Mom is in a precarious situation. What with paying medical bills and funeral expenses for my Dad, she started using credit cards to keep up. Now she is in a mess. The bank foreclosed on their house, which is when I found out about all of this. She has around $18,000. charged on the credit cards. The payment on the cards is nearly 3/4 of her monthly income. I have tried to get as much help as possible for her, but her gross income is over the limit for most available help. I am doing as much as I am able for her, but with a husband who has Alzheimer's, my funds are limited.
I have seen ads for debt consolidation companies who arrange with the creditors for a payoff, pays off all the debts, then the customer pays the company a single monthly amount which would be lower than what she is paying now with 4 credit card payments. But I don't know how trustworthy these companies are, or if it is just another scam to get money from people who can't afford to lose it.
She can't get a consolidation loan from the bank because of her debt to income ratio. So if anyone has any experience at all in this area please let me know.
And she now lives elsewhere, right?
Doesn’t own a home but rents or lives with family, that’s it right?
She doesn’t own anything else, like land?
Shes like 80 and has only SS or retirement for her income, right?
If so, she’s pretty well judgement proof.
Credit card debt is unsecuritized debt, to do anything they would have to sue mom and gets a judgement againat her. Usually it’s done by a wage garnishment...... but your mom source of $ is SS which is protected income from creditors which the exception of IRS and state taxes. So CC can’t attached her SS$. She has no job that pays regular wages. If she has no home, no property solely in her name, there's nothing to place a judgement on. They may not take her to court but just do a write off. She’s judgement proof. CC companies and the subsequent debt collections will be a beyond a total pest to try to get her or you to pay or accept your mom’s debt as yours.... but little they can do to her or her SS income.
If she totally refuses to consider BK, then she’s (& therefore you) gonna have to ride out dealing with collections. 1st step imo is to totally stop any payments on the cards. The .last date paid to each CC starts the clockdown to whatever your state has as its SOL (statute of limitations) time frame. A lot of states have 3 yr SOL, which is not very much time to get past having court filings done.
If you go this route, to keep things somewhat organized, I’d suggest that mom open up a mail box that is her new address for everything. So that her debt, Medicare stuff, whatever mail now go to this address and not commingle with your mail. You go once a week and gather up her mail and deal with it.
Im not trying to be flippant about the walking away on debt. But the situation your mom is in, is what happens so very often to all those that have CC Or other debts or even a mortgage and end up becoming a LTC resident in a NH and apply for Medicaid. Medicaid requires a copay of basically all their monthly income (like their SS) paid to the NH. This forum has lots of posts from families whose mom/dad lived at home, fell broke a hip and cannot live in their home alone anymore, they become a NH resident..... and all those bills and debts from their pre NH life get defaulted on as all $ goes to paying for NH.
So once on Medicaid or Medicaid Pending, they have no extra $ at all; so they end up defaulting on CC or other debts. If they have dementia, they can’t do BK as they don’t have the cognitive abililty go to court. They default and the CC that is the OC (original creditor) will close out the accounts and write the debt off and mom gets a 1099-c for the amount written off. The not so fun part then is that it gets sold to secondary debt collectors which are relentless and that the $ as per the 1099-C is taxable income for the year written off. If she gets 1099-C next Jan, 2020 for 2019 taxes, do a new post on AC and folks will have suggestions as to how to deal with.
she is likely to get a 1099-C on the foreclosure. You might want to talk with a tax pro or CPA like in May - after tax season is done - to look at what her tax liability due to possible 1099-c’ s on house & those CC might be and how to plan for it.
I think it is a good option, you can't pay more then you have, simple.
Make some calls and talk to them, research multiple ones, and find out how it works, how much they charge etc.
I would also call the credit cards and explain the situation and ask them if they can stop the interest and penalties and accept lower monthly payments without the need of a credit counselor. Sometimes they will, and if they say no, call back and talk to a supervisor. It can't hurt to try and might save the CC fees.
That is what I was afraid of. I did get the CC companies to lower her payments however. Thank you for your answer.
See an elder law attorney for suggestions.
Get a post office box for mail and get mom a new number. They can't harass those they can not find.
Be sure and tell everyone that gets moms new number not to share. They will contact everyone and anyone to try and find her. They can just tell the caller that they need to remove their number from the records, they are not a contact point for mom. I found getting the name of company and the person you are speaking to goes a long way in stopping the calls. Otherwise they just don't note it and the calls continue.
What a mess for you but it will get better when mom has some money and you aren't dealing with it all the time.
HUGS!
They can't prosecute her. If anyone says that to you again, counter it with the media will jump on this like stink on poo, BIG BAD BANK PROSECUTING 80 YEAR OLD WOMAN FOR CC DEBT, AFTER MONTHS OF THREATS INTENDED TO INTIMIDATE THIS POOR WOMAN! Headlines baby. That's what I would say.
My friend went to her bank and got a loan. The bank rep sat down with her and a check was written for each debtor. Instead of multiple payments, she had one.
We did try for a consolidation loan with her bank, but they said her debt to income was to high for her to qualify. I hadn't thought about contacting the Office of Aging, but I will do so. Thank you.
I found that bankruptcy was a better way to go for my mother and here is why:
1) It frees up money sooner.
2) Debt Consolidation companies charge to much for to long. It would take my mother 4 yrs to pay it off that means 4 yrs with very little money. A financial drain on me!
3) Payments not reasonable.
4) She no longer needs credit.
5) If you miss a payment...well...that is just a whole other mess. Ugh!
6) I personally just wanted to get it done and over and not be reminded of the mess that my mother made.
7) The Debt Consolidation company lied to me--deal breaker for me.
File bankruptcy is a safer way to go. However all varibles must be taken into account. Secure loans, homeownership, surplus cash, etc.
I hope I gave you something to think about.
I would present it in a way that implies they are guaranteed payment if the will stop the interest, if not bankruptcy may be the next stop because she has to eat and have a roof over her head.
Calling the is the 800# connects you to people that only have so much ability to help, gotta get to upper management.
First of all, STOP paying the credit cards for at least several months until you get their attention. The CC companies won't cut deals unless you're behind, way behind in payment.
Option one: Start with the monthly income your mom has, take out the amount for food, utilities, car payment if any, gas, medicine, and any other necessity expenses. Calculate the amount left if any plus any savings accumulated from the prior months from not paying the credit cards. If there is some money left over, say $1000, call up each of credit card companies, tell them your mother has no money to pay, however, she can pay them a ONE time payment of $XXX (a portion of the $1,000) to SATISFY the TOTAL debt, interest and late fee included. If they agree, send your mother a letter stating that exact term IN WRITING. When you receive that letter in the mail, then you send them a money order or cashier's check. DO NOT give them a check from your mother's or your checking account. They will drain it.
Option 2: chapter 11 bankruptcy.
If you go with option 1, there is some work at year end to avoid paying taxes on the amount of debt forgiven. Here is the info you might need.
https://blog.credit.com/2019/01/1099-c-in-the-mail-how-to-avoid-taxes-on-cancelled-debt-14927/