Elderly dad can't cover card bills and assisted living

By  |  Published: December 2, 2016

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.
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Question Dear Sally,
My father, who is 86 and has dementia, is in an expensive assisted living facility. He is on a very fixed income consisting of his Social Security benefits and a small annuity that we have to keep withdrawing money from just to meet his monthly rent.

He has a total of about $5,700 in credit card debt. As the daughter in charge of his bills, with a power of attorney in place, should I stop paying his credit card debt? With all his other bills, including health insurance, I'm afraid he is going to run out of money. We will then be looking at a Medicaid nursing home situation. I am very confused. I was told by many different people to just stop paying his debt because he has no assets and there is not much the credit card companies can do. – Sasha

Answer

Dear Sasha,
It can be alarming to watch an elderly person’s funds dwindle while they are in an assisted living facility. Round-the-clock care is very expensive, and what seemed like an adequate savings account can soon be gone.

Your friends are correct when they tell you that the credit card companies are not likely to be able to collect from your father. They cannot garnish his Social Security benefits, and his annuity benefits may be protected as well (it depends on the type on annuity and the laws in his state).

That doesn’t mean you should automatically stop paying. If he can afford to keep making the minimum payments on goods and services he charged, you probably will want to do that, regardless of whether the banks have recourse against him. Another strategy would be to negotiate with the credit card companies to settle the debt for an amount less than what he owes.

If you decide to stop paying, then be prepared for collection calls and the possibility of a lawsuit. To avoid going to court to prove your father is uncollectible, you should try to make it clear to the collectors that they will be going to a lot of trouble for nothing. If they insist on pursuing repayment, then you’ll need to show up in court and present his financials.

You do not need to pay the debts with your own money, however. They are not your responsibility.

A total of $5,700 in credit card debt is probably not a major factor in how long your father’s funds will hold out. At an expensive facility, that much money may only pay for a couple of weeks or so. I’m more concerned with planning ahead for the eventuality of running out of money, with or without paying the credit card debt.

The most important thing is to plan now for the eventuality that your father will run out of money, and probably have him in a place where he will be allowed to stay. Many nursing homes only take a certain number of Medicaid patients. This is because Medicaid pays less money than they can charge private pay patients. However, if a patient moves in, showing that he or she can afford to pay privately for some time, the nursing home may let them stay as a Medicaid patient when he runs out of money. The contract you sign on his behalf when he moves in should state that he can apply for public aid and stay in the facility after he has paid privately for the agreed-upon period of time.

If the facility he is in now does not allow him to stay as a Medicaid patient, you may want to start looking for something else immediately. Don’t wait until he is out of money or almost out of money. His choices at that point will be limited. Not only may the facilities not be as nice, but the nearest one may be farther from where you live.

As your father gets within a few months of the time he can no longer afford to pay privately for his care, be sure to apply for public assistance. Don’t wait until the last minute.

You may also want to set up an irrevocable burial fund with your father’s funds before they are gone. The fund should be excluded for the financial eligibility test. Be sure to get qualified, local legal advice for this and any other steps you take on behalf of your father.

See related: Parent's nursing home costs take priority over card debt, Do you have what it takes for DIY debt settlement?

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Updated: 10-24-2017

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