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Mom is in a precarious situation. What with paying medical bills and funeral expenses for my Dad, she started using credit cards to keep up. Now she is in a mess. The bank foreclosed on their house, which is when I found out about all of this. She has around $18,000. charged on the credit cards. The payment on the cards is nearly 3/4 of her monthly income. I have tried to get as much help as possible for her, but her gross income is over the limit for most available help. I am doing as much as I am able for her, but with a husband who has Alzheimer's, my funds are limited.


I have seen ads for debt consolidation companies who arrange with the creditors for a payoff, pays off all the debts, then the customer pays the company a single monthly amount which would be lower than what she is paying now with 4 credit card payments. But I don't know how trustworthy these companies are, or if it is just another scam to get money from people who can't afford to lose it.


She can't get a consolidation loan from the bank because of her debt to income ratio. So if anyone has any experience at all in this area please let me know.

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polar bear :

Kudos on your answer to MidKid. It's easy to judge someone else as midkid did when they aren't in your's or my Mom's position. Mom didn't live large on her CC's. She used them to pay medical bills that the health insurance didn't cover, so my Dad could continue to have the care he needed. She did what she had to do, and now for her the name of the game is Survival
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tacy022

She did have a life ins. policy, but cashed it in to pay medical bills for my Dad. And right, only two cards lowered the interest. the remaining two would not lower the interest, but lowered the payment to $50. a month. Which, at that rate will take forever to pay off.
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So, you have lowered payments but on a few of the cards interest rates could not be renegotiated, correct?

Does she have a life insurance policy?
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Raspberryfarm, if she is still paying 3/4 of her income that can not continue. I am usually of the mind to pay your bills, however, in her situation, to h3ll with them. That they won't listen and work with her to lower these payments into the realm of reality, they can eat the debt.

Get a post office box for mail and get mom a new number. They can't harass those they can not find.

Be sure and tell everyone that gets moms new number not to share. They will contact everyone and anyone to try and find her. They can just tell the caller that they need to remove their number from the records, they are not a contact point for mom. I found getting the name of company and the person you are speaking to goes a long way in stopping the calls. Otherwise they just don't note it and the calls continue.

What a mess for you but it will get better when mom has some money and you aren't dealing with it all the time.

HUGS!

They can't prosecute her. If anyone says that to you again, counter it with the media will jump on this like stink on poo, BIG BAD BANK PROSECUTING 80 YEAR OLD WOMAN FOR CC DEBT, AFTER MONTHS OF THREATS INTENDED TO INTIMIDATE THIS POOR WOMAN! Headlines baby. That's what I would say.
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raspberryfarm Mar 27, 2019
Lol good advice! I love it.
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raspberry - to answer your question, CC companies will use threats and tricks to get people to pay. And NO, they can NOT prosecute your mother. That's an empty threat. The most they can do is to sue her and get a judgement (meaning a judge will issue something that says: "yeah, the lady owes you x dollars and you may collect it." By chance they sue her, she does NOT need to appear in court.

Your mother has no money to pay and no assets to pin the judgement on, and no jobs from which they can garnish salary. They can sue all day long but there isn't money to collect. So the chances of them suing is almost nil. What most likely will happen is the CC companies will sell your mother's debt to a collection agency who will then send all kinds of threatening letters to her to make her pay.

Many years ago, I ran into financial hardship. No money to pay mortgage, I lost my very 1st house to foreclosure. I had no money to pay my credit cards either so I stopped. I had 11 credit cards (or more.) Eventually, most of the cards' balances were sold to collection agencies. Nasty letters started to come in the mail box, I just threw them out. Collection calls also came. I stopped answering the phone. A couple of the cards, I was able to negotiate as I had described in my earlier post. After 5 years, the statute of limitations period passed, all the debts were erased.

My recommendation: stop paying, your mother needs that money for rent and food, and medical expenses. Let at least many months pass, then call to negotiate to pay off the cards. If I remember correctly, one of my cards had a balance over $9,000, after a year of no payment I negotiated it down to less than $1,000 as full payment for the debt.

If the CC companies refuse to accept your one-time payment offer, then stop all contact, ignore all letters and calls, let the clock start on the statute of limitations. Depending on the state your mother lives, the statute of limitations can vary, maybe less or more than 5 years. After that time passes, all her debts will be legally erased.

Do NOT ever give away any banking information. They will drain your bank account.

I take back my recommendation for bankruptcy. Too much work for someone her age. Meetings with lawyer, going to court, etc.

Don't let the CC companies threaten you or your mother. Change her phone number if you need to. Do not give them YOUR phone number or address.

Relax. Breathe. Things will be fine.
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Midkid58 Mar 26, 2019
Wow.

I don't want to be judgy--but, really? You did benefit from those CC card companies and ending up just...not paying?

I guess you did what an acquaintance of mine is in the process of doing: not paying a single bill. Her house will go into foreclosure in a couple of months. She doesn't open her mail or answer her phone. I don't know how she lives with the stress of having the kind of debt she has.

Oh, plus she has "verbal custody" of her 3 grandkids who will be taken into foster care the day she loses her home.

I don't know if your tactic would be a good one for most of us, who would feel some sense of responsibility to the CC cards companies, etc.

Again, no judgment, but, wow, you're tough. She is too, I guess, as she knows the kids will be taken from her.
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How is mom's health? Dementia?

Is she living with you? If on Medicaid and in a facility the cc companies would have to write it off. No money left for anything else.
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raspberryfarm Mar 27, 2019
Mom is in a small apartment. I would have her with me except that my husband has Alzheimer's, and usually is not pleasant to be around.
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I have used one of these companies before. I forget the name of it right now, sorry. But I could look it up. Anyways I settled $12000 of credit card debt for about $3400. It is a process. Basically you stop paying on your cards and you pay this company a fee to stole the debt. It does work, it will hurt your credit score, but it sounds like your in-law doesn’t need credit. I have a 660 score right now. Sorry I can’t think of the name; but I will look for it and pass it on to you.
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raspberryfarm Mar 27, 2019
Thank you Dave, I think I would at least like to research this course of action.
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So her home went into foreclosure, right? House is gone.
And she now lives elsewhere, right?
Doesn’t own a home but rents or lives with family, that’s it right?
She doesn’t own anything else, like land?
Shes like 80 and has only SS or retirement for her income, right?

If so, she’s pretty well judgement proof.
Credit card debt is unsecuritized debt, to do anything they would have to sue mom and gets a judgement againat her. Usually it’s done by a wage garnishment...... but your mom source of $ is SS which is protected income from creditors which the exception of IRS and state taxes. So CC can’t attached her SS$. She has no job that pays regular wages. If she has no home, no property solely in her name, there's nothing to place a judgement on. They may not take her to court but just do a write off. She’s judgement proof. CC companies and the subsequent debt collections will be a beyond a total pest to try to get her or you to pay or accept your mom’s debt as yours.... but little they can do to her or her SS income.

If she totally refuses to consider BK, then she’s (& therefore you) gonna have to ride out dealing with collections. 1st step imo is to totally stop any payments on the cards. The .last date paid to each CC starts the clockdown to whatever your state has as its SOL (statute of limitations) time frame. A lot of states have 3 yr SOL, which is not very much time to get past having court filings done.

If you go this route, to keep things somewhat organized, I’d suggest that mom open up a mail box that is her new address for everything. So that her debt, Medicare stuff, whatever mail now go to this address and not commingle with your mail. You go once a week and gather up her mail and deal with it.

Im not trying to be flippant about the walking away on debt. But the situation your mom is in, is what happens so very often to all those that have CC Or other debts or even a mortgage and end up becoming a LTC resident in a NH and apply for Medicaid. Medicaid requires a copay of basically all their monthly income (like their SS) paid to the NH. This forum has lots of posts from families whose mom/dad lived at home, fell broke a hip and cannot live in their home alone anymore, they become a NH resident..... and all those bills and debts from their pre NH life get defaulted on as all $ goes to paying for NH.

So once on Medicaid or Medicaid Pending, they have no extra $ at all; so they end up defaulting on CC or other debts. If they have dementia, they can’t do BK as they don’t have the cognitive abililty go to court. They default and the CC that is the OC (original creditor) will close out the accounts and write the debt off and mom gets a 1099-c for the amount written off. The not so fun part then is that it gets sold to secondary debt collectors which are relentless and that the $ as per the 1099-C is taxable income for the year written off. If she gets 1099-C next Jan, 2020 for 2019 taxes, do a new post on AC and folks will have suggestions as to how to deal with.

she is likely to get a 1099-C on the foreclosure. You might want to talk with a tax pro or CPA like in May - after tax season is done - to look at what her tax liability due to possible 1099-c’ s on house & those CC might be and how to plan for it.
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raspberryfarm Mar 25, 2019
Igloo , You have given me a lot to think about, and some very good information. Thank you;
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raspberry - DO NOT use any debt consolidation company. Good trustworthy ones are very rare, and most are out to get your money and do nothing to help. Better you stay clear of them.

First of all, STOP paying the credit cards for at least several months until you get their attention. The CC companies won't cut deals unless you're behind, way behind in payment.

Option one: Start with the monthly income your mom has, take out the amount for food, utilities, car payment if any, gas, medicine, and any other necessity expenses. Calculate the amount left if any plus any savings accumulated from the prior months from not paying the credit cards. If there is some money left over, say $1000, call up each of credit card companies, tell them your mother has no money to pay, however, she can pay them a ONE time payment of $XXX (a portion of the $1,000) to SATISFY the TOTAL debt, interest and late fee included. If they agree, send your mother a letter stating that exact term IN WRITING. When you receive that letter in the mail, then you send them a money order or cashier's check. DO NOT give them a check from your mother's or your checking account. They will drain it.

Option 2: chapter 11 bankruptcy.

If you go with option 1, there is some work at year end to avoid paying taxes on the amount of debt forgiven. Here is the info you might need.

https://blog.credit.com/2019/01/1099-c-in-the-mail-how-to-avoid-taxes-on-cancelled-debt-14927/
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igloo572 Mar 24, 2019
Awesome advice about the negotiation.
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Raspberry, try again. Call the corporate office and speak to someone that has the authority to do it.

I would present it in a way that implies they are guaranteed payment if the will stop the interest, if not bankruptcy may be the next stop because she has to eat and have a roof over her head.

Calling the is the 800# connects you to people that only have so much ability to help, gotta get to upper management.
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raspberryfarm Mar 25, 2019
I have called the CC companies, and have got the payments down where she can make them, but she has such a small income that all the payments altogether add up to about 3/4's of her income. Under no conditions will they stop the interest. But a couple of them did lower the interest percentage. Still working on getting her to agree to bankruptcy. Thanks for your input.
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I found my mother in the same position. Like always I did my research and then did the math!

I found that bankruptcy was a better way to go for my mother and here is why:

1) It frees up money sooner.
2) Debt Consolidation companies charge to much for to long. It would take my mother 4 yrs to pay it off that means 4 yrs with very little money. A financial drain on me!
3) Payments not reasonable.
4) She no longer needs credit.
5) If you miss a payment...well...that is just a whole other mess. Ugh!
6) I personally just wanted to get it done and over and not be reminded of the mess that my mother made.
7) The Debt Consolidation company lied to me--deal breaker for me.

File bankruptcy is a safer way to go. However all varibles must be taken into account. Secure loans, homeownership, surplus cash, etc.

I hope I gave you something to think about.
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raspberryfarm Mar 25, 2019
Thanks Shell, I am trying to talk her into filing Bankruptcy, but so far no luck.
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If mom is 80's, early 80's would seriously consider bankruptcy. Has her house actually been foreclosed yet?

See an elder law attorney for suggestions.
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Bankruptcy, is a safer option.
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raspberryfarm Mar 23, 2019
Yes, that was my first response also. But, Mom will not hear of it. She is adamant about not filing for bankruptcy. She feels there is a terrible stigma associated with bankruptcy. But you certainly are right, it would be a safer option.
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How far along in foreclosure process? How old is she? Has she been paying the property taxes and is there any secured debt besides the mortgage or leins? Will the sale of the home cause a deficit meaning will she still owe after the sale?
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raspberryfarm Mar 23, 2019
tacy022,

The foreclosure was a year ago, so it is a done deal. Her only debts now are the credit cards. Mom is 80, her health is good, so presumably she still has some good years left. I just wish I could get this financial mess worked out for her.
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Call your Office of Aging and see if they have someone who can help.

My friend went to her bank and got a loan. The bank rep sat down with her and a check was written for each debtor. Instead of multiple payments, she had one.
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raspberryfarm Mar 23, 2019
JoAnn29,

We did try for a consolidation loan with her bank, but they said her debt to income was to high for her to qualify. I hadn't thought about contacting the Office of Aging, but I will do so. Thank you.
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You can use debt consolidation companies but be careful though. A few of them don't do anything except take a person's money and then you are in even worse shape than before. A friend of mine fell victim to that a few years ago. You can see if you can help your mom work with the credit card companies but if they won't work with you, bankruptcy might be your mom's best bet. I don't know how old your mom is but if she is in her 80's or 90's bankruptcy wouldn't be a bad thing since 3/4 of her income is going to credit cards and she is losing her house.
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raspberryfarm Mar 23, 2019
Evermore99.

That is what I was afraid of. I did get the CC companies to lower her payments however. Thank you for your answer.
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I used a debt consolidation company 20 years ago when I got sick and was unable to pay my bills.  I gave them a lump amount of money and they divided between the various creditors.  It took 3-5 years to pay everybody.

I have listed a few websites for you to look at.  Copy and paste the URL to your browser.  Hope that this information helps.

https://www.daveramsey.com/blog/debt-consolidation-truth

https://www.topconsumerreviews.com/debt-consolidation-programs/

https://help.incharge.org/debtrelief/solution
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Isthisrealyreal Mar 23, 2019
Dave Ramsey is a great starting point.

I am so entertained by his no bs style to money management, I listen when I can.
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Research them for any complaints or hits with the regulating agency, I don't know who that would be, but I sure you can find out.

I think it is a good option, you can't pay more then you have, simple.

Make some calls and talk to them, research multiple ones, and find out how it works, how much they charge etc.

I would also call the credit cards and explain the situation and ask them if they can stop the interest and penalties and accept lower monthly payments without the need of a credit counselor. Sometimes they will, and if they say no, call back and talk to a supervisor. It can't hurt to try and might save the CC fees.
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raspberryfarm Mar 23, 2019
I did get the payments lowered, but none of the companies would stop adding interest, a couple of them did lower the interest. Thank you for your input.
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