Disabled son gets sued for maxed out credit card
Erica Sandberg is a prominent personal finance authority and author of "Expecting Money: The Essential Financial Plan for New and Growing Families." She writes "Opening Credits," a weekly reader Q&A column about issues for people who are new to credit, for CreditCards.com.
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Dear Opening Credits,
My son got a credit card in
2007 and then charged it to the maximum. He is mentally ill and has a severe
cardiac defect, making him unable to work. Because of that, he receives SSI and gets $712 a month. Can the court
or collection agency take his SSI? He has received a summons to appear in
court. -- Victoria
As you might be aware, your son is in
the now unstoppable process of being sued for a debt. If he loses the case, which
is likely because you don't seem to be disputing the validity of the charges,
there can be some unpleasant consequences. Then again, there may be none.
First, rest assured that even if the
collection agency wins the lawsuit, they cannot claim any of your son's
Supplemental Security Income. Along with SSI benefits, Social
Security, veteran's benefits, federal employee and civil service retirement benefits and Railroad Retirement Board benefits are
protected from wage garnishment.
However, this doesn't mean that there
aren't other problems associated with a monetary judgment. If your son enters
the workforce at some point in the future he may be at risk. If the
judgment is still in effect, the creditor may be able to garnish his paychecks
at that point. Because judgments can be renewed with little trouble (and
depending on the state he lives in), they can wait him out for decades.
Assets are another issue. If your son
owns anything that the collection agency can take, the judge may allow the seizure
of that property. What could happen to him if he has neither cash nor things
that the judgment creditor may claim? Nothing.
As for his credit report, the judgment
will appear in the public records section for a total of seven years. That will
look bad to people and businesses who pull them. It will also affect his credit
scores. However, because his reports and scores have already been negatively
impacted due to the many skipped payment cycles and collection activity, the
effect at this point may be moot.
Now, while your son may be safe from
the some of the nastier consequences that I just listed, co-signers on the
account are not. And that is what is concerning me. You don't mention that you
might be named in the lawsuit, so perhaps you're not on the account. If you did
help him get the credit card, though, then you may face some trouble. Your
credit report as well as his will be showing the delinquency, charge-off and
collection action. If you are also a plaintiff in the case, any non-exempt
assets and income that you have are at risk.
My advice for you is to prepare your
son for court. Even if you are not a co-signer, you are clearly a caring mother
and he will need an advocate. Being sued is scary. But the worst thing that can
happen to him as the sole owner with few personal assets (and if his disability
prevents working in the future) is credit damage. That will eventually fade, as
negative information becomes less important as time marches on until it
eventually drops off the report. There is no debtor's prison and his name will
not be printed in the local paper.
Roughly $700 is not much to live on,
even if you are providing him with room and board. If you're helping him
survive financially, money may be tight for you, too. If so, it's especially
important that you know your rights. Don't let other creditors he might have
bully you into paying his bills. Of course they want what's due, but you are
not legally or morally responsible to cover them.
See related: What happens when you're sued for a credit card debt
Erica Sandberg is a nationally renowned personal finance authority. She’s host of several financial web shows, and a frequent guest for media outlets such as Fox, Forbes, Nightly Business Report and NPR. Erica previously was affiliated with Consumer Credit Counseling Service and was KRON-TV’s on-air credit expert. Her book, "Expecting Money: The Essential Financial Plan for New and Growing Families," was published in 2008 by Kaplan Press.
Send your question to Erica.
Published: March 6, 2013