Parent with dementia and a $40,000 debt: Who's liable?

To Her Credit columnist 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, and also wrote for MSN Money, and, and has guested on Martha Stewart Radio and other programs.

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Question for the expert 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

Answer for the expert Dear 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 for that.

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 haven't already.

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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Updated: 01-20-2018