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caretaker

Should elderly mother file for bankruptcy?

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After a recent hospitalization for my mother, I went to help her with recuperation. I came to learn that she has more debt that she can handle on her fixed income. As I sort through it, she has just under $25K in unsecured credit card debt. With her fixed income and her mortgage and other expenses there is not enough left for these payments.

 

Here is where I look to all of you for advice.  We believe (and the doctors confirm)  that she is in the early stages of dementia. Right now, it is more of a forgetfulness, but we also believe that she has been been taken advantage of by some people she has allowed into her life (poor decision-making). She is strong and proud and not ready to deal with much is being said. While my siblings and I can work something out to pay this debt, we are also looking to the very near future and I believe full time care. The expense of this prospect is overwhelming. Should we have her file bankruptcy and save every penny for what is to come or come up with the money to pay off this debt?

 

We are faced with so many emotional challenges right now, I know that I am not thinking too clearly. My main concerns are that my brother is on the title to the house, I'm not sure how bankruptcy would affect that. Also, is her pension and social security protected? Any advice would be appreciated.

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You don't say what state you're in, but your mom's pension and SS should be safe from garnishee.  And, even if the CCs sue and get a judgment the worst that might happen is a lien on the house...they can't force her to sell.

 

So...its possible she can just stop paying and the only damage that will be done is she won't be able to borrow more money.

 

But, many states have STATE sponsored credit counselors for senior citizen.  You might check...

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I'm so sorry to have forgotten such pertinent information - she lives in Colorado.  With regard to home equity, there is not much that I know.  She has only owned it a few years.

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You can update your profile to show Col. that way people will be able to better answer you when you have questions. Like me, I don't normally respond to a person if I don't know what state they are in because I can not give a full and proper answer.

 

Like Willing said, she should be protected. Is the house paid for, if not she will either have to exclude it in BK or let it go and move in with someone. If she plans to keep it, her file for the homestead act if she has not already done so. That will offer some protection as well.

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Subject to a thorough examination of the net equity of the home and Colorado exemptions, which I can't speak to, don't pay the credit cards.  You can easily file a Chapter 7 for her.  If your mother lacks mental capacity, then you file a Chapter 7 on her behalf and then the same day you file the case, the attorney should file a "motion to appoint a next friend pursuant to rule 1004.1".  Be prepared to show the judge a note from an MD.   Most judges will hold a five minute hearing, approve the appointment, and allow the filing to proceed. 

 

Save the money for her grandchildren's education, or for her children's retirement.  No need to pay the debt.

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