I need some legal/credit card advice
Moms View Message Board: General Discussion: Archive May 2007:
I need some legal/credit card advice
I am going anon because I am discussing my Mom's personal stuff. I hope that's ok.
A few years ago my younger sister passed away. My Mom hasn't been the same since. She has gotten herself into credit card debt to the tune of a bit more than $30,000 in just the past few years. She has very little memory of getting herself into this situation and blames it on my sister's passing. She does not work. She is disability retired due to a work accident years ago. She lives on her check from SSI and COMP.
My older sister has gotten involved and closed the credit card accounts. She made my Mom go to a bankruptcy lawyer and my Mom has been physically ill since hearing all that will happen to her stuff should she declare bankruptcy. She doesn't have much (her vehicle, and some collectible stuff that belonged to my sister who passed.) She rents an apartment. She can't bear with losing what little she has to a bankruptcy case.
We are wondering what her other options may be as far as the credit card debt is concerned. My sister is considering a few things: 1. calling the credit cards and offering them $100/month but not paying off all the debt. 2. Consolidating the debt into a new credit card taken out in my sister's name (if she can even do it with her credit) and being in charge of my Mom's financial life and paying off the bill and giving Mom an allowance. 3. Not paying off the credit cards at all.
She wondered if anyone knew what the worst is that can happen to my Mom if the credit card companies file judgement against Mom for non-payment. Can they seize her personal property for payment? Can they force her to sell her stuff to pay off the debt?
We aren't sure what the best thing to do is and I wondered if anyone has any BTDT advice or any legal knowledge of this stuff. My Mom lives in NY if that makes any difference. Thank you so much!!
Sorry to hear your mom is having such a hard time. My mom has done alot of retail therapy since my sister's passing too. So far, though, she can handle the bills.
Personally, I would start with contacting the credit card companies and trying to make a deal with them. I would not be comfortable trying to let them slide. The stress alone would be horrible for her.
I have no idea but wouldn't any lawsuits/liens affect your mom's estate when she passes???
I'm sure Ginny will come it with tons of information.
Good luck.
I do think you need to consult a lawyer (not a bankruptcy lawyer) in the state where your mother lives, because different states have different rules. I say not a bankruptcy lawyer because many (not all) bankruptcy lawyers are simply interested in getting the fees paid for filing bankruptcy, and don't usually think of other options.
I suspect, from what you describe, that the worst that can happen is that the credit card companies get a judgment against your mother, and what happens next varies from state to state. In Pennsylvania, for example, a creditor can get a judgment but cannot have access to a person's paycheck except for child support and tax bills. But in other states they can. Social Security is exempt in every state (and SSI), and most likely disability payments (including comp) are exempt.
I'm not sure declaring bankruptcy has any value or purpose for your mom. It doesn't appeara that she has sufficient non-exempt assets to protect. It sounds to me, from what you say, that all or almost all of her income and assets would be exempt. Protected assets (exemptions) include a certain minimum amount of money and personal property. Social Security payments are exempt. Here's a link to what is "exempt" from being considered "available" for payments to the creditors in NY: NY Here's a quick list of federal exemptions: Federal
A lawyer can tell you exactly what is considered "exempt" in your mother's state and how the figures are calculated, that is, how personal property is valued, and thus, whether she is vulnerable. How I googled was - NY +bankruptcy +excemptions and federal +bankruptcy +exemptions. If creditors get a judgment, there is the very real question of whether it will make any difference to your mom. If most or all of her income and property is exempt, it won't make any difference other than having the judgment listed in the court records and collection calls and letters.
From what you describe, the only value I see for your mother declaring bankruptcy is that it would get the creditors off her back (and off her phone). Legal fees would be involved, a lot of paperwork, and a hearing.
Both of these lists of exemptions are not "authoritative", that is, they are put up by organizations I haven't checked out at all, but my guess is they are pretty close.
By the way, given that your mom's sole sources of income are SSI and comp, could she qualify for legal advice from community legal services? I'm fairly sure a CLS attorney cannot actually help with bankruptcy filing, but they might be able to give advice on your mom's level of vulnerability to collection actions if a creditor gets a judgment. Another place where she might be able to get advice is through AARP's volunteer program and that is worth checking out.
My personal vote would be to explore whether your mom's assets/property are exempt and, if they are, either going through bankruptcy to get the creditors off her back, or just not paying them at all. If the decision is to simply not pay them, ask the lawyer if it is safe/appropriate to write a letter to the credit card companies telling them that mom's assets are excempt from judgment and bankruptcy, so they might as well just close down the account and stop the collection actions. And, sis might consider having mom sign a durable property power of attorney, which gives sis the legal right to manage all of mom's finances, including putting the bank accounts in sis's name as trustee for mom. What sis does NOT want to do is to get her name on any document that has any potential for making her liable for mom's debts.
For those who think it is cheating to not pay the credit card companies, in general I agree. But in this instance you have credit card companies giving $30,000 worth of credit to a woman who is unemployable and whose sole sources of income are SSI and comp. Assuming they did a credit check up front before they issued the credit card or increased the credit limit, they had to know that up front, and decided to take their chances.
Oh, and would mom consider going for psychiatric counseling? Sounds like that might be a good idea.
And yes, your reason for going anonymous is one of the reasons we keep the "anonymous" privilege.
Good point Ginny. I totally spaced off on the $30,000 debt. That is WAY too much credit for a person in that position.
Ginny,
Thank you so much for all of your advice!! I am passing it on to my sister right away!!
My Mom has been in counseling since my sister passed. It doesn't seem to be having the effect that we hoped for. She is ALONE (without a man for the first time since she was a teenager and without my sister who was her "mostly companion" for nearly 30 years.) We are afraid that she will never be the woman that she once was.
My sister has already mentioned getting power of attorney so that she can take care of things. My Mom has kept this debt situation from us for quite a long time so this is kind of new to us and we are trying to find the right thing to do.
I so appreciate the advice from Ginny and Dancermom!!! It helps so much!!
My grandmother recently passed away and we are dealing with credit card stuff. Her and my grandfather basically got sucked into credit card stuff, long story, but their actual debt was nothing near what was wanted. Late fees, sold accounts, over credit limit etc, really add up. In texas credit card debt is unsecured, that means really until you die, they have no claim. When they die, we are obligated to pay out only the amount of money she has and then it is just over. So when my grandfather passed away and we discovered the debt, my aunt called the cc and said simply, she cannot afford these and will not be paying them. There was nothing they could do, except call and be a pain, mostly they didn't get answered. When my grandmother died, my aunt called each company and explained that she had passed and there wasn't much money and we were going to pay as many bills as we could. Most places were willing to cut her bills down by a certain percentage. One cut it to 25%, one to 50% and one only 25% off. But every little bit helped. The reality for my grandparents is they were taken advantage of and didn't realize it. They only had charged about 5k, mostly on home repairs or meds, by time it was all said and done (about 5 years) the amount due was over 60k. Another thing about calling now, if they are willing to work out some sort of payment plan, they will often quit charging interest.
But do look into your state laws, look into each credit card, if cards are sold between bank to bank laws change also. Good luck.
Before the BR laws changed, my dh's law firm did a lot of BR work. I used to fill out the petitions. It is much harder to file for BR now. Under the old law, she would have been a perfect candidate as her assets would have all been exempt.
Now, though, the procedeures have changed, as well as the exemptions.
I would consult a Bankruptcy attorney because he/she would know exactly what would and would not be exempt.
I know that in order to file, the attorney has to apply a certain rubric to see if the debtor even qualifies and then the debtor has to go into a certain period of counseling by a certified debt counselor. After that the debtor can file. It is a long process, but it might be worth it in your mom's case because then the debt would be discharged.
Since the law changed, we stopped doing BR work because it became way too complicated.
Good luck,
Ame
The first thing that occurred to me was ABSOLUTELY NOT- Your sister should NOT consider assuming her debt or putting a loan or a credit card in her name to pay off your mom's debt. This seems similar to me to forgiving an alcoholic's bar tab.
Your mom is addicted to spending money, and if the debt is removed from her shoulders that easily, she will have no interest in changing or improving her life. The problem is not the debt, it's your mom's depression and addiction. The debt is a symptom.
Best of luck to you and your family.
I agree with Lisa entirely on this. Sis should not open a new credit card account in her name and give mom access to this account. Disaster lies in that direction. And if it were me, I'd certainly not consolidate the debt into a new credit card. The idea is, I suggest, to either get rid of the debt through bankruptcy or to just ignore it entirely, not to find a way to pay it off. Mom can't obviously, and unless sis has $30,000 to spare, I personally don't think she should. I don't know why Mom would need a credit card account anyhow, but that's not my business and is something you and sis and mom have to sort out.
I defer to Ame's experience. I've never had any experience with bankruptcy as a legal secretary. Be advised, though, that if mom goes through bankruptcy there will be fees both for the lawyer and for the counseling. And with the counseling, which is now mandatory in most bankruptcy cases, you have to be very careful to find a non-profit organization that is truly devoted to helping people with credit issues, and not a profit-making organization that promises debt counseling and maybe debt organization/consolidation and that they will "immprove your credit rating". Most of those have very high fees and don't do what they promised. They are very bad news (and very expensive).
I still think the first thing to find out is whether mom's assets are exempt under the new bankruptcy laws, using either the federal or New York exemptions (some states allow you to use either, and some don't, so you have to check that also).
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