Dear Debt Adviser,
My mother is a widow living in a retirement home on a pension, with no assets other than a small savings account used to pay her living-medical needs solely and $5,000 in credit card debt in collections. I am reluctant to deal with the collector. They have threatened her with a judgment. I have power of attorney and am speaking on her behalf. Given her minimal assets and the fact that her credit rating is not so much an issue given her late stage in life, what is your opinion on how to deal with the collector -- pay, not pay, agree to a reduced amount? If I agree to a reduced amount, what amount would they accept? Thank you.
Reluctant to deal with the debt collector? This is not a good place to start. You are talking about your mother here and I suggest that your only concern be for her well-being and that you get more resolute in defending her interests.
My second reaction after reading your letter is to have you ask how your mother would like to handle the debt. Although you have her power of attorney, if she is mentally clear and capable of making financial decisions, I believe she should decide how she wants to proceed concerning her debt. She may want to pay what she owes in full, if possible. She may say she would rather not deal with the situation and request that you handle it, or something in between. The other matter that you might want to broach with your mother is whether she has any additional credit card debt. As the holder of a power of attorney, you can request a copy of her credit report. I suggest you do so and that you both read it carefully to be sure you know where she stands.
Based on what you mother wants and what is practical, you will need to contact the debt collector. Tell the collector you have power of attorney, you are representing your mother in this matter and all communications are to go through you. I wouldn't just stop communicating with them. The main reason is that they are very likely to keep calling until some resolution is reached.
One thing I definitely want you to check on is whether the statute of limitations has expired on collecting the debt. For credit card debt, the statute of limitations that applies is based on the state where the consumer who owns the account resides and it can be as little as a few years. You can determine the statute that applies in the state where your mother resides by checking the state attorney general website. If the debt is no longer legally collectible, you will need to let the debt collector know that the statute of limitations has expired, that you don't intend to pay anything and that all future communications should go through you. The collector is unlikely to make good on the threat to sue in court for a judgment if the statute of limitations has expired, but I would be sure to appear in court if your mother receives a summons regarding the debt.
Be firm but polite with the debt collector. Depending on how much is available to pay on the debt and how long the debt has been in collections, the collector may settle for a percentage of the debt owed. If you make a settlement offer, I suggest you make the best offer you can. Be sure to follow up in writing. If you reach an agreement, do not send any money until you get everything in writing from the debt collector and always keep a copy of it. If your offer isn't acceptable, tell them not to contact you again about this debt.
Should you -- yes, you can always pay the bill with your own money -- and/or your mother decide to pay the full amount owed, keep records of the payment and paperwork from the collector to prove that it was paid, should the debt pop up with another collector in the future. Now go in there and be firm and aggressive with the debt collector. Your mom deserves nothing less.
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