Mom is on Medicare/Medicaid, in a nursing home. She had a small checking account (my name is on it for check cashing purposes) and I've been paying monthly only on the interest, she owes $4000 (all her medications were charged to that credit card). Now the money is just about gone. What should I do? What will happen? She owns nothing, her pension and social security go to the nursing home. Should I write to the credit card company? Should I just stop paying? Will they be calling me and harassing me?My mother owes on a credit card. Can't pay on it any more, she's in a nursing home, out of money. What should I do?
I agree with GardenArtist. Keep all of your communications in writing and don't ever call them.
If you're not a joint account holder, you can notify the card issuer (in writing, sent cert. or reg. mail, return receipt requested) that your mother is in a nursing home and all of her assets are taken by the nursing home. She would have nominal income, if any, to repay the debt. You could also tell them she's judgment proof, which means that even if they sued, there would be no assets from which to collect.
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Or if you are liable as a joint account holder, you could ask for long term repayment plan if you want to pay the debt off yourself. If you're not liable, you could ask for forgiveness of the debt based on your mother's judgment proof situation.
I don't know, however, whether banks/lenders still issue 1099s (not sure if it's this or another form) for the forgiven debt, treating it as income, which needs to be factored into any tax return.
Depending on the bank (some are more aggressive than others), you may or may not be hassled. If you are, familiarize yourself with the Fair Debt Collections Practices Act (https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-text), respond in writing to any debt collection notice sent (send it cert. or reg. mail), and don't take any debt collector's calls. Make all your contact in writing.
a joint account holder and therefore not liable for the debt -
chances are the credit card company wil try to imply or straight out lie and say that you are. Some of the less reputable credit card companies can become very aggressive and try bullying you. Be prepared to stand your ground and refuse to be intimidated. Sadly, my hubby and I went through this with his mother.
If moms income is SS & any sort of governmental retirement, it is protected income by federal law, as so cannot be attached in a judgement by a credit card issuer. The only ones who can get the funds from SS is the IRS or state -they are " super creditors " and as such have this ability.
Now 4 things could / will likely happen:
- they mail back a letter wanting to know more info. Just resend the initial letter and add you consider the letter sent on XYZ date as statement of fact and that this matter is closed. Send certified with return registered (USPS $ 8.00) like you did with the first one.
-they send you a letter that the debt is bring written off. This could be 90 days or a year later. There will be fees & interest on the debt too.
- the account is sold to secondary debt collectors. This can be done even if the debt is written off by the OC (original creditor). These guys are relentless, ruthless scum and you will likely get letters that imply its your debt. To these you have to again send a letter within 30 days that it's a written off debt by the OC and not your debt & the letter is a cease & desist. Again certified with return registered card. it may be sold again & again....endless fun!
- maybe next year or year after, mom may get a 1099-C cancellation of debt from the OC. If mom gets this, you kinda need to file taxes for her and do a IRS Form 982 to show her to be insolvent.IMHO it's not a DIY or turbo tax project, you need a CPA or tax pro like those year round H&R block small business offices. Why file?...well the amount in the 1099 C is considered income (even though it's phantom income) and will take mom over the income/asset limit for Medicaid unless taxes are done to show insolvency if your state does a matchup with iRS. Also if taxes aren't paid, IRS -as a supercreditor - can attach SS and that can snowball issues with the NH getting the required by medicaid co-pay or SOC each month.
Get a little folder to keep all items related to this. Issues on debt like this take a year or two to run its course to cease being sold. Fun!
They have been very helpful to me when I was owed money by a credit card company - they got the money back, and they can help you deal with the company.
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