One of my friends called me today, very upset about a situation going on with her mother.
I can’t really go into much detail, since I don’t know much. I do know that her father passed away five years ago and there wasn’t any retirement money.
Her mom’s health is failing, she is in her seventies, with no retirement or savings. Her mother nets about $1400 since $400 of it is being garnished by one credit card company. Another is pursuing her for collection.
Last year her mom had $20,000 in debt with this one company that is garnishing her wages and today she opened a piece of mail from the company and the interest has jacked the debt up to $25,000. So although she paid $4800 in monthly payments, she is still $5000 more in debt.
My friend doesn’t know what to do. Her mom is losing her home, the car was already repossessed, and she has these massive credit card debts.
I don’t like the idea of filing bankruptcy. I feel if you charged up all that debt, you should be responsible and pay it off. In my teens I knew a family where one of the adult sons had about twenty credit cards. He still lived at home and they went crazy charging a whole bunch of stuff, then he just filed bankruptcy. I thought it was despicable, and vowed that I would never do such a thing.
But I think my friend’s mother’s case is different. She won’t be able to pay off the debt she’s incurred in her lifetime and if things keep going the way they are now, she could end up homeless. Well, I’m sure my friend would never let things go to that point, but really what can the mother do? She could move in with her daughter, keep working and even if she paid every bit of her paycheck to the debt she probably couldn’t pay it off in the years she has remaining.
The kicker is the mom can’t even afford at this point, to file bankruptcy. I told my friend she may have to find some way to come up with the money to help her mom file bankruptcy.
I don’t see any other solution. This is one case where I have to say I approve of filing bankruptcy. What say you?
I agree with you on this one. It doesn’t sound like there is any other way out from under this. The mother is elderly and at the risk of losing her home. Filing for bankruptcy would prevent her from becoming an even worse burden on her family and allow her to spend the rest of her days in relative peace.
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Not enough information. Social Security is not garnishable, so she must have a part-time job? Depends on where the income is coming from and whether social security changes the math.
Easier solution might be to retire, take social security, and be judgment proof? In Texas at least, they can never take your house, they can’t touch your social security, so they can go sit on a tack. I would say this needs a professional, and not one who will make money off her filing for bankruptcy.
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Mrs. Accountability Reply:
July 29th, 2010 at 8:02 pm
Dog, yes she has a part time job. That is all she is capable of, and she started to collect SS the minute it was possible for her to do so, and unfortunately receives a small amount. How would you propose to find a “professional” ?
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I think I agree with Dog Ate My Finances. She needs a professional to help her resolve the credit account. It sounds like she doesn’t make much money and the credit card company is charging outrageous interest and fees, bascially they really don’t want her to pay it off. A professional might be able to fight it out with the credit card company and come up with a resolution without her losing her home. It’s sad to know that there are people at this age in such dire financial circumstances.
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Mrs. Accountability Reply:
July 29th, 2010 at 8:03 pm
Little House, I thought it was horrible, too. And you’re probably right, they don’t ever want her to pay off that debt they just want to keep socking it to her forever. Any ideas on how to find a “professional”?
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If she is going to file bankruptcy, the attorney can possibly get a hold placed on the garnishment once papers are filed. There should be free legal aide somewhere in her area, or maybe she could work it out to pay the attorney once the garnishment is stopped, as she will have that income back. At her age, and in this situation, she is probably best moving in with her daughter (if she has room) and filing Chapter 7 and wiping it all clean. She can live out the rest of her days in peace with this behind her, and her family won’t have to deal with these companies once she passes. If she doesn’t have life insurance or a funeral policy, we learned the hard way that they should put the money in an account POD to a relative to pay for the funeral! At least this would give her a fighting chance to save a small amount of money and provide her basic necessities for her remaining time.
My FIL passed in Sept last year, and we are getting hounded from collectors from 10+ years ago and on through the new car he bought ONE WEEK before he died. We returned it to the dealer, but obviously it depreciated immediately. He had no life insurance, lived with a close friend and had no possessions other than used clothes (He used their furniture), so we have nothing to pay towards any debts. It makes the mourning period very difficult.
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IMHO she should declare bankruptcy at the earliest possible moment. If she can…new laws have made it a lot more difficult.
I think there’s still a legal aid society in Arizona, despite our doughty elected representatives’ campaign to get rid of free or low-cost legal help for the poor. Tell her to check out the Arizona Foundation for Legal Services and Education (http://www.azflse.org/), her county bar association, or, if push comes to shove, to call [name removed] at [name removed]. Some heavy hitters will take on cases like this pro bono. 😉
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I know she’s probably too independent to like this idea, but could she quit her job and go into a government-run nursing home situation? You say her health is failing and she’s not getting any younger. I don’t think they can turn anyone away. She’d have to sign her house over to them maybe but the stress in her life would go way down. Just an idea. Or, like you said, she could move in with her daughter – or vice versa – and live off Social Security (she’s eligible for her husband’s if it’s higher than hers).
I’ll certainly keep her in my prayers.
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It’s a tough situation. It is also a really good reminder of 2 things: 1. We never know what the future holds & 2. Don’t judge someone elses situation, because you never know the whole story.
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She REALLY needs to consult a bankruptcy attorney–oddly enough, bankruptcy mills are cheaper and it doesn’t sound like she has anything complicated. Depending on her state’s laws regarding homes, she may have to do a Chapter 13 instead of a Chapter 7, which means she might have to make small payments over three years, but it won’t be $400! While bankruptcy is harder to do since passage of new laws, this won’t affect her–it really only affects folks making a whole lot more than she is. Most states allow one to have a certain amount of income before a garnishment can kick in–I have to wonder if her parttime income is actually being accurately taken or if her employer made an accounting mistake. All of these things take a Bankruptcy lawyer to figure out. Tell her to go RIGHT NOW!
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The nearest senior center can provide an attorney who will have good advice. My senior center attorney here in Alabama will do legal things like wills and power of attorney. The attorney will not represent anyone in court. She can borrow the money for the bankruptcy attorney fee. If she is going to file bankruptcy, she can pay nothing toward her debts once she files. That frees up money for other things. Maybe the garnishment will automatically end when the bankruptcy is filed. I don’t know. But, lots of good things happen when a person files for bankruptcy–payments end until a plan is in place, then she will know what she must and must not pay. Also, if she is filing ch 7,she will reliquish any goods that are collateral. But, if she wishes to keep the appliances from Sears, she stops making payments when she goes to the attorney. Then, at a hearing several months later, she can reaffirm the debt to Sears. Ask me how I know this!
There is more, but she should get an appointment with an attorney, NOW. The daughter needs to come up with the money upfront. Then, the mother will have the income later with all the debt gone to repay if that is necessary. Oh, her house is safe if she can afford the payments and does not put it in the debts she wants discharged. Ask me how I know this!
Good luck.
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I feel sorry for any one who falls in the hands of debt collectors. They will torture you forever unless you are smart and swift- I was even shocked to learn much the debt collectors gain from people who are struggling to survive- answer file for bankruptcy and never use a credit card again. I have did cut all my credit cards in 2003 and I have never applied for another one since-Credit cards=heartache
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