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Elderly Mom needn't worry about ailing Dad's debts

With few jointly shared assets and little income, he's judgment proof

By Tanisha Warner

Credit Care
'Credit Care' columnist Tanisha Warner
Tanisha Warner is the communications manager for Money Management International, where she manages educational content designed to teach consumers about personal finance topics. She writes "Credit Care," a weekly reader Q&A about debt issues, for CreditCards.com.

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Question for the CreditCards.com expert Dear Credit Care,
My question is regarding my parents. My Dad is 86 years old with Alzheimer's, diabetes, strokes and heart attacks. He has no life insurance, no savings -- only Social Security, which pays for his rent and other necessities. He has outstanding debt which he cannot pay. My 84-year-old Mom, who is in great health, is his caretaker. She is struggling to meet financial demands. She needs to know if she is responsible for his outstanding debt. Her name is not on the credit card balance due -- other debts she is covering between her Social Security and his. So, his outstanding debt while he is alive, but not able to function on his own, is what she needs to know about. She lives in Michigan. Thanks. -- Nancy

Answer for the CreditCards.com expert Dear Nancy,
I am sorry to hear about your father's physical and mental ailments. I understand why your mother is concerned about the debt in your father's name only. She has enough to deal with without adding financial stress.

Because your mother and father live in Michigan, which is not a community property state, any credit obligations that are owned by your father and in his name only are not the responsibility of your mother to pay. Whoever holds your father's power of attorney should write a polite but firm letter to your father's creditors and let them know the situation. Explain that your father is not able to care for himself or his finances and does not have the income to pay what he owes and will not be making any further payments. Send the letter certified mail with a return receipt and keep a copy for your records.

You might also let the creditors know that his sole source of income is Social Security benefits and he owns no real property (real estate). The reason to include these statements is that it lets the creditors know that should they decide to sue your father to collect what is owed, a judgment earned by the suit would not be collectible. A judgment can be used to garnish wages or banking accounts, but Social Security benefits are exempt from garnishment with the exception of some government debt and child and/or spousal support. In addition, your father has no property for the creditor to execute the judgment and place a lien on the property. Your father is what is known as "judgment proof."

Even with the information that your father is judgment proof, the creditors may still turn the balances due over to collections, particularly should your father owe a large amount on his credit card accounts. For peace of mind for your family and your mother, you might consider hiring an attorney who specializes in working with collectors to communicate with them should your mother be contacted about the debt. When contacted, simply let the collector know that you are being represented by an attorney and give the collector his or her contact information. The Fair Debt Collections Practices Act requires that the collector communicate through the attorney and not directly with your mother.

One other thing you might consider, if you haven't already, is additional financial planning for your mother moving forward.

Handle your credit with care!

See related: Stuck with spouse's debt in a community property state, Protect elderly parents' credit cards from illegal use

Tanisha Warner is the communications manager for Money Management International, the largest nonprofit, full-service credit counseling agency in the United States. She manages educational content designed to teach consumers about personal finance topics. You can find more money management advice on Blogging for Change and MMI's Facebook page.

Credit Care answers a question about a debt or credit issue from a CreditCards.com reader each week. Send your question to Credit Care.

Published: July 9, 2012


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