My mother has incurred $20K+ in credit debt and has a mortgage. I am going to have her visit a legal service to help with filing for bankruptcy which she will certainly qualify for but the wait to see an attorney is 4-6 months. In the meantime, I am advising her not to pay any of the credit card minimum payments she has been making. I am trying to get her out of her debt as inexpensively as possible so that I can then help support her moving forward. She receives $1300 in SS each month and is working full time at a retail store at 81 years old and making around $700 a month. I have set up her mortgage to be paid from my bank account, should I discontinue that as well?
Can you clear up something. Above you say Mom has a mortgage she has to pay. In a response you said you are helping her pay because she is living in a tiny apartment.
So I am confused. Does Mom both own a home she is pay a mortgage on, and also paying rent on a small apartment? If this is the case, as I said below, a really good option would be to sell her home and keep the apartment. This means one rental and no mortgage. She would sell the home, pay off her creditors to the extent she is able and pay off the mortgage upon sale of the home. Wishing you good luck. Think all here are hoping to help or give good advice.
The first question is ... does she want to save the house? How much equity does she have? Go online to Nolo press.
https://www.nolo.com/legal-encyclopedia/chapter-7-bankruptcy
you can find out how much she can protect in bankruptcy. I am sure she can meet the means test with that income...the issue is can she protect her assets. This is simple to look up
if the mortgage is not being paid...the bank will foreclose. Bankruptcy does NOT remove the mortgage it will only remove the legal obligation to pay...the bank can foreclose ... so consider if that is what is desired. She can affirm the mortgage and keep the house, but she has to pay the mortgage.
for 6 months before filing...any payments made to unsecured creditor (meaning...no assets to be repossessed) will be just throwing money away...because the trustee will just go take the money back.
go to this website to ask questions online in their forum...they have bankruptcy lawyers to answer your questions...and they are very good at explaining things ... so it is real help.
https://www.bkforum.com/
Bankruptcy is a unique legal practice area; you need to be aware of a lot more than free services can provide. And you and your mother could end up in a worse situation than when you started.
You CAN get free legal advice from various agencies; there were many that were available during the last real estate crisis and recession; I don't know whether they're still operative or not.
Lighthouse Services is one group that reaches out to help people in need, and if I remember correctly, they also were offering free financial advice. This was back during the last recession though. And I have no experience with them so can't opine to their skills.
You might check local Senior Centers for free legal counseling. Most have various attorneys visit weekly or bi-weekly with nominal advice. Speaking with a practicing attorney could give you some better advice, now, instead of waitig until the limited free advice is available.
If she has a house, what is her equity in it? Can she sell it, pay off here creditors and rent?
When you see posts here about people stopping paying cc, it is when they have no other assets. If you Mum has any equity in her home the CC companies can come after it.
Creditors cannot garnish her social security.
only the IRS can do that. She’s not in danger of having her wages attached, she’s been making the minimum payments due. Once she stops, she’ll be sent to collections and from there, it would go to court if they choose to sue her. It will take a long Time before there’s a court order to garnish her wages.
Www.Bogleheads.org is a great place to get feedback on this sort of situation.
Lots of smart and financially astute folks.
Why is the wait to see a legal advisor so long?