Dear Opening Credits,
My daughter owes on a credit card and she cannot make the minimum monthly payment. She is on disability and lives in a adult foster home. What legal action can the credit card company take against her? What can she do? -- Worried Mom
Dear Worried,
The first thing you should do for your daughter is get an advocate or pro-bono attorney with experience in helping people with disabilities.
Start by visiting the website of the National Disability Rights Network, the nonprofit membership organization for the Protection and Advocacy (P&A) System and Client Assistance Program (CAP). Collectively, the P&A/CAP network is the nation's largest provider of legally based advocacy services to people with disabilities.
Click the link to get help in your state, and you can find your nearest office of NDRN, which can help you find advocates and attorneys with experience with debt issues in your geographic area.
You don't give a lot of information on your daughter's specific disability or situation, so I'm making some assumptions. If you or your daughter have started to receive calls from a collection agency or from the credit card company, you or an advocate on your daughter's behalf should contact the lender. But first, the advocate would take a closer look at your daughter's financial records, ensuring she has no assets or income other than government assistance.
"If Social Security/disability income is the only income, that income can't be attached to satisfy anyone with a judgment against the person," says Lewis Bossling, an attorney with the Judge David L. Bazelon Center for Mental Health Law, an advocacy group for people with mental disabilities.
"If there are other assets, it is more likely the person with the disability should be able to pay a reduced amount on the debt."
Section 207 of the Social Security Act (42 U.S.C. 407) protects Social Security benefits from assignment, levy, or garnishment. However, the law provides five exceptions, says Everett Lo of the Social Security Administration's New York Regional office:
Section 459 of the Act (42 U.S.C. 659) allows Social Security benefits to be garnished to enforce child support and/or alimony obligations;
Section 6334 (c) of the Internal Revenue Code (26 U.S.C. 6334 (c)) allows benefits to be levied to collect unpaid Federal taxes;
Section 3402 (P) of the Internal Revenue Code allows beneficiaries to elect to have a percentage of their benefits withheld and paid to the Internal Revenue Service to satisfy their Federal income tax liability for the current year;
The Debt Collection Act of 1996 (Public Law 104-134) allows benefits to be withheld and paid to another Federal agency to pay a nontax debt the beneficiary owes to that agency: and
The Tax Payer Relief Act of 1997 (Public Law 105-34) authorizes the Internal Revenue Service to collect overdue federal tax debts of beneficiaries by levying up to 15 percent of each monthly payment until the debt is paid.
"If a creditor tries to garnish your Social Security check, inform them that unless one of the five exceptions apply, your benefits can not be garnished," says Lo.
So assuming your daughter's only income is from the government, that income is protected. The advocate would send a letter to the creditor detailing her financial situation and stating that your daughter is judgment-proof, which means because of her status, no creditor would be able to get a judgment against her in a court proceeding.
Some credit card companies have policies on how they treat outstanding debt by a person with a disability, and after an advocate contacts the creditor, it's unlikely the creditor will continue to seek payment from your daughter, Bossling says. The company may even write off the debt as uncollectible.
Please get online and find an advocate or attorney for your daughter. This move should give both you and your daughter some peace about the debt.
Karin's money makeover column "Get With The Plan" can be seen every Sunday in "The Star-Ledger" and "The Trenton Times." She also hosts and writes "Money 911," a multimedia series for MSN Money. Before writing became her main focus, Mueller was the executive producer of CNBC's The Money Club, where she led the team that won the network's first ever Cable ACE Award for Business and Consumer Programming. Mueller lives in New Jersey with her husband, three kids, one guinea pig and one leopard gecko. Whatever they don't eat goes into her retirement savings accounts. A comprehensive archive of her writings is available on her Web site, www.KarinPriceMueller.com.
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