Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also writes regularly for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Steward Radio and other programs. See her website SallyHerigstad.com for more personal finance tips and free budgeting worksheets. Ask Sally a question, or read her previous answers in the To Her Credit archive
Dear To Her Credit,
My mother is 83 and has dementia. Her credit cards are out
of control even though she doesn't use them anymore. The problem is, she thinks
she doesn't have these bills, so she wasn't paying them. I tried to pay them
for her, but it became a financial drain for me.
She only has Social Security benefits, which she uses to pay
rent, phone and cable bill. She has little left over after she buys food and
household needs. She cannot afford to pay the credit card minimum payments now
as they are long overdue with over-limit and late fees.
I have a power of attorney for her -- what can I do? I have
these companies send bills and calls to my home as it is very frustrating for
my mother and she becomes very agitated as she cannot remember having credit
cards or owing on them. Will the companies eventually go after her bank account?
She only has a small account, which she refuses to touch because she wants us
to use it for her burial. -- Roberta
I'm all for personal responsibility and paying one's debts, but
a person with dementia can no more bear personal responsibility for things they
can't remember than a five-year-old could. The credit card companies are going
to have to take a hit on this one.
Harry S. Margolis, a Boston attorney and president of ElderLawAnswers, says, "It sounds like the mom is what is often referred
to as 'judgment proof,' meaning that the credit card companies may be able
to sue her, but they can't collect anything if there's nothing to
collect. I'd recommend that the daughter let the companies know about the
situation and ask them to write off the debt."
Margolis doesn't recommend that you pay your mother's credit
card debts at this stage of her life. If she were more cognizant of her
situation, and if the balance was something you and your siblings could get
together and pay off, that would be one thing. But paying off a large balance
that has become even larger due to mental confusion is not the best way for you
to help. Here's what you can do:
Write to the credit card companies -- calling on
the phone is less likely to help. Keep a copy of the letters for your files.
Make sure your mom does not have the cards or
card numbers anymore. If you discover she does buy something, send it back.
If the credit card companies write off the debt, your mom
will receive a Form 1099 showing the forgiven amount. This is taxable income.
However, Margolis says, "If she has no funds she also can't pay taxes."
Some people say that credit card companies should have known
that an elderly person doesn't know what he or she is doing and couldn't pay
those bills. I wouldn't want the banks making that kind of decision based
solely on our ages, however. According to theforgetting.com, an online resource for the Alzheimer's community, only
13 percent of 77-year-olds have Alzheimer's or related dementia, and in the
group 85 years of age or older, less than half are impaired. Personally, I'm
aiming for 100 and hoping to be awake and alert the whole time! It's better for
individuals such as yourself to keep an eye on aging parents and step in when
there is a problem.
Also, it is entirely appropriate for your mom to save money
for her burial. End-of-life expenses, including burial, are generally allowed
from a person's estate before other creditors are paid. Check with a legal
resource in your state if you have questions.
Taking control of a parent's finances when their mental
faculties start to slip is very difficult. So many of us have or have had
parents who needed help managing their finances, and older people don't always
let go of control quietly. Your mom is fortunate that you are looking out for
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