My mother is 79-years-old with dementia. I recently discovered she has approximately $17,000 in credit card debt. The monthly minimums are over half of her income ($1,062 from social security). She has no assets and lives in subsidized housing. There are approximately 8 different credit cards. She can't really afford to file bankruptcy. What happens if she simply stops making the payments?
-- Nancy
A.
There two different kinds of consequences for not paying. The important one, can the creditor take anything from your mother, is no: Social Security benefits are exempt from creditor's claims before and after payment. As long as the Social Security payment is not co-mingled with any other funds, it is safe from creditors.
The second consequence, collection activities, is not so neat. Collectors will generally try to get the debtor to pay from funds that the creditor could not reach with a judgment. They use annoyance, shame, and fear to get the elderly and unsophisticated to write them a check.
The federal Fair Debt Collection Practices Act gives a debtor the right to tell third party collectors not to contact her. The original creditor remains free to contact the debtor. Some states have similar laws that extend that protection to the original creditor's activities as well.
A letter from you with the facts of your mother's financial situation may be sufficient to get them to see that collection will be fruitless.
