Follow
Share

My grandmother owes on a lot of freakin credit cards, plus Verizon is on her about returning DVR boxes, that were already returned, but can't find the receipt to prove it. Verizon can kiss my a** as far as I'm concerned, but she has a good $20k piled up on credit card debt. Can credit card companies, if they are successful in trying to sue her, garnish her Social Security? She has no other assets, I swear.

I WANT Bankruptcy to be an option, but her money is just leaking out of her bank account too quickly to save up for a lawyer. Yes, I've tried to open a separate account, but there's already a bankruptcy on my credit report, so I can't open one, and my grandmother can't open a 2nd account because she just foreclosed on a home :\

There's nothing I can do for her financially, except insuring her cell phone gets paid (as well as insurances)

What the f. I mean, really.

This question has been closed for answers. Ask a New Question.
You should pay for an hour of a lawyer's time before you do anything, but from my personal experience, I'd advise taking away her credit cards, then checking to make sure they are all unsecured (they almost always are) and then, STOP PAYING THEM. If your grandmother has only her SS check as income and very little in the bank, the credit card companies send a lot of threatening mail and make a lot of annoying phone calls – all of which you can ignore – and eventually give up.

The credit card companies have no doubt have taken more in interest than your grandmother charged on them to begin with. That's what I discovered when I found out that my father had run up multiple cards. In fact, once someone has a lot owed on cards, opportunistic companies start offering them even more cards with even higher interest rates and more penalties and fees. It's a racket! They knew her income when they offered the cards. They calculated that they could squeeze more interest out of her than what she'd pay on her purchases.

Bankruptcy costs money. If your grandmother has no real estate to protect, why bother.
Helpful Answer (1)
Report

Guessing that is why crazy talk show host attorney says: "Do not confirm the debt".
Helpful Answer (1)
Report

Unless the loan is student or income tax no one should be able to do that. Find an elder atty that volunteers advice thru your local senior citizen agency's. Good luck!
Also look into law passed this year I think in May but at only be fla they cannot garnish ss acct.
Helpful Answer (0)
Report

Thank you all for all your comments. I don't think I have a choice, however I have decided not to do a bankruptcy but to send letters as to my not paying. Then after I am all caught up on medical, dental, etc. Maybe they will settle for a lot less in years to come. I want to pay I just can't stretch it anymore and bring myself medical and dental up to date so I am healthy enough to maybe even get a part time job, but that is not available to me right now due to catch up necessary for health......have a nice day.
Helpful Answer (0)
Report

freqflyer - in the case of the elderly, it was often not a case of unbridled shopping that got them into a credit mess. It's more often struggling to stay ahead of their ordinary expenses; groceries, prescriptions, etc... Credit card companies prey on people in this situation, offering them 'special' credit cards with crazy high rates and lots of fees. During the era of deregulation, they were able to profit from bad debt so they didn't care it you were able to pay or not. They'd make money from you either way.

Before they extend credit, the credit card company asks you how much money you make and how much debt you have. When an elderly person states that they have $20,000+ in debt and they make less than $20,000 per year, and the company still sends them a credit card. Who's to blame when they can't pay?!

Dementia often is at the root of the poor financial decision making. Sometimes, it's one of the first symptoms and it's often not recognized by family members until it's a real mess. I speak from experience.
Helpful Answer (0)
Report

When it comes to bad debt, it's us consumers who are paying for those bad debts with high cost for goods/services. I can understand and sympathize if someone is behind on payment due to unforeseen medical expenses, but those who shop until they drop they created their own worse nightmare.
Helpful Answer (0)
Report

So if. Even 15pcent that's still under 2000 yeah gonna go for it. Thanks
Helpful Answer (0)
Report

In a nut shell, if a business forgives someone a debt of $10,000 then that $10,000 becomes *income* in the eyes of the IRS, if the business reports it as a bad debt..... even though that $10,000 isn't in your wallet you would still need to pay income tax on that amount.
Helpful Answer (0)
Report

Someone sent me a question but it disappeared before I could read..it started may I ask u.... So I am guessing why.? I am 71. Have spent most of my life caregiving, raising 4 kids on my own and dropping everything, moving etc. when parents needed help. My dad passed 1980. My mom passed February 22 4 wks from her 101st bday. So now I'new finalized all.... I looked at my finances and said 'oh my God! I have not taken very good care of myself evidently. I am 70 lbs over weight. I need cataract surg both eyes. I broke my upper partial 1 1/2 yrs ago never replaced. I need knee surgery. eyelid surg not for cosmetic purposes. 7 teeth on top ans8 on bottom none meet to chew. I have 1500 just in dental in past year to save what's left. I need 3000 more for an extraction and 2 partials. March I landed in re with a fib probably from stress ang grief.... I am exhausted and have decided to let 13000 of debt sit of 16000. Pray they can't stop me.... I need health, rest and rehab......
Helpful Answer (0)
Report

You are only taxed on what you earn and not on what you owe.
Helpful Answer (0)
Report

So I am only on ss and 71. Are u saying with 16000 debt I may have to pay taxes on that amount?
Helpful Answer (0)
Report

Don't know anything about all this debt stuff but there seems to be some confusion about Medicare and Medicaid.
Medicare is the program provided by the state to cover medical expenses for up to 80% of the cost for the elderly. Premiums are automatically taken from the social security so you never see that money. That is parts A & B. Part D is the drug benefit which has to be paid separately. Medicaid is a program for those living below the poverty line and it pays for any and all medical expenses for that individual. It can be a bit tricky because some providers do not accept Medicaid It is based on household income and depends on the number of family members living under the same roof it is possible for some very low income seniors to qualify for both programs. Your area office on aging usually has volunteers who can help you understand this.
Helpful Answer (0)
Report

My 49-year-old son is disabled but not demented and on Social Security Disability. He has no assets. He owes considerable back IRS but since he has nothing to pay it back with, the IRS has told him that unless his financial situation should change for the better, he is off the hook. Of course, he feels like it is forever hanging over him, but they are not going to garnish his disability check. It took him a long time to contact the IRS and get this taken care of, but it was worth it. I suggest going that route for your grandmother and relieve that one item, anyway.
I am worried, after reading this thread, about myself. I am 69, unable to work, and living on a very small fixed income, which consists of $999 Social Security (after medicare payment which is supposed to increase significantly in 2014 due to Obamacare!), about $250 (reduced by half for pyament of Medicare supplement) from the state retirement, and an annuity from the federal government for retirement from the Postal Service in the amount of less than $400. I know Social Security if safe from garnishment, but I don't know about the other small government retirement. I don't know how I would get by without what I get now and really worry about the future rising expenses. Good luck with figuring out your grandmother's problems.
Helpful Answer (0)
Report

If that is all she has and no assets, send a desist and stop letter to all creditors, and then do nothing. Here's the catch on the credit card tapping into her money. If it is direct deposited into an account they have legal access to garnish that account despite what monies goes into it. But no they cannot garnish the check from social security. My dad was in the same situation and his account was garnished and then we found out the distinction between the bank account and a check distributed. So be careful there. Don't worry about the credit card companies - if no assets you have a strong case for insolubility. Plus there is a statute of limitations for credit card debt in each state which averages 4-7 yrs. Do not pay any credit cards because then that will restart the clock on the debt. You as the adult child are not obligated nor liable to pay her debts. They can't touch you if you are not on any of her credit cards as co-signer. Just be aware if the credit cards submit in a debt of cancellation she may owe at tax time the taxes on that debt cancelled because the IRS considers that income back to her but you can still get out of that by claiming insolubility for her.
Helpful Answer (0)
Report

As long as the bankruptcy didn't involve you owing money to your bank, you can have a checking account after filing for bankruptcy (& so can she, following a foreclosure) just switch banks.
Helpful Answer (0)
Report

OK, hang with me......a 1099 - C can be done when a creditor forgives a debt over $ 600.00. The creditor can be a bank who issued you a credit card that got charged off OR a mortgage that was forgiven because of a foreclosure or short sale on the house OR the doctor who wrote off 5K in fees.The creditor issues it in January and technically the forgiven debt is considered "income" as the 1099-C is also sent to the IRS and then the IRS expects taxes to be paid on the income and then also the "income" gets reported into the system. So lets say you had 2 credit cards for 15K with Discover & 10K with Citi and had the debt written off by Discover and Citi, then you could get a 1099-C for whatever the 15K and 10K have morphed to with fees and penalties. So it could just be 25K but more likely it will be higher because of fees and penalties.

That there is now "income" based on the 1099-C is the sticky tricky part for those on Medicaid. Remember Medicaid is a needs-based program to qualify and so if you somehow now have "income" via the 1099-C, you could get disqualified because of your new"income". What is so totally crazy in this is that this is phantom income and it could be from a debt that was written off years ago. It's totally phantom income from zombie debt. Zombies are so "In", aren't they?

It also matters if say your folks have limited income (not on Medicaid and still living at home and only get SS) and they had credit card debt written off as they could find they have to pay taxes on the supposed "income" and they haven't done taxes in forever because they don't have any reportable income.

If you or your parents get them, then what you kinda need to do is file taxes and do an IRS Form 982 - Insolvency Exclusion so that your exclusions totally off-set whatever "income" you have. You need a tax professional to do this who has experience with dealing with 1099- C and Form 982 because it is a totally loco form to figure out. There's this whole worksheet which makes no sense as it's designed for foreclosure written off debt and not for dealing with your financial terrorist of a MIL who had 30K in credit card debt forgiven. It is not imho (in my humble opinion) a do-it-yourself project or done via on-line tax filing, H & R Block has folks who can do it but they are usually the ones at the Block for Business offices that have year round office staff and it might run a couple of hundred but well worth it as you don't want to deal with IRS or having them disqualified for Medicaid till it all get's sorted out.

Personally I think it's criminal that they can issue a 1099-C from debt that is from years and years ago.
Helpful Answer (1)
Report

Reindeer, I looked into it a bit. The only thing I was able to find was something call the "Spousal Impoverish Protection Law" and a form regarding that. My grandma has no spouse, however, she also doesn't have Medicaid at this time. Just Medicare.

Does this make a difference for this year's taxes, I'm not sure.
Helpful Answer (0)
Report

I have some familiarity with the 1099c. My father got several of them when CC companies "forgave" his debt. I was advised to claim them as income on this taxes. That's what I did and, because he has very little income, he didn't owe any taxes. However, I'm nervous about some CCs still out there that have much higher balances. The best advice is what you've given yourself, go see a tax accountant. A couple of hundred spent there may be wisely invested.
Helpful Answer (0)
Report

imho means- In My Humble Opinion
Helpful Answer (0)
Report

I was told the impoverishment form was for Medicaid. Because this income would
show up on her taxes it then would be considered by Medicaid and might knock her
off being eligible for Medicaid. I believe the form is from Medicaid not the IRS. Maybe I didn't understand, but I know it has to do with keeping them eligible for Medicaid.
Helpful Answer (0)
Report

I'll let you know what I find out. However, I'm in between my own stuff at the moment, so I had to put a lot of things with my grandmother on hold. Not by choice, but I'm doing the best that I can.
Helpful Answer (0)
Report

What does imho mean? Also, I looked up impoverishment form and it doesn't seem to exist, so I have no idea what you people are talking about.

However, it sounds like a 1099-c form is for the purpose of showing interest incurred on a debt, but because the debt is not being paid it shows as income? That makes no sense to say, "Okay,so you're not spending the money on us, it must be income!"

I'm just going to ask a tax guy (and a lawyer). Thank you everyone.
Helpful Answer (0)
Report

What is an impoverishment form? I worked as a Revenue Agent (audited tax returns) for 27 years and have never heard of such a form. As I previously said, and have since checked and made sure the law has not changed, if a person is insolvent the forgiveness of indebtedness income is not taxable to the extent of the insolvency. File a statement with the tax return showing the amount of indebtedness income, then show the fair market value of your grandmother's assets, any excess in assets over the debt forgiveness income is the amount that is taxable. That amount will be carried forward to the front of the form 1040 with a note to refer to the statement.
If you do not get an expected 1099 (or any other expected statement) by the 31st of January of the year following the year income is received, you can call IRS and report you did not get a statement.
Should IRS get a statement you did not report as income, you will receive a CP-2000 notice showing IRS's tax computation and what they think is not on your return. All you have to do is contact them about the discrepancy and work it out. Now, if one were to ignore the notice (yes there are people who ignore notices from and appointments with IRS), the tax will be assessed and collection activity will be started.
I do not know where you live, but if there is a local IRS office, they have people there who will help you with all of this. You might also find someone at a voluntary tax preparation site that can help you with this. There are several kinds available including some for the elderly.
Helpful Answer (0)
Report

OMG - 1099 C may or may not be sent. Kinda depends on the creditor. You do NOT ask for them as they have to be done by whomever forgave the debt. IRS rules require 1099's to be sent out in January for the prior year. So if you are getting them, you should have them by the end of this month.

1099 C are imho a really sleeping nightmare as not dealing with it can trigger IRS and that (the IRS) in turn can affect Medicaid. Medicaid is a needs-based program in order to qualify which basically means for NH Medicaid that they have 2K in non-exempt assets and 2K monthly income...so if the IRS gets a 1099-C that shows income of 15K in forgiven debt, that is 15K in reportable income and takes you above the 2K income level for Medicaid. So you have to file taxes and do an impoverishment form to zero out your "income".

1099-C from CC debt are real zombie's to deal with as they could be from any old debt over $ 600 that wasn't paid off in full and from years and years ago.

This has nothing to do with Medicare.
Helpful Answer (0)
Report

A form 1099-C is used to report Cancellation of Indebtedness. It has to be sent to your grandmother. You should not have to request it.
Helpful Answer (0)
Report

You all lost me when you started talking about taxes. So, a 1099-C is a tax form sent showing the taxes owed on a debt? They were all charged off in 2012, so hopefully, it'll show up in the mail sometime in this new year.
OR - is it something I have to request?


Also, my grandmother doesn't have Medicaid. Just Medicare. What's the difference?
Helpful Answer (0)
Report

I have not done taxes in several years, but it used to be if the person who had the debt written off was insolvent, the debt was not taxable to the extent of the insolvency. In other words, if there are no assets, only debt, none of the write-off would be taxable. If a 1099 is issued, you would need to check the law in effect for that tax period. If you get a 1099, be sure you put a statement with the tax return computing the amount of insolvency. If you do not, you will probably receive a CP2000 notice showing the unreported income and the increase in tax. You can at that time present the information.
I know nothing about how it affects Medicaid.
Helpful Answer (0)
Report

If she doesn't have any property, then there is nothing the cc companies can do as cc is usually unsecured debt.

However, there is something to be on the look-out for when it's charged-off:
1099-C aka Cancellation of Debt. This will come from whomever was the original creditor (like Bank of America or Chase or whatever bank group held the credit card) who wrote off or charged-off the debt (and not the collection agency). This gets issued in January and you cannot ignore it. Oh & to make this even more fun, the 1099-C does not have to be issued the year the debt was written off. It could have been debt from years and years ago. So 10K DIscover card charge off could go to 15K with interest & fees and you get a 15K 1099 in reportable income.

What the 1099 -C does is becomes INCOME for the tax year the 1099-C was sent. And this can be sticky to deal with both in that you owe taxes on income and if you get Medicaid, then the "income" (which is really phantom income) can take you over the Medicaid limit for income. What you have to do is file taxes and do an impoverishment for the year against the debt so there are no taxes due. You kinda have to have a CPA or other tax professional do this as it is sticky.

The 1099-C's get routinely done for people who do a foreclosure, or short-sale or walk away from a mortgage. The outstanding $ due on the mortgage but not paid is forgiven as debt BUT the amount becomes taxable income. Imho that was what the intention of the law was - for dealing with foreclosure crisis. But the CC companies can do 1099-C's if they are a bank (so AMEX doesn't do them). If you just ignore the 1099-C, the IRS will get involved as you did not pay taxes or file an impoverishment in excess of the "income".
Helpful Answer (1)
Report

The problem with collection agencies calling is that they cannot prove how much my grandmother owes. So, if it ends up being one of them who sues ON BEHALF of a creditor, they can't prove what she owes and when. (Or so I've heard. Whether this is true or not, I'm not sure.)
Helpful Answer (0)
Report

It is probably not the credit card companies contacting her. They sell the debt & those people try to collect. If they can't, it gets sold again & a new round of calls starts. My ex had some debt and periodically the calls would start even tho we had not seen each other in almost 25 years. The last guy that called was about 3 years ago. They got my husband who let them know they had better never call my phone number again.
Helpful Answer (1)
Report

This question has been closed for answers. Ask a New Question.