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My father is 73 and diagnosed with moderate dementia. He has about $30,000 in credit card debt--and no assets. He has been maklng payments on these bills monthly, but is now being moved into an assisted living facility. He has insurance that will pay for 95% of his first year. He received about $2800 monthly in pension and social security. I'm thinking that he should stop making his credit card payment and "save" his monthly money to cover his second year in the assisted living facility. What is the pro/con of this thinking? Must he declare bankruptcy? I believe that both his pension and social security will be protected from the creditors--correct? Thanks!

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The daughter is not responsible for the fathers bills (unless she declares she is)
If all the father has is the income she described then it goes to pay for his care. in AL period.
She does not have to pay the credit card bills; he will never get them paid, he will not have taxes as his expenses are eating iall his income in AL
Daughter should in no case agree to any credit card collection settlement
Credit card is the last priority .
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Dave Ramsey might suggest womething like stop paying the CC bills and when they go to collections try to get a settlement of something like 30-40 cents on the dollar or less. Collection agencies typically buy such debts for pennies on the dollar and will settle for a substantial cut. BUT, never give electronic access to any funds because they WILL drain your assets. and be sure to get a statement IN WRITING that an agreed amount will settle the debt in full.
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kmd - about Assisted Living, most AL are totally private pay. So you have to be able to fully pay for your stay on your own. Most AL run between 2K - 5K. Now some states have Medicaid diversion programs which will pay for AL rather than a NH as the costs are lower (so saves the states money). But those seem to come from a list based on residents who have been there and doing private pay for a couple of years prior. If you are on a Medicaid diversion AL program, all your monthly income must be paid to the facility except for a small amount (runs between $ 35 - 90 a month) which is your personal needs allowance. The allowance is all the income you will have too. Your income & assets all have to be fully reportable for Medicaid so no way around any of this. There realistically will be no $ to be able to pay on your debts once in a facility on Medicaid.

But for AL you may have a problem in admissions. SInce most AL (like IL) are private pay, they can run a credit check as part of the admissions process. If you have lousy credit, you may find they will never have an opening for you without a significant deposit or someone else to sign off to be financially responsible for you.

60K isn't that much debt, how to deal with it, well a lot depends on what the debt is. You know the majority of bankruptcy's are medical debt. You might think about bankruptcy and then moving into subsidized housing.

You kinda have to be careful with debt & Medicaid. If you default on credit card and often medical debt, they can send you a 1099-C for the amount of the debt, interest and perhaps also fees. The 1099-C is fully reportable income for IRS too. So can totally be a problem for Medicaid. You have to do taxes & have enough expenses to establish impoverishment for that tax year. If you are in a NH, they run 5K - 15K a month, so a few months of private pay can establish impoverishment. You may not have the ability to do that, so you may be better off doing bankruptcy. Most cities have Consumer Credit Counseling Services which can come up with payment options for CC debt. Their services are free. Maybe check with them and them with bankruptcy attorney to see what is the best reality. Good luck.
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From more practical standpoint; it is doubtful that Dad is going to be applying for new credit.

Were you ever appointed power of attorney....

His current upkeep is the number one priority.

It sounds like any payments made will never clear the debt....

Creditors can request assets when the estate is probated. if any there is any residual.
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Im not sure if I am in the same boat as others who have asked this question. I have about $60,000 in credit card bills and loans. I have no savings and live on my SSI and pensio. If the time comes where I need to go into an Assisted Living Facility, does the law require the facility to bo paid first by my SSI and Pension; and creditors second?
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So many of the above comments illustrate the importance : transfer of the property via IGT, and not wait until the parents are no longer independent
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I did a QC between my mother and I and several years later found out the house was still in probate from my father's passing 11 years ago. Thankfully, my parents had bought the house with a right of survivor clause in the title because the idiot lawyer (who has since disappeared off the face of the earth) started the wrong kind of probate process. Because my parents only had the house, she should have filed Connecticut's short version but she filed the long version. So we put zeros for all the stuff that had no relevance and have recently received the probate bill. Once I pay that, after 30 days, everything should be fine. I am living in the house so that in essence my mother lives with me in my house. Because the house is my primary residence, the look back time is slightly different (at least here in CT).
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Wisconsin has the non impoverished act, where the home, it's contents, 1/2 of savings can be saved for the well spouse. The other 1/2 and all but one car, I believe, go to the side of the balance sheet for the pt. with a need for nursing home care.
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Gennerally Credit Card Debts are unsecured... so I am not to confident they can lein the property

Perhaps they can demand payment in estate proceeds?
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THE IGT Irrevoccable Grantor Trust allows folks to live in the house, and simplies tax consequences for the beneficiaries if house is sold
Also starts Medicaid Clock
One can't medicaid plan effectively when they need it... must be done in advance
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Jennie, that is probably a really good option for people who have some income and could conceivably pay off the debt if it were restructured. If you are in a nursing home on Medicaid, you have virtually no income -- a small allowance out of which to pay for replacing wardrobe items, getting a haircut, etc.
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KZ you need an attorney. I'd start with whomever was the attorney who did the life estate paperwork to explain what an LE is in your state.

It sounds like your mom (the "grantor") did a Quit Claim deed to you with a "Life Estate" for her attached to the QC on the house. Correct? and the QC reads you as the owner, correct?

Do you have a copy of the QC and is there a life estate on it? It's the life estate part that allows her as the grantor to keep the property in her name and because it's a life estate she pays the taxes, etc on the property at her senior citizen rate. She can do whatever she wants with it short of torching it as it is her life estate. So if she lets you or whomever live there while she is in a NH she can do that. I think that in general if a property does have a life estate, you (the grantee) has NO right to possession of the property until after her death even though you are on the QC deed as the owner, because you really don't own the property yet. You really need an attorney to work this out for whatever is the run on property law in your state. Your mom still technically is the owner so judgements or leins against her can be put on her home in most states.

If she gets Medicaid, there probably will be a claim or lien by MERP (Medicaid estate recovery program) on the property that will have to be paid so the property can be released before you can sell or transfer it too.

There often can be lots of issues with QC deeded property. Again, with a QC deed there is NO warranty of good title that you get with a warranty deed. The property could have liens or judgements or clouded title or any other claims to the property and still get a QC deed. If you should ever need to use it as collateral or get a mortgage on the property - say you want to build on it years from now and need a loan (mortgage) to do it - mortgage companies won't usually accept a QCD as there is no assurance of good title. Also should you want to sell it later on and the buyer needs a mortgage to buy it, most mortgagee's will not loan on a QCD property as there is no guarantee (warranty) as to ownership. You probably will need to get an experienced attorney to run a quiet title on the property to properly transfer or sell it and work through the judgements on it.
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Some people in this boat may wish to contact a non-profit credit management agency. I was deep in credit card debt, and I don't know what I would have done without Genus Credit Management. (They later changed their name to American Financial Solutions They got my creditors to lower my payments to a fraction of what they had been (my payments had gotten to be as large as my total income!) and drop most of the interest. In a few years, I was completely out of debt, and I never gave a penny to Genus. They are staffed by caring volunteers. They pretty much saved my life, and I will always be grateful. Just make sure you deal with a non-profit or not-for-profit agency, not a money-making business. I won't say it's easy, but I'm proof that it's possible!
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My mom has been in a nursing facility for 5 years and has credit card debt. She is on Medicaid and her lawyer sent out letters 5 yrs ago telling them she has no assets since she's on Medicaid. They continue to send letters and phone calls. I was told she couldn't file bankruptcy if on Medicaid. They placed judgments against the house that is in my name but she is named life estate of the house. I believe there is a statute of limitation. Anyone know anything about this?
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Taisia - I think it depends on how the pension/retirment/annuity is structured. For those that are railroad or federal (like civil service) they can't be attached. You should probably get sound accurate legal on this for your state. BUT one thing that does happen if it gets to the point of a judgement being done, is the collection agency will try to attach the bank account. Now most banks will comply as they don't know if the account is co-mingled with any non-protected funds. You have to sent a letter (again certified,RRM) to the bank stating that the account is 100% SS and therefore cannot be attached. My late MIL was a real financial terrorist and we had issues like this for her. Sometimes it's just easier to open a new account that only gets their SS and retirement and start fresh and take reins on the account and away from them.
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NO, I am not a bank employee. And I was not stating the senior was irresponsible. I was making a general statement, about the general public. I guess I was venting my own personal frustration with THE SYSTEM! Due to my health and disability, I have had to file bankruptcy!!!!!!!!! NOT something I wanted to do, but they were going to sell my house on the sheriffs steps the next day. The crazy thing about bankruptcy is that you have to pay a lawyer, several thousand dollars to file the thing. So I took some of the money that I had taken out of my retirement to pay for medications, to keep my roof over my head! If you have not had to deal with the medicare system yet!, I hope you stay well and do not have to. It is a nightmare. Especially for those that fall just outside the guidelines! Hopefully that helps you understand why and what I posted. I was not referring to this single situation. Peace
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Yes we should stay within our means. BUT, lets not forget the banks, auto makers even countries are not responsible for their debt and who is bailing them out? We are! Why can't the government take care of our seniors. Let your dad claim bankruptcy, remember his care is more important then the dollar . It must be a bank employee to even make a comment that our seniors are irresponstble if they claim bankruptcy. Remember if it was not for our seniors building this country where would you be!
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Thanks for all the good insights. Just to clarify, a monthly pension is NOT considered an asset that a credit card company can go after when bills are left unpaid? I know SS is protected, but wasn't sure about the pension.
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Hi again. Yes! We are talking about the same thing. You are absolutely correct. Regret I did not make myself clear!! Thanks!
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As silly as this sounds, credit card debt can be taken care of in a bankruptcy!!!!!!!!SO AS I SEE IT, YOU CAN CHOOSE TO BE IRRESPONSIBLE WITH YOUR CREDIT CARDS AND THAT'S OK {NOT EVERYONE IS }, BUT IF YOU TRY TO STAY WITH IN YOUR MEANS AND YOU GET SICK AND DO NOT HAVE ANY THING TO FALL BACK ON, YOU ARE IN TROUBLE!!!!!!!Oh yah and the irresponsible parent that did not pay child support, they are doing what ever they please, because they hide their assests!!!!!!
I had put my cobra on a line of credit (about 28,000-dosn't take long at almost 1500/mo.) against my house. Wish I had known what I know now!!!! I have used up my retirement to pay for my meds, and other needs.
I do not know what insurance thinks you are to do when you became disabled. Because you are not eligible for medicare for 24 months. I still had my two children on my insurance ( in college) when my disability started. I'm one of those people that is not eligible for medicaid, but I do not have enough income to cover all my basic expenses!!!!!!!!! My meds are very expensive, but I have a 1300 spin down! Right !! Make sure you know the laws in you STATE! There is a look back for Medicaid. The best thing to do is to consult an elder attorney.
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A surviving Spouse is Eligible under Title 38 US CODE to (up to) $1093, a Veteran is eligible for up to $1703, and a VET with a dependent (both Living) is allowed up to $2003, So I would suggest your CFP Check it out to revise his/her accuracy
It is the Improved Pension Aid & Attendance non service connected disability
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Hi again. In my answer, I refer to the VA Non-Service connected Pension which was established in 1952 to provide for Aid & Attendance and Housebound status. I am working w/ HeritageFinancialNorth.com located in Burlingame and they are required to provide VA Benefits application assistance free of charge. Hope this helps. Best to all.
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With all due respect, I am working with a CFP approved by the VA, and the benefit is up to $2000 per month. This information is available on the VA website and I encourage all relatives of veterans to check it out.
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Tomatilla - I know your situation. You are fortunate that you are in a program that does an AL waiver so Medicaid will pay. These are few and far between. My mom is in a NH & on Medicaid & still has her home. Myself and another family member pay for all and upon her death will file a claim against her estate for those expenses which will be deducted from her Medicaid MERP tally as per her states law on Medicaid (Texas). I met with her attorney to review the situation when she was in IL. Financially, keeping the house and doing minimal maintenance & costs (taxes, insurance, etc) made more sense than selling the house. For us, its managable as there is no mortgage and she has really good neighbors. My mom is in her 90's so that makes a difference if she was alot younger like 80, keeping the house wouldn't make sense as we'd be looking at the possibility of years and years of expenses. For us, one big issue is that the house would be a very difficult sale, likely to be on the market for a long while plus the costs & time to get it market ready would be significant. Her $ really was better used to pay for her to be able to live in IL for number of years.

One thing to consider if there is debt, is whether in your state, a creditor can place a lien on your home. In Texas, cc or other unsecured debt can't get a lein on your home. I think this is true for Florida too.

If your $ is really tight, I'd pay the taxes first & foremost and let the other house costs slide. You don't want to face having it go to tax sale and dealing with that.
You do want to continue to file her homestead exemption too.

What about renting it? You mom would have to watch the amount so that it doesn't take her above Medicaid income level but that might be a good way especially if you can find renters who will repair or do maintenance. Renting for us we decided against as it would cause ill will with the neighbors.

I'd still look about for NH so that you have a plan for when your mom needs a higher level of care. Good luck.
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Taisa & Kelly - I wouldn't pay another cent on the debt, there is no way the debt is ever going to be paid off. SS is protected income and can't be touched by any creditors except the IRS*. Sections 407(a) and 1383(d)(1) prohibit creditors from reaching Social Security or SSI benefits by levies, garnishments, or other legal process.

The debt collectors are relentless vampires and you just have to learn to deal with them and get to the point where you find it amusing. You kinda have to do something about it because the debt collection process can go on for years as the debt gets sold and resold over & over. Mom's or dad's debt is not your debt, please don't let yourself get buffaloed into assuming the debt. Personally I would NOT do bankruptcy. First I'd get a mail box, like one at a UPS shipping store or other mail/ship small store and that becomes the new mailing address for everything for your parent. This way you can do a mail pick up every couple of weeks and deal with the paperwork which will be all together and separate from yours (so you don't get crazy every day when you get mail). Second, I'd sent a letter, via USPO sent certified with a return registered card (the green post card) to each an every creditor and debt collector.

The letter reads: "This is in response to a letter received on AA/BB/CC sent to YYY concerning the above referenced account related to credit card #1234.
The only owner of the above account, YYY, is advanced elderly. YYYs income is federally protected income (e.g. Social Security) which is dedicated to her health care in a facility as per medical necessity. Sections 407(a) and 1383(d)(1) prohibit creditors from reaching Social Security benefits by levies, garnishments, or other legal process.This is your notification that should you or any of your associates or any affiliates attempt to contact YYY directly, a complaint will be filed with her state’s: Attorney General Office; Department of Banking and Consumer Finance; and Ombudsman for the Department of Health and Human Commission, Senior Care Division, on her behalf. Any and all matters concerning the above reference account must be sent in writing to her DPOA at the above address. This letter is being sent to you within 30 day of receipt of your letter.Thank you for your attention to this matter.

Type in your name as J. Smith as DPOA for Mary White Jones. Then go to the USPO mail them. Will run about $ 5 - 8 per letter with the RRM card. RRM card is important as the signature establishes that somebody actually got it.

What will likely happen is if the debt is still being held by the original creditor (like capital one) they will do a follow up letter to you and then write the debt off. You will get a letter that this has happened. This is pretty straightforward. But usually the account would ALSO have also been sent to a collection agency, who will contact her also.The collection guys are relentless and it will get sold and re sold, so each time, you get that letter you saved in Word and print it out and mail it certified RRM.
Should take about a year or two to run it's course to have it go away.

But you need to be aware of getting a 1099-C Cancellation of Debt. The original credit card company, like Capital One, will file a 1099-C to your mom for the whole debt cancelled. It may be in the tax year they do it or even in a future year. If you get a 1099-C, you have to deal with it by filing taxes for your mom for that year to establish impoverishment otherwise the 1099-C can be income & affect Medicaid & can owe the IRS taxes on it. Cancellation of debt is nothing but fun.....
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Please do consult with an attorney who specializes in elder care law.There are several answers on here that, based on what I've learned over the past five years of caring for elderly in-laws, might not be in your best interest. For one thing, I would be very cautious in following up on contacting someone who advertises that they can eliminate or significantly reduce your debt, and only charge 10% of what they save someone. I have read unfortunate stories about such people charging money up front, but never coming through on the savings. Sounds like one of those "if it sounds too good to be true" stories. Also, if someone is unable to pay their bills, filing bankruptcy is almost always the best way to go. It is a legal proceeding. Simply defaulting on bills leaves a person subject to being taken to court and having judgements placed against them whether they ever appear in court or not (especially if they do not). And yes, putting someone's assets in someone else's name does not keep them from being counted in the Medicaid application process, if those transactions are done within five years or less of applying for Medicaid. Please don't add to existing troubles by going about these things the wrong way. Consult a valid, knowledgeable, experienced elder law professional. If you don't know where to contact one, check with your local Area Agency on Aging or legal aid society. As the Wicked Witch of the West said when trying to get Dorothy's ruby slippers in the "Wizard of Oz", "these things must be done delicately." Good luck!
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The Veteran 'Pension', if he is wartime era is $1703, not $2,000,
This case illustrates the falicy of people not looking at the possibility of Medicaid until they are faced with a Nursing home. Medicaid is not a tool for "Assisted Living"
Medicaid has a 5 year lookback of most assets, and don't count on Cash Value Life insurance on the Dad, as it is an attachable Medicaid Asset.
The Irrevoiccable Trust for the house is the best thing a famly can do, Mom & Dad can still live there as long as they are able. All part of an orderly transfer of assets
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When a person's credit rating is of no value anymore, you can just do an involuntary bankruptcy by not paying them. They can't attach the benefits, so they are out of luck. I don't see how you get a sick elder person to a bankruptcy proceeding, anyway.
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I am in the same boat as Jeannegibbs - my mother has no assets and around $8,000 or $9,000 in debt. I am her POA because I am an only child. There is no one else. My mom had a stroke which affected her physically and mentally and I have her in a personal care home that she can just barely afford. There is no money left over for bills. I thought about seeing a lawyer about bankruptcy but if I have to take her to any of the proceedings I am not sure how she would do. She is very upset I am spending her money on the PC home and still thinks she is going to buy a new car (to replace the one I got rid of when we were told she would not recover enough to drive). I doubt I could get her to cooperate through the whole procedure because of her mental state. Right now I am dodging calls from a few persistant creditors and at a loss as to how to deal with her financial mess.
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In NJ most AL require 2yrs out of pocket and then offer only 10% of there beds to medicaid. Be careful, they will all tell you that you'll get a bed not true, get it in writing. As a care giver myself, we have a difficult decision to make when we no longer can give the type of care from home that our loved ones need. We all think AL or NH, what about in between the two. I am not a fan of either ,AL or NH (read my posting in the discussions catagory 8/7/12 titled "My Mom") you'll know why. In the northwest families combine resources by renting a house and hiring a full time certified health care worker. This cuts the cost of care significantly and gives our parents the care they need. My wife and I are putting this together for my mom . We have researched this concept fully and feel very strong about it. We are looking for positive or negative feedback.
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