Parent with dementia and a $40,000 debt: Who's liable?
By Sally Herigstad
To Her Credit
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 Stewart Radio and other programs. See her website SallyHerigstad.com
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Dear To Her Credit,
My mother has recently gone into an assisted living
facility. She has about $40,000 worth of credit card debt, and she cannot
continue to meet the minimum required payment on most of the cards. She has
dementia and does not know what's going on.
As her daughter, I pay what I can from her bank accounts.
However, the cost of the care she requires does not leave any extra money for
the credit card payments. Most of the credit card companies won't even talk to
me, and I really don't want them to know that I am her representative. The
cards are all in her name only.
What will happen if I continue to pay something on them but
just not the minimum? -- Teri
You can stop worrying about becoming liable for your
mother's debts. Talking to credit card companies on your mother's behalf does
not make you liable for anything.
If you already have set up a power of
attorney to you can deal with all of your mother's finances, you can show it to financial institutions, including the credit
card companies. Then they'll know that you are the person they should talk to.
If her condition is past the
point that she can grasp the situation and grant power of attorney, you will
have to go to court and get conservatorship. An attorney can help you with
either of these issues, as well as help you with her will, if necessary, and
any other financial and medical directive issues.
Assuming your mom has some assets that she is using to pay
for the assisted living facility, you should keep paying the minimum amounts on
her credit cards. Paying less than the minimum does not protect her from late
fees, higher interest rates or legal action. Her balance could skyrocket, and
the banks may sue her for payment. If she has money she intended to use to pay
for her assisted living facility, the credit card companies may be able to sue
Harry S. Margolis, a Boston attorney and president of
ElderLawAnswers, says "I'd suggest that
she explain the situation to the credit card companies and try to work
something out," says Margolis. The credit card companies may settle for a
lesser lump sum or lower payments. "She should keep paying the minimum in
the meantime so that her mother isn't sued. Then, if her mother is about to run
out of money, she can stop paying and it won't matter if she's sued."
Write to the credit card companies and explain the
situation. You could call them, but you're more likely to get results by mail.
Be sure to keep a copy of all correspondence.
When there is nothing for the credit card companies to take,
your mother will be what is called "judgment proof."
Your mother's finances may be more complicated if she has
assets, such as real estate. I recommend that you find a local elder law or
bankruptcy attorney to help you take control of your mother's finances, if you
It's difficult to take over your parent's finances when they
can no longer make decisions. With the right help, however, you can keep her
finances on track and make sure she still has the resources she needs so she is
taken care of.
See related: Steps to take to relieve elderly mom of credit card debt
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Published: December 20, 2013
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