So far he is paying rent and utilities, but tends to spend money eating out and visiting the local watering holes, which he cannot afford. I'm thinking it's time for me to get POA.
If he doesn't pay his credit card debt, his credit will be virtually ruined, his credit cards will be cancelled and they will eventually get a judgement against him in court. His pension counts as income.
There are companies that were representing homeowners during the real estate crisis; they assisted in negotiations with creditors holding mortgages. These kinds of companies (reliable organizations of which I believe the Lighthouse is one) can represent an individual and seek to negotiate a settlement of the credit card debt. But your father would likely also have to agree to stop using credit cards as part of the settlement.
There are also a lot of unscrupulous compaies that get copies of credit reports and solicit debtors, alleging they can execute settlements of credit card debt. Stay away from those.
You might substitute the existing credit cards for lower balance ones, enough say for a few or more meals out monthly. But I think the issue of the "watering hole" visit is a separate one which needs to be addressed from the standpoint of why he's visiting these places, and if he's depressed.
As Maggie writes, if he stops making payments, he will go into default, and failing some kind of negotiated settlement for payment, the credit card holder may sue. If a money judgment is won, the creditor can garnish his bank account, but not his SS as I understand it. I'm not sure if pension income is exempt from garnishment but I doubt it.
The creditor can also file a lien against any property he owns, but if he's in independent living, that wouldn't be a possibility unless he has a vehicle. However, if he needs the vehicle for medical purposes, that might constitute an exemption. I'm not up to date on all the exemptions, so that might have changed. It may also vary by state.
Judgments also bear interest at the money rate of judgment for states, so the balance owed will continue to climb.
Do take action of some sort. A POA doesn't stop him from doing what he wants to. Lack of funds might. Perhaps a meeting with a credit counselor could help him avoid a law suit that would take his pension. Sometimes the credit card company will negotiate. Bankruotcy? Is he alcoholic? Perhaps a rehab. Do take action of some sort. Sounds like he's lonely.
Gerd - not to sound harsh but you know the train wreck is coming. I'm going to approach this somewhat differently.....Dad is going to continue his spending & pile on debt and it's his choice. Your having a DPOA isn't going to really make a difference as he is cognitive to do what he wants to even if he does a DPOA to you. Short of getting him declared incompetent and you go to court to become his guardian, there is little you can do to stop him. He knows well enough to have funds for rent & utilities but the rest he doesn't care about and won't ever as his view is that the debt owed is not his problem. My late mil was a total financial terrorist and her viewpoint was if Saks, Coldwater Creek, Citi, etc were stupid enough to issue her credit, its their problem not hers. Does this sound like your dad? He is clever enough to know who to pay and who not to, doesn't he? I'll pay to keep the lights on but pay Discover, well why bother....
If dad has no assets - like a house or a car- and his income is SS or a federal or civil service pension, then his income is protected income from all but the supercreditors (IRS, state governments). Dad is judgement proof and I'd bet he knows this. My mil knew she was judgement proof.
The glitch with this approach is that the bank who issued the credit - the ORIGINAL CREDITOR - can issue a 1099-C (cancellation of debt) when there is finally, finally, finally a default on debt, it's interest & fees. 1099's since they go to the IRS means the amount on the 1099 is income....and income that has taxes due to the IRS. IRS as a supercreditor can attach SS & pension.
One issue in this scenario, is that as long as dad is paying the minimum - even if late - it is putting off the default. He could limp along with all the CC for months or even years to hold off on the default. If he gets a new CC, he uses that new CC to pay a bit on all the old ones & push back the eventual default.But eventually he will default; the OC will within the year or a year later issue the 1099 -C; IRS will contact dad about not paying taxes on the 1099 amounts; then maybe a year later will IRS start debiting dads $.
My point in all this is that right now dad has some time to decide how to deal (or not) with the eventual train wreck. He is not going to change his spending pattern or having drinks around the corner at 78. Would you say he has been a functioning alcoholic? If so,this is even more difficult. As far as choices, He can do nothing and let the IRS take some funds down the road 3 -5 years from now. Or he declares bankruptcy. The advantage to bankruptcy is that there will be no 1099-C out there to haunt him later on.
Personally imho with folks like this, being their DPOA is impossible as they constantly undermine your trying to do your fiduciary duty. You get a deal worked with a creditor and they do something to queer the deal. They often play family or their friends against whatever you are trying to do to help them. Often guardianship is the only option and for family to become the guardian if you can tell them to STFU and you stick to it. Otherwise I'd let the judge appoint the guardian from a list of guardians approved by the state.
Whatever you do, NEVER agree to be responsible for any of his debt or actions.
There are also a lot of unscrupulous compaies that get copies of credit reports and solicit debtors, alleging they can execute settlements of credit card debt. Stay away from those.
You might substitute the existing credit cards for lower balance ones, enough say for a few or more meals out monthly. But I think the issue of the "watering hole" visit is a separate one which needs to be addressed from the standpoint of why he's visiting these places, and if he's depressed.
As Maggie writes, if he stops making payments, he will go into default, and failing some kind of negotiated settlement for payment, the credit card holder may sue. If a money judgment is won, the creditor can garnish his bank account, but not his SS as I understand it. I'm not sure if pension income is exempt from garnishment but I doubt it.
The creditor can also file a lien against any property he owns, but if he's in independent living, that wouldn't be a possibility unless he has a vehicle. However, if he needs the vehicle for medical purposes, that might constitute an exemption. I'm not up to date on all the exemptions, so that might have changed. It may also vary by state.
Judgments also bear interest at the money rate of judgment for states, so the balance owed will continue to climb.
If dad has no assets - like a house or a car- and his income is SS or a federal or civil service pension, then his income is protected income from all but the supercreditors (IRS, state governments). Dad is judgement proof and I'd bet he knows this. My mil knew she was judgement proof.
The glitch with this approach is that the bank who issued the credit - the ORIGINAL CREDITOR - can issue a 1099-C (cancellation of debt) when there is finally, finally, finally a default on debt, it's interest & fees. 1099's since they go to the IRS means the amount on the 1099 is income....and income that has taxes due to the IRS. IRS as a supercreditor can attach SS & pension.
One issue in this scenario, is that as long as dad is paying the minimum - even if late - it is putting off the default. He could limp along with all the CC for months or even years to hold off on the default. If he gets a new CC, he uses that new CC to pay a bit on all the old ones & push back the eventual default.But eventually he will default; the OC will within the year or a year later issue the 1099 -C; IRS will contact dad about not paying taxes on the 1099 amounts; then maybe a year later will IRS start debiting dads $.
My point in all this is that right now dad has some time to decide how to deal (or not) with the eventual train wreck. He is not going to change his spending pattern or having drinks around the corner at 78. Would you say he has been a functioning alcoholic? If so,this is even more difficult. As far as choices, He can do nothing and let the IRS take some funds down the road 3 -5 years from now. Or he declares bankruptcy. The advantage to bankruptcy is that there will be no 1099-C out there to haunt him later on.
Personally imho with folks like this, being their DPOA is impossible as they constantly undermine your trying to do your fiduciary duty. You get a deal worked with a creditor and they do something to queer the deal. They often play family or their friends against whatever you are trying to do to help them. Often guardianship is the only option and for family to become the guardian if you can tell them to STFU and you stick to it. Otherwise I'd let the judge appoint the guardian from a list of guardians approved by the state.
Whatever you do, NEVER agree to be responsible for any of his debt or actions.