Bankruptcy

[Walt34]

Never-Ever-Ever send out the original. You can make a copy if necessary and get a medallion guarantee at your/his bank. The POA is needed to take control of any outstanding accounts. They may say they want the original but legally they can function with a medallion guaranteed copy.

It may depend on state law. When DW sold FIL's house the title insurance company wanted the original copy of the POA. Our response was "We'll check with the attorney" who said that was a rare exception to letting go of physical possession of the original. In our case there was a duplicate original but we didn't tell them that.

They did send it back with no issues but still, we didn't like it.

 

[spncity]

.... told me a number of times that he was "alright" and that if he needed help he would let me know.<snip> ...it's my money.

Which is fine if a person is, in fact, alright.

The "it's-my-money-so-don't-tell-me-what-to-do" was heard from a formerly thrifty relative with imperceptible cognitive decline - as the lifetime savings was being sucked away by scammers in a variety of scams.

An experienced, compassionate interventionist was hired by the adult children to help the parent transition financial control. Yes, it was an actual intervention!

Kindest regards.

 

[Corporateburnout]

Which is fine if a person is, in fact, alright.

The "it's-my-money-so-don't-tell-me-what-to-do" was heard from a formerly thrifty relative with imperceptible cognitive decline - as the lifetime savings was being sucked away by scammers in a variety of scams.

An experienced, compassionate interventionist was hired by the adult children to help the parent transition financial control. Yes, it was an actual intervention!

Kindest regards.

We had a similar situation with MIL. She never wanted anyone to pry into her finances but when we noticed she was spending excessively on gifts for her grandchildren her response when DW asked " I can't take it with me". Then when she had an extended stay in the hospital we retrieved messages on her answering machine regarding some overdue accounts. She also had 15K in CC bills and since she was only paying the minimum she was digging a much deeper hole.

We had to intervene and in exchange for helping to pay some of her bills she would let us oversee her finances.

To me this agreement was much cheaper financially than moving with us after losing her modest house which was her only asset.

 

[gauss]

Are there free legal clinics in your area? I would recommend, at a minimum, describing your situation to one of their attorneys during the clinics office hours. You would want to know the downside risk in your state of what could happen if either he stops paying or files for BK.

Although I hate to see people not take responsibility for their actions, this does go two ways in my opinion. The credit card companies, with their databases and monitoring bureaus, have allowed the individual to rack up 80K in debt which appears to be entirely unaffordable based upon his income short of liquidating his residence.

If the CC companies do decide that the debt is noncollectable and choose not to pursue it further, they will be able to take a tax deduction in the full amount of the debt that is forgiven.

The individual, on the other hand, will be liable for taxes on the full amount of any debt forgiven and this would likely come all in one year thus pushing him into a high tax bracket! Also please keep in mind that the IRS has extended powers for collection beyond normal creditors such as garnishing a portion of SS payments each month as well as levying retirement accounts. I would want to know more about the risk of seizing the house that was recently transferred to the daughter.

You really need to get some professional advice on this (both legal and accounting) so you know what you are getting into whatever path you choose.

-gauss

 

[scrinch]

gauss, good post!

 

[tryan]

This is worth a "free" 1 hour consult with an attorney.

My 2 cents ... Credit cards are unsecured debt. The only thing at risk is his credit rating. Stop paying on them and change/disconnect his phone ... collections will be relentless.

Unrelated interesting debt story ... after a bitter divorce a friend found out her ex had put a 2nd AND 3rd mortgage on the house. Neither had been paid for quite a while. The house was no where near the value of the mortgages. She said "What should I do". I said "Consult with an attorney. But if I were you, I wouldn't pay. The notes are in HIS name and the lein holder won't foreclose because the value isn't there. Just understand, you'll never OWN this house ... you're paying rent to the first lein holder." That was 4 years ago. She and the kids are still in the house.

 

[pb4uski]

Here is what I would do if I were the POA. First, I would assess whether the timing of the transfer of the home that Dad lives in to me might cause a problem and consult an attorney if necessary. In any case, take Dad's credit cards away and freeze his credit at the three credit reporting agencies so no further credit cards can be taken out (not that he would likely be granted credit anyway given his $80k of credit card debt). He can use either an ATM card or prepaid cards for daily spending needs.

If the timing of the transfer of the house is not likely to be a problem, then as POA I would call or write to the credit card provider and explain the situation with Dad and that there are no resources to pay and no further payments will be made. Then just ignore any further collection attempts (change Dad's phone number if necessary) and minimize the balance in any bank accounts in case the credit card company tries to claw anything out of the bank. Like someone said, they are not supposed to be able to garnish SS but administration is not always perfect.

If the timing of the home transfer is a problem, then negotiate hard to get them to make a substantial write-off and then settle as agreed. And obviously, the story is that Dad has no assets and income is only SS and if they can't come to a mutually agreeable settlement then Dad will file for bankruptcy. The threat of bankruptcy should incentivize them to settle.

What was the counseling service thinking in allotting the credit card company so much of his income?

 

[DAYDREAMER]

Thanks to all the great input from the pros here on ER! It's great food for thought. I'll be sending a link of this thread to my affected friends.

 

[rmark]

If SS is comingled with other funds in an account it may be garnished. You might want to have the SS check deposited into a separate account in another bank.