91-year-old Aunt with cognitive impairment has 65-70K in credit card debt. Should we try to settle with the credit card company?

OMG...Check with her bank or yours to see if they have people that can negotiate her card balances. First freeze them. Hopefully someone has POA. I would think she has had late payments and tons of finance charges. These can be negotiated. Once negotiated she has to pay more than the minimum payment. The minimum payment hardly touches the principle. Or like said bankruptcy may be the best way. Her credit is already ruined. At her age I don't think she will be financing a house or car.

This is something I ran into. My wife has dementia for at least 12 or more years. I was unaware for a long time as she always handled everything. I was working over seas and making good money. When I cane home there was no money and $50,000 credit bill. Her predatory knew how to get her to sing anything. I did talk to a lawyer, bottom line I was not responsible for her bills. So I did not pay them ,after a year or two they will file a suit from another state legal. The Sheriff will come out and give you the summons. Just go to the court house and set a trial date, they will have to come to you. They will not, they are trying to intimidate you. Get a credit report . I found where my predatory step son , used my SS# and his Mother to put his college debit on my credit.
When I found it , I filled a identity theft report to the law. There is a federal group that will help: CFBC, Consumer Financial Protection Bureau . He had $16,000 charged to me. I contacted them and they gave Chase 15 days to straighten it out . In 2 days Chase sent me a package. I gave them what they asked for. I will send back the package tomorrow. I will not pay his college debit. He is 40 years old and has 5 years in prison for other thefts and drugs. I hope it helps him. I do pray for him. But I will not pay his bills.

I would avoid bankruptcy. She is collection proof.

Think of it this way...she defaults on all that unsecured credit. They get a court judgement against her. This will ruin her credit. Well...she does t have a need for that credit anyway. So who cares?

So..they put a lien in her house. Again..who cares? They cannot take the house until she tries to sell. This is not likely to happen anyway. They cannot get a judgement against social security .... so she is collection proof.

If she files bankruptcy...she will lose the house right away. She might also lose anything in her checking and savings. And for what? She has no need for a "clean start".

Notify the credit cards that it is NOT ever ok to contact by phone. All correspondence must be in writing. They must not make calls once they get that letter.

Filing bankruptcy is not cheap. It likely means she loses the home to pay off whatever percent of the creditors the trustee can get cash for....also..remember the trustee get a 10% fee on all money he collects...so he really wants to sell off her assets to collect that fee.

Any money paid to those credit card companies is just flushing it down the toilet.   There is no upside to paying them ...  

Talk with any bankruptcy attorney.   They all give a free consult...talk to a couple of them.  Bring all the financial information with you.

Or...talk with the bankruptcy attorneys who give free advice on this website...   bkforum.com

How do we find a good bankruptcy and eldercare lawyer?

How many credit cards? How many credit card companies? How old is/are the debt/debts?

If you have a good look through the records and find that the bulk of the debt is interest over a number of years; and especially if you can find out that there was irresponsible lending involved; it's well worth negotiating.

But in any case there are laws against harassment, and if your aunt is being subjected to over-frequent or threatening phone calls that is harassment. Legal advice is always comforting, but if there isn't the money for it then look up consumer protection laws in your state - there will probably be forms of words that you can quote to the lenders to make them back off.

I'm sorry your aunt is going through this, and that you have such a mess to clear up. And as CW points out, make it abundantly clear at every opportunity that this is NOT YOUR DEBT, that you are not liable. Avoid giving them your own name or contact details; identify yourself as "Ms So-and-so's representative" instead.

Someone who was diagnosed with cognitive impairment has about a 50 % chance that it will progress to a form of dementia.

Did someone in your family get added on to the account either at the time or after the Aunt opened the credit card account? If so, the CC company can go after this person for all the CC debt. Is this one reason why the CC company is harassing you with phone calls? Just like all the above stated: You have talk to someone now. You can Google debt consolidation companies but you should try to find a lawyer. There may be a lawyer does pro bono work for people on a low income. I would try calling the State's treasury department and tell them your situation. They may know of a local legal aid team for the cognitively-impaired indigent.

I'd try to find out IF her state laws allow for unsecured debt judgements to be placed on her property first & foremost. Some states do & some don't.

If so, then I'm in with guestshoppe on looking at bankruptcy. Bankruptcy may require an APS report & aunt placed with court appointed guardian in order for bankruptcy to be done. Family can petition to be named guardian but if it were me, well it's pretty involved and unless you want paperwork hell for a year or so, I'd let judge appoint a guardian.

If not, then the CC & car note can be ignored for the moment. They can't seize anything or place a judgement on her home. They are unsecured creditors. If all she has is SS for income, then her bank account cannot be touched by the CC or secondary debt collectors. SS is protected income except for the supercreditors (IRS or state tax authorities). more on this & 1099 issues below.

Then the hard part, she cannot afford to stay in her home and needs to move into AL & house sold within 60 days. I'd suggest she use her SS$ to pay just the home equity payment. Whatever left except for utilities & food gets set aside to pay for care in AL for 3 mos. As soon as it hits a 3 mo AL cost saved,you get her out of the house, into AL and house goes on market, priced "as is". Motivated seller. Her house sells & pays off home equity loan and the rest of $ used to pay for her care, & maybe buy a preneed funeral & burial policy. If it turns out that a nH is what she needs (rather than AL), then you find a NH that takes Medicaid. The AL is likely to work with her & you the first few months to see if she can adapt to the AL and if not then she moves to a NH.

She will need to deal with 1099-c Cancellation of Debt fallout for 2017 &maybe 2018 tax years. The CC & car loan debt writtenoff - if she walks on it (so no bankruptcy) - will be taxable income reported to the IRS. Mom must get a CPA or solid tax pro to do a 1040 & 982 to get taxes zero'd or reduced. IRS as a supercreditor can attach her SS. She needs every penny of her SS to pay for AL or her SOC (share of cost) if she goes onto medicaid.

She will - if she lives a few years - apply for Medicaid. AL run from 3 -6 k, NH 5 - 15k a month. She flat will not have funds to private pay & medicaid can be applied for. Please, pls realize, She cannot pay you or others for things as it will be viewed as gifting by Medicaid. Only if there is a legally done agreement in place before any costs paid by her, can you try to get around gifting issues. Medicaid tends to view things paid or done by family to be done for free & out of a sense of familial duty. so before you start to pay her water bill or yard guys, keep this in mind.

If you find it's all just too too overwhelming, APS can be brought in and she becomes a ward of the state with court appointed guardian.

Here is a great answer from poster IGLOO that gives you some issues to consider. I put bankruptcy in the search on this site and found it and others. Also you could search using credit card debt.

"Medicaid really doesn't care about her debts - they are all about what she has done with her assets in the look-back period before she applied. For you to be truly concerned about her cc debt it depends on what her assets are. CC debt is unsecured debt so in order for them to get any money there has to be an asset that they can try to get.

If she owns no home and her only asset is her SS monthly then there is nothing the creditors can do. SS is a federally protected income so can't be attached.

Not all banks know this, however. If the debt recovery company actually comes after her and goes through to file against her and gets a judgement against her then they could try to attached her bank account. But if there is only SS check in in, they can't do it. You may need to send a letter to her bank to remind them of this

If her check is going straight to the NH from SS then there is nothing they can do as it can't be attached as there is no bank account to go after.

If she still has a home and cc debt then it is different. In TX & FL, cc debt can never get a judgement against her that is placed on the home. In TX & FL your homestead is untouchable. So the debtor is out of luck in those states. In most other states they can but until you go to sell the house the lein doesn't have to be dealt with. If she is on Medicaid and has a house, the MERP program (Medicaid
estate recovery program) will be getting any of the $$ made on the sale of the house before unsecured creditors. Remember CC are unsecured.

Also depending on the state the debtor has to refile the lein to have it continue to be attached to the property. That costs $$ and takes time, most don't.

But remember no matter what they have to go through the whole debt recovery process, file a lawsuit, have her served, and go to court, then get a judgement, etc. in order to get a lein. In order to serve someone, they have to be competent to be served, which if she has dementia, she is not.

If i were you, I'd send a letter to both the cc company and the debt recovery company (if she's at the point of getting those type of letters) informing them
that XYZ is elderly, dementia in a nursing home whose only assets are SS which is federally protected and there will be no further payment on the cc as all of her assets are federally required to be completely and directly paid for her care. The letter should be written on her behalf at whatever the address was on her credit card statement. NOT the nursing home where she lives - you don't want mom or the staff at the NH getting these calls. Send the letter certified mail with return registered card. You may have to do this a couple of times. The debt recovery companies are constant and her debt will be sold after a period of time to yet another company that will send the same type of letters again. So send your letter out again to the next one too. It can take a couple of years for the cycle to stop but eventually it will. Each state has a specific statue of limitations on how long they can go after a debt. If mom's state SOL is 3 years and her last payment was April, 2011 then the debt is SOL is June, 2014. After that they cannot try to get a lien placed on her or her assets."

I agree that bankruptcy is probably the only realistic option. Just be very careful you don't sign anything or even give any impression that you will help financially with her debt or take any personal responsibility for it.

What I would do is talk to an elder attorney and a lawyer that specialized in bankrupcy. It couldn't hurt to talk to APS as well. She is a vulnerable elder that probably does have more than cognative imparment and she needs tons of help. It doesn't mean that you have to do hands on caregiving but this is some really scary financial stuff.