My Mother was the primary bill payer for my parents for almost all of their marriage. During the last couple of years of her life, she was starting to battle dementia and ran up big credit card debt on two cards, often paying one bill with the other card. Since her death last year, my Dad now has big debt on both cards ($15,000 on one; $9,000 on the other) that he cannot pay. He can't even make the minimum payments on them, and now the one with the larger debt is suing him for the balance. He has no assets, so even if they sue him, they won't get anything. What do I do now? Do I seek legal help?
What to do, well to me kinda depends on where these two CC are in the debt collection scenario...... if it’s still in the payment system for the OC (original creditor), I’d suggest what Talkey wrote and your dad contacts them in writing & hopefully it gets written off. But if it’s past that and has been sold by the OC to debt collectors, it’s another system as those send an initial letter that requires a response within 30 days, & if not essentially the debt is consider valid and then they hound till it’s paid or if it’s ignored they sell the debt to another collector firm (yet another cycle) or go to court to get a judgement. Actually filing for judgements has all sorts of costs for the collectors, so often it’s a bluff by them to consumers.
If dad has no house, no salary, no income but only SS, he’s judgement proof.
But I’d be concerned that if you should start paying on his debt, it somehow becomes your debt. I’d try to do all in writing by “dad”. No phone calls.
OC will likely write it off for debt, plus fees and interest. So 9k debt could morph to 12k. Each will produce a1099-C Cancellation of debt sent to dad for the tax year the OC wrote it off. Probably sent Jan. 2019 for 2018 taxes as we’re already in Dec. Now that 1099-C will be something to be dealt with as taxes are due to the IRS on the $ written off as it’s viewed as taxable income. IRS is a “ super creditor” and can attach $ from his SS to pay on taxes due. Dad will need to file a 1040 & 982, & hopefully get his income zeroed out; imo kinda needs a cpa or tax pro to do as they are sticky.
The situation your dad is in is pretty common for those who go into a facility and onto Medicaid. Medicaid requires their income to become a copay to the NH. So no $ for old CC debt, car note, house costs, etc. Really they end up walking on all their existing debts, unless family pays it.
Whether or not a life insurance policy could be attached as an asset is not something I could answer.
This is one reason why you need an attorney who's familiar with liens.
If your father owns the house free and clear, the credit company could get a judgment (easy if he doesn't respond to the complaint) against the house. Bye, bye house as an asset.
Don't forget that judgments bear interest at the allowable state rate.
Have you considered bankruptcy? Don't know how that would work but I see lawyers advertising for a few hundred.
Maybe now is the time to sign up for subsidized housing as there is often along waiting list.
can he get help with food stamps, heating Etc?
I think he will also get some of Mom's social security so look into that if she ever worked.
There's a good article on how to distinguish who's liable vs. who can sign but isn't liable, but I can't find it right now.
But since your father has no assets, he's "judgment proof." Still, he needs to respond to the suit, generally w/I 30 days of being served.
This is a matter for an attorney's help at this point. Typically he or she would ask for an extension of time to answer, then meet with your father to determine the facts of the situation.
An attorney can advise you how she/he would handle preparation of an answer, and future work, based on your father's judgment proof status.
But definitely get an attorney. If your father doesn't respond, a judgment can be entered against him for the full amount of the debt, subject to accruable interest at the legal rate in his state.
Good luck. I'm sure this must be unsettling, so let a legal pro help you.