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Premeditated card default for ailing father?

Racking up card debt knowing it won't be paid is fraud

By

To Her Credit
To Her Credit, Sally Herigstad
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 wrote for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart 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
Question for the CreditCards.com expert

Dear To Her Credit,
My father has no assets or money. He has two credit cards with $19,000 of available credit on each, and he gets $900 in Social Security benefits each month. He does not qualify for any government assistance, and he is not a veteran. We live in Alabama. He is in assisted living due to memory problems.

His four children, me included, have been pitching in to support him. We all have lives and problems of our own, however, so this is getting very difficult. If we use his credit cards to take care of him and to pay for the assisted living facility, will we be liable for his debt when he dies? -- Jane

Answer for the CreditCards.com expert

Dear Jane,
This sounds like a desperate situation. Taking care of elderly parents is hard enough -- my husband and I have also been down that road recently. It's worse when parents need care, and they have run out of money.

However, desperation doesn't turn wrong into right. The question is not whether you will be liable for the debts, but what is the right thing to do.

Let's run through this scenario: You take your father's card to the drugstore to get things he needs. You either have your dad with you and he signs the sales slip, or you have a power of attorney for him and you sign it yourself. Either way, you influence him to sign or you sign on his behalf a promise that he will pay back the balance.

If you use the $38,000 in available credit knowing full well it will not be repaid, you're engaging in deceit. True, the credit card company may never know you did it (although I wouldn't rule that out). But taking out a loan or using credit with no intention of repaying is the same as stealing. There has to be a better way to take care of your dad.

Fortunately, there is help available for elderly people who run out of money and can't live on their own. And in your dad's case, with no assets and very clear need on his part, it should be easier for him to qualify for help than it would be for most people who own houses and other assets that complicate matters.

The first thing you can do is look into Medicaid requirements in Alabama. You can learn a lot just reading the website. However, getting government help paying for an assisted living facility can be daunting.

If you and your siblings have been paying the assisted living facility thus far, be aware you may have agreed to continue doing so, either by contract or assumption. If you suddenly stop paying the facility before Medicaid or other help is approved, you could be sued for the balance. For example, in Connecticut, the courts held a son liable for $100,000 of his mother's nursing home bill, even though the only signature he put on the contract was as her power of attorney.

 I also recommend getting a good elder care lawyer on your side before you make any changes or decisions. ElderLawAnswers.com has a database of elder care lawyers to choose from. Look for one who specifically deals with Medicare/Medicaid issues. This is one of those times where an expert can be worth many times anything you pay them.

Best of luck as you take care of your dad.

See related: When elderly parents abuse credit cards, An elderly couple's options for dealing with debt, Elderly father's Social Security income likely safe from garnishment

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Published: June 18, 2010


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