult lawyer who specializes in family care or elder care about her debt and how to use your POA for her finances. He/She will probably advise you to talk to credit card companies and anybody else she owes to set up a payment plan and creating a "bare bones" budget for your mom - and make sure she sticks to it. It usually helps to pay down one credit card with her finances while meeting the minimums on the other. She/she can also advise you on setting your mother up with Medicaid if she qualifies. She/he is your best advisor for whether or not to file for bankruptcy.

First get in contact with a good Elder Attorney.  Second, quit spending your money to cover her debt.  Unless your name is on her credit card, quit paying it.  either call or send them a letter explaining (maybe after you contact the elder attorney) the situation that she has no money to pay the bill.   Sell the bed for a couple hundred dollars if not usable and taking up space.   The elder attorney will be able to help in all matters.  CALL TODAY.......
My mother has no life insurance either (she is 93)......I think back in their day even $1000 was a lot of money and they thought it would last or do them, but that is not how it is.  Even young kids today cannot afford life insurance........its a sad situation for a lot of people.  I don't know if you can recoop what you spent but do NOT throw away your spreadsheets......show everything to the Elder Attorney..........GOOD LUCK

Several red flags, the primary being you say she doesn't have dementia. Most POAs become "activated" when the person is no longer capable. Even if she had dementia, as others noted, the POA would need to be a very specially written one to cover it. If she doesn't have dementia, she would have to be the one to apply for bankruptcy and sign the documents.

Short and sweet here:
https://www.sasserbankruptcy.com/blog/the-power-of-a-power-of-attorney-in-bankruptcy/

You may be able to find one or more Elder Law attys who will give an initial consultation (usually less than an hour), to answer questions like this. You would be best advised to seek legal advice. Even though it might cost a bit now to get their help, if they CAN truly help get her out of this debt, it will slow or stop the drain on your resources.

(If the stuff in storage is crap, can you just start pitching whatever isn't really worth anything, eventually emptying it? If she doesn't go there or ask to see the stuff, I'd start getting rid of it, donating what might be useful to others, etc.)

Question: If you don't charge her for groceries or sundries, how are you spending $12k on her? Generally housing and food are the 2 biggest expenses a person has, but you own the house (even if there is a MTG, that would exist with or without her, it wouldn't increase your expenses), and you're feeding her and providing supplies (unless she's eating meals fit for a King everyday, enough food for a 3rd person also won't add up to that much.) A little increase in utils wouldn't likely add up to about 1k/month. It is rather confusing how you've presented that (BTW, I juggle my own expenses, my mother's condo and MC for 2 years before we could sell the condo, managed all her care and costs for 2 more years, managed her pension and SS, continue to manage the trust and now preparing for an estate account AND my daughter's debt, which she pays for every 2 weeks, so it's not like I don't know numbers!!! I also don't get paid for any of this.)

Get a book on bankruptcy from the library and browse through it. Then see if you can get a free or low cost consultation with an attorney once you have your thoughts organized.

In her situation, I'm not sure that there is advantage to declaring bankruptcy vs just not paying the bills and developing a thick skin for hanging up on creditors.

She has no assets. Her SS is really hard for a creditor to come after. Her credit rating is probably not a priority. No one cares if the bed is repossessed. Is there a cosigner that thinks bankruptcy will help?

I give thanks to Katy!!

This is a question that routinely appears and it seems we don't really know what to do.

My FIL died with some (not an atrocious amount) of CC debt. We did have to pay off a couple of them in whole, the others worked with us. Some simply wrote the debt off. Personally, I was scared they'd come back and dun the estate for the balances...never did.

DH was executor and I know after he'd dealt with each CC co, he sent a death certificate and a document stating that payment in full had been made. This was b/c FIL's atty told us to do it this way--don't just assume that the person on the phone is telling you the truth, or in fact, even has the authority to make decisions like how much $$ will truly satisfy a debt.

I personally would not give my mother nor MIL money to 'play' with. They know their limits and incomes and stepping up and enabling them to spend more than they have is not a good practice to get into.

You might call one of those credit consolidation companies - they can negotiate for a lower pay off and you send them the money. They use your payment to pay on credit card 1,2,3 etc. As one credit card gets paid off, they redistribute the payment over the remaining two cards, etc. That will mean, of course, that she will have no credit card to use for any emergency or storage - the cards are closed down. However, it's doable

Go back to your 'plan'. You added up household expenses (utilities, etc) and came up with a rental plan, of sorts, of what she would owe for her part as a roomer/boarder/tenant in your house. If there are 3 of you in the house, most people do the math by saying each will pay 1/3, What's the point?
Realistically, you have to pay all those things even if you didn't have her there. And it doesn't allow you to save any of her money for the eventual funeral/cremation, emergency. Not to mention the storage probably contains items that will just ruin if left unused for long periods of time. Bottom line, she pays you 50% of what you charged her for rent and then you turned around and gave it back to her for her 'real' expenses. Your real out of pocket is probably not $6K - she gave you some rent, you gave it back. If you really paid out of pocket for her needs, evaluate what it was. Forget her share of the mtg or utility payment: make a list of her income and her bills. The difference is what she can afford for any kind of housing or personal needs. One credit card and a bed? Tear the card up. Make min payment for the rest of her life and no more charges. Or make less than minimum payment - who cares. Just no more charges on it

In any event, you expect to get this rent from her and keep it for your use (like a regular landlord would do). Impossible. After one year, you pretty much charged her for housing and just gave it back to her.

Why does she live with you? Health, mobility? Can she live on her own in an apartment? Get her on a list for government apt where rent is based on income, sliding scale. She can just quit paying the credit cards and the bed and use all her income towards rent, food, utilities. Destroy all credit cards so she has none. Have her mail delivered to your house so you can toss out new credit card offers. She has to learn to live on available cash in the bank. Period.

You say she is clear headed, just a spender. So you sit her down with 'here's your income and here's your bills. Bottom priority on the list is, let's say, the storage. You are throwing away $xx a month to store things you do not use. We need to thin it out drastically. Sell all of the appliances - keep going down on price until you get rid of anything like that - frig, toasters,microwave, etc. Then go for clothing. Do some keep, sell, donate piles and make sure she's involved. It's very possible you can get the hoard down to a much smaller/cheaper storage or eliminate all together. If she's not willing, then go back to the income/bills list and ask her - you don't have enough for all of this, so what bill are you going to eliminate. Or ask her if she would like to start an application to live in a nursing home - they take all of your money and leave you with $30 (might be a tad more now) per month to do what you want and none of your money could be used to pay for the storage room. So storage seems to be the first thing of wasted money to deal with - keep bringing her back to that. She probably already has what she would need, in her bedroom, in the event she went to small apartment or to a nursing home. Thin out the rest.

You need a Durable Power of Attorney that has specific language stating the following:  To file Bankruptcy either Chapter 7 or 13 if my bills become such that cannot be handled from the funds of the family. It needs to be executed before the onset of dementia and recorded with the County Recorder.
Otherwise, your attorney can file a Motion to Appoint you as "Next Friend" in order to do the Bankruptcy. The Bankruptcy will eliminate the phone calls, you can also surrender the overpriced bed if it has a security agreement. There are no real cons given your mother's age. I recommend consulting with a consumer bankruptcy. See for a list in your area: https://www.nacba.org/ Shop around for prices. I am a bankruptcy attorney in Cleveland Ohio.

A simple Power of Attorney will not work for Bankruptcy. It needs to be a Durable Power of Attorney and must specify the following:
"To file Bankruptcy either Chapter 7 or 13 if my bills become such that cannot be handled from the funds of the family." In addition, it would need to have been signed before the onset of dementia. It should be recorded with the County Recorder's office as well.
In the event that it is too late for the POA, the Bankruptcy Attorney could file a Motion to Appoint you as "Next Friend" of your mother immediately upon filing the bankruptcy. The bankruptcy will stop all harassment calls to your home and allow the discharge of debt. In the Northern District of Ohio, we are conducting hearings by phone. I am a Bankruptcy Attorney.

Your profile says your mother is 90-yrs old but you don't state that she has dementia. Some questions for you:
- are you joint on any of her credit cards or loans or any debt accounts?
- are you her financial/medical or durable PoA?

You must remember that filing for bankruptcy also costs money. My MIL paid $1500 to "someone" who helped her file (and I think she also paid this person in possessions, like jewelry). The filing was valid. But 15 years after that she (and idiot husband) were in no better shape financially: he really never worked, she retired early from her low-paying job, they had a ballooning second mortgage, owed $12k in back property taxes and he still owed more than $10K in cc debt. In their early 80s he got Parkinsons and she developed short-term memory loss. My husband had PoA for her, no one had PoA for him.

Long story short we wrote the credit card collection agencies to tell them they both had dementia and had moved into nursing homes (not quite true but was imminent and it stopped them from contacting them). Any further mail was marked, "No longer at this address, return to sender." We talked to the mortgage company and basically told them the same and allowed the home to go into foreclosure. We sold everything of theirs that was sellable for cash and kept it out of their bank account (which was basically empty) for any of their future needs. It wasn't much, like $8K total. StepFIL became a ward of the state. We applied for Medicaid for her and she started in AL in a nice facility and is now in LTC.

At 90 years old I don't think there's any reason to continue paying on your mom's debt if she doesn't have enough to live on for basic survival. Your own family is priority and if I were in your position I would tell her that a condition of her living with you is to assign you as her PoA. She should transition into AL but only if your state is one for which Medicaid will pay (it doesn't in my state).

You can do a down and dirty PoA by downloading the proper docs for your state from Legalzoom.com or Rocketlawyer.com. She and you will need to have it notarized and witnessed. Download 1 copy per PoA and one for your mom. All involved need an original signed doc to present when asked.

Once you have PoA, take her for a cognitive exam (you can request this discretely from her doctor). If she does poorly on the test, then she is probably a candidate for MC or LTC and she can be transitioned into a care facility that takes Medicaid. This is all assuming she would qualify. For the immediate moment I would call social services and have them come out to see if she qualifies for any in-home services and talk to them about Medicaid for her. You simply cannot rob yourself and your children because your mom couldn't be responsible with money. That's on her. And, you are not responsible for her happiness. She is a grown woman who had 30 years as a widow to ponder and plan for her later years and exit. I'm sure you love her and none of this will go down well with her and it will feel horrible, until she's out and you see there is life after this profound change and she is getting good care and your visits aren't fraught with anger and anxiety. I wish you much courage and wisdom and peace in your heart for whatever you choose to do.

Well, as you say, your Mom is not incompetent. She is willing to owe everyone, and that includes you. She still HAS her credit cards, and likely when they are paid down she will use again. I would make it clear, given your own investment of your own money (which, by the way, you should NOT have done. Who will take care of YOU when you end up with no money in old age?) that bankruptcy and continuing to pay you is her only choice. Otherwise you will let her go into care, and on medicaid, and she can die with these debts intact, as the nursing home will be getting all her money until she applies for medicaid.
Your plans and your past has complexity. Congratulations on doing the care plan and having all your receipts; please stay her and advise others on that, if you would. But for yourself? You and Mom should see an elder law attorney. I would make it quite gently clear that if Mom cannot cooperate now, and chooses to do things her way, she will be doing them alone.

Contact an attorney for advice.