You won't inherit Mom's credit card debt
Hello. My mother is no longer able to take care of herself, she
has no assets and very little money; she does, however, have about
$30,000 in credit card debt, and she now lives with my wife and
me. We take care of all her bills for her. If we cannot make payments
for her due to our own debt, what can the banks do to my mom? She
has nothing to take but her minimal Social Security. Do I become
responsible? Can she file some type of bankruptcy? When she dies,
she will leave nothing as she was a very generous person her entire
life and really kept nothing for herself. What happens to the credit
card debt if there is no estate? Thank you.
First, let me say I sympathize with your situation. Living with
a parent again is difficult in the best of circumstances, and you
have the added stress of your mother's credit card debt. My experience
is that older people (and I mean older than me, although there are
fewer of them each year it seems) often have strong notions of what
they should do about their debt. I suggest you have a discussion
with her about it before pursuing any course of action.
However, quickly; no. You are not responsible for
your mother's debt unless you are a joint cardholder on any of her
accounts. The credit card companies will write off the debt at the
time of her death if there is no estate from which to collect. Creditors
may not garnish Social Security income in most cases, and I believe
your mother's case would not qualify for garnishment; however, you
may want to ask an attorney if you know one.
Now, for a plan of action. Do not put your own financial situation in jeopardy to pay your mother's debt.
My recommendation is: Have your mother or her attorney
communicate with the creditors and let them know that your mother
does not have any income to pay the balances. Although they won't
like it, chances are they might just go ahead and write off the
balances since they will have no productive legal recourse. They
can bring legal action, but since her Social Security can't normally
be attached, it will end up just costing the creditors more money
with little return. If the debts were for medical bills, be sure
to mention that when you contact the lenders.
It goes without saying that her credit cards will be canceled (if that hasn't happened already). And that's only right, as she shouldn't continue to charge if she knows she can't pay the bill.
As for bankruptcy, that would work but it might not
be necessary. I would save that option as a very last resort in
case there are any creditors or third party debt purchasers who
become harassing. She could file anyway, but the stress, time and
money that would be involved is probably not worth it to your mother
or you or her creditors without some strong motivation. The end
result will be the same to the creditors but will be much worse
on you and your mother.
I suspect that your mother's generous nature, which
in itself is a good thing, has led to the high debt level that she
now finds herself in. It's probably time to sit down with your mother
and have a frank discussion about money and her lack thereof. Again,
be sure her credit cards are canceled and make sure she doesn't
accept any future offers of credit.
Clearly, you have inherited Mom's generosity by the
way you are caring for her. But don't let that generous nature put
you in financial trouble the way it did her. First, check to see
whether you can claim
your mother as a dependent and recoup some of the cost of caring
for her through your taxes. And by no means should you accept any
offers that would make you liable for any future debt, such as by
becoming a co-signer or joint account holder.
The Debt Adviser, Steve Bucci, is the president
of Money Management International Financial Education Foundation
and the author of "Credit
Repair Kit for Dummies." Visit MMI
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