She has Alzheimer's and is in debt to the IRS and credit card companies about $100K. Her income from a pension and social security is barely enough to pay for the assisted living she's in. The POA does not specifically mention bankruptcy, but does state that the attorney-in-fact can initiate lawsuits, defend them, with several paragraphs generally allowing "all necessary" action etc. We're spending a lot of time telling creditors there's no money and some have threatened to sue.
I would get her neurologist or primary doc to provide a letter on their clinic letterhead to send to the credit card companies. You explain the debts were incurred when she was cognitively compromised and didn't understand what she was doing and that she barely has enough money to pay for her care. Then sit back and see what they say about it.
My SFIL (who had Parkinsons and Lewy Body Dementia) also had tens of thousands in cc debt that he incurred *before* he had an excuse. No one had PoA for him but the calls and letters kept coming from the collectors. We just wrote "not at this address" and put their letters back in the mail. He was dead broke and even owed money on his 2nd ballooned mortgage. We allowed to house to go into foreclosure and the cc collectors never could do anything since there was only his SS check and the county had acquired guardianship for him.
Then too, she may have a home? If so they can sue and put a lien on it that would affect future sales?
Just thoughts.
See an elder law attorney for advice. This will vary state to state and according to your POA document.
We wish you good luck. Don't count on the word of those in a Forum when legal advice is what you need.
Do know that paying the IRS and paying bills isn't necessary. You as POA if you are doing financial pay for her care needs so far as the money will go. They do not attach SS funds. They may put a lien on property if they go to court for a judgement. But if you choose bankruptcy that would be the easier way to go.
Hope you will update us how it goes for you.
Just as a PS: This from an answer on the internet:
QUOTE:
"The person given the power of attorney may come to the realize that in order to properly handle the incompetent parties financial affairs they must file for bankruptcy. The question is whether having a power of attorney is sufficient to file a bankruptcy case on their behalf? The answer to this depends on whether you are considered a representative under the bankruptcy rules.
Under the Federal Rules of Bankruptcy Procedure Rule 1004.1, “If an infant or incompetent person has a representative, including a general guardian, committee, conservator, or similar fiduciary, the representative may file a voluntary petition on behalf of the infant or incompetent person”. The issue is whether a person who has been given a power of attorney is considered a representative and therefore can file a bankruptcy case on behalf of the incompetent person’s behalf.
Does having a power of attorney qualify the party as a representative and allow that party to file a bankruptcy petition on behalf of the incompetent person. Again the code is not clear on this issue since there is no definition in the bankruptcy code of who is a “representative”. Some courts have found that a power of attorney is sufficient to qualify a party as a representative if the power of attorney specifically provides the authority to file a bankruptcy case In re Hurt, 234 br 1 (bkrtcy.d.n.h 1999). In some cases a general power of attorney to handle the financial and legal affairs may be sufficient to consider a party a representative. Other courts have taken the position that a power of attorney is insufficient to treat that party as a representative and therefore require that a party be appointed a guardian ad litem or next friend".....................
UNQUOTE:
and on and on blah blah. As you can see, complicated. Do seek legal advice.