My inlaws have a lot of credit card debt. They will be moving to senior living which will take all of their money and then some. What happens to their debt in this situation? Should they file for bankruptcy?
My MIL had around $5000 in credit card debt when she was admitted to nursing facility. Her only income was social security and she was on Medicaid. When I received credit card bills In the mail, I returned them to the credit card company with a note saying that she is in the nursing home and will not be able to pay this bill. I did not sign it or leave my contact information and they stopped sending bills.
Doesn’t an AL require the resident to provide financial information prior to moving in? I would think they may run a credit report to assure the AL will get paid? Those AL’s don’t just let someone move in without a financial guarantee.
There is something not right about this situation. Do they own a home?
OP - Medicaid pays for nursing homes, not assisted living. Most AL’s do not offer Medicaid waivers that allow residents to stay there when their own personal resources run out.
I too feel like they should pay off their debts. I can’t understand why they expect not to pay their credit cards either. Once an AL runs a credit report they will see your parents’ credit scores. If the AL reviews past history of non payment to creditors this will put up a red flag.
Again the AL will research the residents ability to pay their monthly cost out of pocket unless I am missing something. Assisted Living is not cheap nor covered by government funds unless it’s a Medicaid waiver which barely exists anymore.
Making sure the inlaws get proper living arrangements and care is much more important than paying off credit card debt. They've likely been paying the cards as agreed so their credit is likely OK. Now with their costs increasing due to the new housing arrangements, their money will need to go to that, not paying off the credit card. I hope you're not saying they should pay off the credit card debt and then be left without proper care because they can't afford the new living arrangement. Then what would happen to them?
Filing bankruptcy is not necessary. And it’s pretty costly if their living off credit cards. The credit card companies cannot collect if there are no assets. It costs creditors a lot to sue —usually not worth it to them. There’s nothing to collect. They will write it off on their corporate taxes as a loss.
You should be able to find a standard letter online that you can use to contact each creditor telling them to stop all contact either by mail or telephone. But has to be signed by the parents or whoever is a power of attorney. (Google something like “do not contact letter for creditors”. ) This is a federal consumer protection law.
One can argue the ethics of not paying a debt but it is what it is.
I don't know how much access/info you have to their financial info, but I would not make a move until I had visited with a certified elder law attorney for guidance on the best moves. I know you should be very careful in signing anything that might leave you and/or your husband liable for the debt....
Why does no one here seem to think the parents are obligated to pay their credit card bills? They received goods and services using the cards and the companies gave them credit in good faith it would be repaid. The restaurants and stores expect to be reimbursed by the credit companies. This kind of debt is passed on to other consumers via increased costs so in the end we all have to make up the losses.
Yes, it sucks to be old with no money. Shouldn’t they pay the debt, sell their excess possessions, then apply for Medicaid when they have reached the minimum? I should point out that Medicaid is funded with our taxes so once again the public is paying for the debt.
I will also state that I have experience with Medicaid through applying for my father who had nothing saved for old age. And now am facing doing the same for my mother if she outlives the little savings we have from selling her house.
And please know that AL is not required to accept Medicaid, only SNC facilities are. All of the places I looked into for Mom in Ohio required a 2-year stay before they will consider a Medicaid waiver.
It isn't clear what you mean by "senior living", but if Medicaid is involved, at a minimum we're talking AL. As someone else said, if it is plain old AL, consider yourselves lucky as many states/facilities don't accept Medicaid for AL. Some won't even cover MC. Those cover NH only, and not everyone qualifies for NH.
Given that they owe money AND given what I posted in reply to others about skip tracing, you might want to have at least one consult with EC atty. Just ignoring the debt won't make it disappear! Best case, they harass your parents by phone. Worst case, they AND you get harassed (and possibly other family members.) Even if the credit card company decides to give up, many will sell old debt for pennies on the dollar to collections - THEN the REAL fun begins!
If you think they will run out of money. Apply for medicade and when they become elgible....they will have to move into a nursing facility. They can be ambulatory and take care of bowel and bladder needs. But need help with food, medications, and be unable to live anywhere else. The Medicade plan must always to "come back home". They will explain why that is needed in the plan. Bankrupcy has to do with unpaid bills. The facility will not keep them if they dont pay monthly. The Medicade app. when elgible...they must be also physically elgible for one or two levels of care. Medicade also pays for Board and Care and of course they have to be able to care for a lot of personal needs.
Do you have durable power of attorney both medical and financial? Most credit card companies are willing to settle the debt for a very reduced amount. Have you cut up their credit cards yet or are they amassing new debt? Make a budget for them and help them budget their money so that no new debt is incurred going forward.
" The money they do have will be gone in no time paying for AL, we have applied for Medicaid for them"
Does the AL they are in except Medicaid? If so, you are very lucky. In my state Medicaid only pays for an AL if you have at least paid privately for 2 yrs. Then being able to stay depends on if the AL has not met the % allowed of Medicaid residents. Also, you don't apply until 90days before money runs out. Thats all the time Medicaid gives to get them paperwork needed, spend down and finding a facility.
When people go into assisted living or a nursing home, many times the facility wants a contractor to do the Medicaid paperwork. It is WELL WORTH the cost!! When I had to put my best friend into a nursing home the home required a contractor. The contractor not only applied for Medicaid, they handled ALL financial issues - as POA I made the final decisions, but they knew how to get things done! The $1,000.00 paid to the contractor was money so well spent it is impossible to explain - they handled everything, including debts and how to navigate the Medicaid paperwork. I simply could not have done it on my own!!
Be sure and find out how the debt gets discharged. Sometimes it is 1099'd (maybe a different form number) (reported as income to the IRS) to the debtor, increasing their annual income.
You don't want to have that happen because it will mess up their Medicaid.
Do they have assets still? I spoke with an elder care/estate planning lawyer when my father had to go in the nursing home. He had a mountain of credit card debt. The lawyer told me that the nursing home has to get paid first. The credit cards did not get paid because there was nothing to pay them with. The credit card company had no choice but to forgive the debt because they can't get what isn't there. Your parents will not have to file bankruptcy. That's an unnecessary cost. Their credit will be ruined for non-payment, but does it matter if they're in assisted living?
I agree with Joann about seeing an Elder Law Attorney for an hour and explaining this. Their assets and the limitations of their assets. If you are POA first step is to cancel the credit cards. Second step to pay the minimums which will put this in a holding action though the debt will likely only increase. The rest of their money will be spent down on Assisted Living. When it is gone, the debts will remain, and you are down to the old not getting blood from a turnip screnario. I of course am assuming there is some level of decreased competency here and a good POA in place for your husband. If not, then all bets are off, as it is up to them what they do about all of this. That takes it off your plate completely (for now). You can't really file for bankruptcy when you have money and assets. So if they have funds for ALF the creditors would not want to see it going THERE instead of to pay the debts they incurred. So takes one option off the plate.
Well actually, they do have money even though you plan on using it for their care. This is not like Medicaid where they literally have no money and can't be sued against SS.
I guess you can just do as suggested but I may want to consult with a lawyer. I would suggest that you do not forward their mail to new home. I did this with my Mom. Had all her bills sent to my house thinking that this would help stop the junk mail, it didn't. It started to be sent to my address. I asked the PO how did they know when I sent nothing to them about the change. The PO denied it was them but I think it was. With automation I don't think the machinery or the humans think about its good or bad mail when they put that yellow change of address sticker on the mail. They tried to blame the utilities but they claim they don't sell addresses.
So my suggestion is to get a PO box. This way they can't find your parents. Believe me they will eventually. Just had a post where a member's Father was estranged from his brother (something like that) and had a call or letter from a collection co. for a 4 yr old debt from a hospital who probably had sold the debt to the collection agency. How did they track down the Father down through the internet. There are sites that show who u maybe related to.
Thanks, didn't even think about the mail, that would just make her anxious. The money they do have will be gone in no time paying for AL, we have applied for Medicaid for them.
You're saying that inlaws DO have money but you want to preserve it to pay for AL. How old is the debt? It is possible it's been sold to a debt collection company and non-payment is a risk inherent with that purchase. I wouldn't file for bankruptcy. Just make sure no collection calls are getting through and return any collection letters unopened with "No Longer At This Address" written on it.
The little money they do have will be spent in a few months paying for AL before they get approved for Medicaid. All their debt is current, they used credit cards for almost everything.
There's no need to file bankruptcy. Make sure they get a new phone number and protect it from the public ( You don't want them receiving harrassing phone calls in their new home). You can call the credit cards and tell them your inlaws are unable to pay anymore, they are ill. If you choose to do this, do not give them any information about yourself.
Thank you, their only phones are their cells, I doubt if I could talk them into changing numbers, I just need to get them to stop answering if they don't know who it is!
Best wishes to you and your family.
There is something not right about this situation. Do they own a home?
OP - Medicaid pays for nursing homes, not assisted living. Most AL’s do not offer Medicaid waivers that allow residents to stay there when their own personal resources run out.
I too feel like they should pay off their debts. I can’t understand why they expect not to pay their credit cards either. Once an AL runs a credit report they will see your parents’ credit scores. If the AL reviews past history of non payment to creditors this will put up a red flag.
Again the AL will research the residents ability to pay their monthly cost out of pocket unless I am missing something. Assisted Living is not cheap nor covered by government funds unless it’s a Medicaid waiver which barely exists anymore.
You should be able to find a standard letter online that you can use to contact each creditor telling them to stop all contact either by mail or telephone. But has to be signed by the parents or whoever is a power of attorney. (Google something like “do not contact letter for creditors”. ) This is a federal consumer protection law.
One can argue the ethics of not paying a debt but it is what it is.
My two cents.
Yes, it sucks to be old with no money. Shouldn’t they pay the debt, sell their excess possessions, then apply for Medicaid when they have reached the minimum? I should point out that Medicaid is funded with our taxes so once again the public is paying for the debt.
I will also state that I have experience with Medicaid through applying for my father who had nothing saved for old age. And now am facing doing the same for my mother if she outlives the little savings we have from selling her house.
And please know that AL is not required to accept Medicaid, only SNC facilities are. All of the places I looked into for Mom in Ohio required a 2-year stay before they will consider a Medicaid waiver.
Given that they owe money AND given what I posted in reply to others about skip tracing, you might want to have at least one consult with EC atty. Just ignoring the debt won't make it disappear! Best case, they harass your parents by phone. Worst case, they AND you get harassed (and possibly other family members.) Even if the credit card company decides to give up, many will sell old debt for pennies on the dollar to collections - THEN the REAL fun begins!
Does the AL they are in except Medicaid? If so, you are very lucky. In my state Medicaid only pays for an AL if you have at least paid privately for 2 yrs. Then being able to stay depends on if the AL has not met the % allowed of Medicaid residents. Also, you don't apply until 90days before money runs out. Thats all the time Medicaid gives to get them paperwork needed, spend down and finding a facility.
You don't want to have that happen because it will mess up their Medicaid.
I of course am assuming there is some level of decreased competency here and a good POA in place for your husband. If not, then all bets are off, as it is up to them what they do about all of this. That takes it off your plate completely (for now).
You can't really file for bankruptcy when you have money and assets. So if they have funds for ALF the creditors would not want to see it going THERE instead of to pay the debts they incurred. So takes one option off the plate.
I guess you can just do as suggested but I may want to consult with a lawyer. I would suggest that you do not forward their mail to new home. I did this with my Mom. Had all her bills sent to my house thinking that this would help stop the junk mail, it didn't. It started to be sent to my address. I asked the PO how did they know when I sent nothing to them about the change. The PO denied it was them but I think it was. With automation I don't think the machinery or the humans think about its good or bad mail when they put that yellow change of address sticker on the mail. They tried to blame the utilities but they claim they don't sell addresses.
So my suggestion is to get a PO box. This way they can't find your parents. Believe me they will eventually. Just had a post where a member's Father was estranged from his brother (something like that) and had a call or letter from a collection co. for a 4 yr old debt from a hospital who probably had sold the debt to the collection agency. How did they track down the Father down through the internet. There are sites that show who u maybe related to.