85 Year Old Mother in CC Debt - Help!

MaceyJuly 27, 2007

My mother is 85 years old and my family just found out that between five credit cards, she has 60K in credit card debt from a business she no longer owns. Her income is around $2,100 per month. She is paying around $1,500 each month just to service the interest or make minimum payments. Then you add in her other fixed expenses of $1,400 (utilities, medical, etc., she is in the hole about $700-$800 before she has any general living expense money. She has just about depleted all of her savings just to pay the credit card interest.

Looking forward, I am seeking advice on how to help her. She owns a house and we are planning to sell it. She will clear around 40K after paying off the credit cards. From there, she will move in with one of my brothers. At that point she will have a positive cash flow and feel much better about herself (we hope).

The house is on an acre of land and has become a burden on her. So, selling is something we all feel is in her best interest anyway. She has seen the financial numbers and is in agreement that selling the house makes sense. I think? The hook is in paying $1,500 in interest each month, we need to sell the property FAST.

Options are Sell the house, seek debt consolidation (heard of it but don't know much about it) or file for BK. Any advice on how we can deal differently with this credit card situation?


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There was a similar thread a while back. It had a helpful link which I'll attach below.

I think I'd be talking to someone who specializes in elder legal issues.

Your mom is fortunate to have caring, involved children. Best wishes to your mom and siblings.

Here is a link that might be useful: Edlerly parents and debt

    Bookmark   July 27, 2007 at 11:02AM
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I would call each card and ask for a lower rate. That should help with the interest. Also find a debt counseling service (one with no or low fees, check your state dept of finance and banking). They should be able to get some of the accumulated interest forgiven so your mom might have some chance of actually paying off the balances.

I'm uneasy about the idea of selling her house to pay off the cards. This leaves her with nothing, not even a place to live if something happens to your brother.

I'd definitely seek the advice of an elder law atty. But my gut feeling would be that she should be paying her important bills first--heat, food, medical--and then giving anything that's left to the CCs (but *not* sending them any more of her savings).

Bottom line, a CC is unsecured debt. So if she dies leaving debt, the CC companies are out of luck. You're not responsible for her debts, and if she has no or few assets, they just have to write it off. Knowing this, they should be reasonable about lowering the interest and negotiating lower amounts to pay off. getting some money is better than none, from their perspective.

Good luck.

    Bookmark   July 27, 2007 at 12:06PM
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Thanks for the responses.
I've thought about the selling of the house issue.This idea has been in the works for several years now. I feel it's time to pull the trigger. She will have enough family financial support if she lives with my brother or on her on. But not to the point where we can pay off her cards.

What are my "barginning chips" with the cc companies? What should my approach be? She does have some assets: 135K value for the house (which is under consideration for sale)and 8K in stocks.

    Bookmark   July 27, 2007 at 2:12PM
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The bankruptcy laws were revised and it's harder to file now. Do talk to a lawyer. Free advice is worth what you pay for it! As a family you need to face the various options and select the best for your individual circumstances.

    Bookmark   July 27, 2007 at 2:28PM
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I don't know anything about them but what about those "reverse mortgages?"

    Bookmark   July 27, 2007 at 3:31PM
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Add into the equation what real estate is doing in her market. It's dropping like a rock in many places, and probably will continue to do so for more than a year.

I don't know about now, but in the past you were allowed to keep your residence and car when you declared banktrupcy. What's she got to lose by filing? She's not likely to be taking out loans or buying another house.

    Bookmark   July 27, 2007 at 5:40PM
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Right now I am an estate planning attorney and deal with elder law. I did practice bankruptcy law for many years.
Mom is 85 years old. I think a Debt consolidation that would take several years to pay off is probably not practical. Mom may need medical care in the future so be careful about things like reverse mortgages. If she has to move out of the house--the loan is due and payable.
It depends on the state that you live in--what the exemptions are when you file for Bankruptcy. So first see a Bk attorney. They do evaluate whether you can file or not. They will tell you quickly if she is eligible. If she is--and can keep the house then have her file BK.
Do NOT sell the house until you determine that she cannot file bankruptcy in your state.
The idea behind the new Bankruptcy Law was not to make older people live in poverty so banks could make a profit.
She is who the law was designed for. They simply didn't want people to go out and spend money on luxuries, trips and gambling and then file bankruptcy.

    Bookmark   July 27, 2007 at 7:37PM
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Macey - I'm in the minority here but I like the idea of selling your mom's house - and just getting her debt paid and done with. I think your family is on the right track. Good luck, my heart goes out to you.

    Bookmark   July 29, 2007 at 12:12AM
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Hi macey,

Your Mom no longer owns her business, you say.

How long has she been out of that business? Did she sell it, or did it fade away?

If she sold it, did she agree to hold on to the debts? Usually they hang arond the neck of the business.

Do you have any idea of the level of the debt at the time she left the business?

It might be a good idea to have someone who has some understanding of credit card debt, who can develop a plan, especially one that might be saleable to the CC companies, be persuasive, yet firm, and can think on his/her feet, to call them and see what level of accumulated interest that they may be willing to forego, to stop the clock on the interest, or at least most of it, and arrange payment schedule.

If you deal with a credit counselling service, be sure that it's a non-profit, that you know what level of fees they charge, and be careful not to arrange a repayment structure that your Mom may need to backtrack on, later.

Quite a number of people here in other discussions about this seem to feel that if someone can have a person familiar with the CC situation, who's patient, courteous, a quick thinker, and determined, deal twih the CC companies, that they can arrange about as useful a deal as the credit counsellors, and without fees.

I haven't had experience in this game, not having run up CC debt, so don't have any personal experience to relate.

Good wishes to you guys and your Mom in getting this straightened out.

ole joyful

    Bookmark   July 29, 2007 at 1:45PM
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The house does sound like a little much for the average 85 year old woman. I would also lean towards selling the house and moving mom into something a little smaller and maybe more communal- possibly something like a condo community. Perhaps she can clean up her financial issues this way and also move to a place where she might be happier and less burdened by caring for a property? Best of luck.

    Bookmark   July 30, 2007 at 10:15AM
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I'd sell the house and pay off HER debts. Your mother's debts are not yours or my debts--they are HERS. She should not file BK and make everyone else pay for her overspending.

    Bookmark   July 31, 2007 at 2:43PM
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The idea that everyone else is paying because of Mom's overspending is maybe jumping to a conclusion. Credit card companies spend a lot of money on Public Relations.They spend millions supporting political candidates. I don't see anyone here discussing the default rate that credit card companies charge--thats when they get to jump your rate on all of your cards to 29% because you were late on one card. If you have a dispute with them--you must arbitrate with a group of their choosing. (Guess where the loyalty of the arbitration group goes if this is a major referral) Try reading the fine print on your credit cards to see that they can change your rate with minimum notice.
Also see the other thread on how Amex is playing games with the cash back offer.
I think you need to look at how much Mom will have left if she does sell her house and pay off the credit cards 100%. I would be willing to bet Mom has been paying those credit cards for quite a while and they have probably gotten their money back a long time ago. It would surprise me that an 85 year old just stopped her business recently.
What is the interest rate she is paying? I would bet she has a bunch of overlimit fees, etc.

    Bookmark   July 31, 2007 at 7:03PM
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Hi Macey,

A reverse mortgage MAY actually work for Mom... *IF* Mom actually wants to stay in the home for now (and family concurs.)

Some facts on today's Reverse mortgages;
A) It is impossible for the borrower to ever owe more money than the sale proceeds of the home,
B) Current closing costs and interest rates are very competitive... lower than standard conventional loans,
C) In most cases, ALL costs (including taxes& insurance) can be included in the reverse mortgage payments, which are absorbed against the remaining equity,
D) If the owner sells to move, the OWNER (not the bank) gets the remaining equity after the loan balance is satisfied (exactly like any other outstanding mortgage balance is treated,)
E) The calculation for the amount of monthly credit to the borrower from their remaining equity is determined by annuity mortality tables... so the older the borrower, the shorter the statistics say they are likely to live, and the more money they reverse lender credits to the borrower....
F) It *IS* even possible (especially in your 85 y.o. Mom's case) that the lender may allow her to receive monthly CASH INCOME as part of the reverse mortgage (always optional, never required to be drawn if not needed.)
G) If there is sufficient equity from the beginning (as it appears there is,) it is possible to get out enough cash to pay off some or ALL of Mom's outstanding consumer credit balances.

Whether a reverse mortgage actually DOES make sense or not is far more of a question (in my mind) of whether Mom DESIRES to live out her days (or at least a while longer before assisted living homes) in her family home. If she DOES, then I'd say a reverse mortgage would be a good solution to consider.

All the best to you & your family!
Dave Donhoff
Strategic Equity & Mortgage Planner

    Bookmark   July 31, 2007 at 7:48PM
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My 90-year old mother-in-law had about 20K in credit card debt. She ended up paying it off w/ a home equity line. I really regret that now. If I were you I'd consider bankruptcy very carefully. The equity in your mom's house is all she has and she may well need money if she needs to be in an assisted living or nursing home situation in the future. That 60K could pay for a year of care. don't be quick to sell the house and use the equity to pay unsecured debt!

    Bookmark   August 1, 2007 at 11:00AM
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marge727 wrote: "I think you need to look at how much Mom will have left if she does sell her house and pay off the credit cards 100%. I would be willing to bet Mom has been paying those credit cards for quite a while and they have probably gotten their money back a long time ago. Mom may need medical care in the future so be careful about things like reverse mortgages."

I think what marge727 said makes sense. Make sure your mom is going to be taken care of first. The CC companies have probably already made their money back. My cousin missed one payment and had his interest rate shoot up from 9 to 19%. He tried but was unable to make his minimum payments. He finally went through consumer credit counseling. They helped him arrange a payment plan where he didn't have to pay interest.

I think this practice of being able to jack up an interest rate this much isn't any different than the predatory loan racket.

In the course of helping your mother with her CC's, please DO NOT add YOUR name (or anyone else's) to any of her accounts or you will end up being liable for her debt.

If you decide to look into a reverse mortgage, make sure you have a lawyer help you. They aren't always what they seem.

Links that might be useful:

Reverse Mortgages Cause Homeowner Headache

    Bookmark   August 2, 2007 at 4:42PM
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When I was practicing bankruptcy law I was often saddened to see elderly people who were missing meals to pay cards off. They had already lost what little they had but still felt honor bound to pay off the cards, which sometimes were medical bills. In other cases they weren't even the ones who ran up the charges.
When you know that in 2002 Alfred Lerner the CEO of MBNA received 194.9 million in compensation, and the same bank contributed 5.2 million to the 2000 election campaign its a little sickening to hear people act like MBNA will be in financial trouble if Mom files bankruptcy.

    Bookmark   August 2, 2007 at 6:04PM
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I gotta tellya I am in awe of attorneys. Yeah, really!

I'm so sick and tired of the prevailing sentiment that all attorneys are "sharks", looking for easy prey or feasting on carrion.

Lawyers are professionals who INTERPRET and translate the law for laypeople. And that's a GOOD thing! Mum's lawyer helped us get everything in order so when she dies there will be no confusion (and she will die!).

Hat's off you! and hat's off to our own attorney and Mum's attorney... you guys are all about sidestepping unpleasant, sleep-robbing realities. Yeah, what you bring up in a consultation may be scary, but it's a short-term thing... try probate on sometime, you guys! it never ends...

A fan!

    Bookmark   August 2, 2007 at 6:23PM
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Marge and Chelone - I don't think that it was ever suggested that the lady was in anyway taken advantage of by the CC companies or anyone else. It also sounds as though she has the means to pay for them and, at the same time, rid herself of a house that has become a burden. She would still have 40K and a monthly income as well as a roof over her head with her son. She also qualifies for medicaide/medicare.

There may very well be an angle here for bankruptcy. But what is *legal* is not always *right*.

    Bookmark   August 2, 2007 at 6:49PM
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I'd love to see a study of how long seniors stay in their homes after taking out reverse mortgages. IME, it's not long.

Sometimes this is an entirely emotional decision to keep someone "at home" (and isolated) when they are truly unable to maintain the home and already need, or will VERY shortly need, assisted-living care. This "financial" decision should have a health-assessment component before a decision is made. Remember, Change Can Be Good!

    Bookmark   August 4, 2007 at 11:32AM
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Macey, if you have to sell her house "fast", why does she need to make a $40K profit - after she pays off her cc debt? How about price the house $20K less, sell it fast, and she'll have $20K plus her $2100 income monthly.

Her 'fixed' expenses will no longer include utilities, taxes, insurance or maintenance on her house.

Her medical might still hold, but no other expenses she now pays. She can pay your brother for room & board.

    Bookmark   August 5, 2007 at 12:20AM
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Let me point out that this lady does have MediCare. MediCare has limitations. However she would not qualify for Medcaid in any state. She has too much in the way of assets. Her income alone would disqualify her plus she will have savings and stock if she sells the house. Her ability to live on her own is gone once she sells the house, as $20,000 will not last long. For everyone who thinks that MediCaid is a safety net, I urge you to visit a nursing home that has mostly mediCaid recipients, and then visit one where people pay for their care.
If she has almost no money--she will qualify for MediCaid. Please remember that our taxes pay for MediCaid, so the choice is--do the credit cards take a hit or does the general public?
If she files for Bankruptcy, the Trustee in Bankruptcy (if your state has the Trustee system) will sell the stock to help pay the creditors. She will get to keep the amount of the homestead exemption if she has too much equity in her house and it needs to get sold. The creditors will get some money.
If this lady is in her 80s and has that much social security, she has worked hard all her life I would bet. She is lucky she has children to help her. She certainly doesn't seem to be getting any sympathy from anyone else.

    Bookmark   August 6, 2007 at 3:59PM
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A Consumer Credit Counceling Service is a great organization if you're in high debt with credit cards. They will deal with all the creditors to reduce the rate to 0% most of the times or to the lowest possible. They will also deal with the lowest minimum payment until all debts are paid. The CCCS would distribute the payments to all the creditors and your mom would only need to make 1 payment to CCCS monthly only.

It is a non-profit organization provided by the government and it's free of charge to the consumers. It's worth looking into it, see link below.

Here is a link that might be useful: http://www.cccsstl.org/debtsolutions/index.asp

    Bookmark   August 6, 2007 at 8:07PM
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I'm sorry, it seems that each CCCS location has their own website. If you can't find it on Google search, you may want to contact with the one shown above and ask for a contact number for a branch in your area.

Below is another branch serving Texas.

Here is a link that might be useful: http://www.cccsintl.org/

    Bookmark   August 6, 2007 at 8:39PM
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Thanks for all the responses and "all" points of view. At this point, having been part of the family business for 40 plus years, she has been on the wrong end of customer collections a few times. So for her, she knows the obligation is hers thus, in her mind bankruptcy not an option.

We are proceeding with selling the house based on two fronts. First, to get her out of debt. Secondly, for the past ten years the idea of selling the house has been on the minds of my family and my mom as well. The house itself is 1,900 square feet and sits on two acres of land in a rural area in South Dallas. As originally mentioned, the burden and up- keep of this house is simply too much for her at this age. Additionally, she has had two knee replacements within the last five years. So, getting around is not so easy for her.

For now, the plan is to sell the house, make as much as we can off it. Who knows it may bring her 20K but the market price says we should clear 40K. From there, she has agreed to let me serve in a financial advisory capacity for her.

She decided that a senior complex closer in town and near shopping is something she'd like to do. She has been looking at few senior citizen complexes. The family is helping her look at those.

I will pursue a credit card reduction payment plan to run parallel to the selling of the house.

Thanks again for all the view points.


    Bookmark   August 6, 2007 at 11:56PM
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this has been such an odd thread for me. right or wrong, i have always equated credit card debt w/ youth or at least way younger than 85. shows how much i know. just out of curiosity, what would happen if she just stopped paying, never paid it back??

    Bookmark   August 8, 2007 at 7:00PM
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I would just like to point out that, having worked for a so-called "non-profit" credit counseling service in the past, I have learned that these services are, for the most part, self-serving. There is always a monthly service fee involved, and the truth is that these services don't do anything that the individual can't do for him or herself.

As others have stated, you can contact the credit card companies yourself, explain the situation, and in most cases they will suspend or lower the monthly interest rate. You'd be surprised how willing most credit card companies are to work with you.

Best of luck to you - my heart truly goes out to you and your family.

    Bookmark   August 8, 2007 at 9:11PM
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morgan88, as the boomers age and go into retirement, you are probably going to see this become more and more common thing with elderly people with too much consumer debt.

I think understanding how to use credit is a thing that many at all ages fail to understand. A few years back my wife's sister was drowning in credit card and auto loan debt. She was about to lose her home when my wife and I stepped in and paid off all of her debt except the mortgage to the tune of almost $65000. She did not ask us to do this, we did it voluntarily, so we did not think we had a right to get in her business going forward. We also told her to pay us back when she can, knowing that we most likely would never see the money again. Since then she bought a cute little Mercedes car, redecorated her house and gone on several nice vacations. Sadly, she is right back where she was 3 years ago, maybe even worse. This time I have told my wife, we are going to let "nature" take its course. It kills us to watch her go through this but paying off her debts again just enables her to not have to address the real issue.

    Bookmark   August 11, 2007 at 9:59AM
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Coyote_Gramma, you may have worked for a counseling service that required for consumers to pay a monthly fee. However, not all organizations required a monthly fee.

Years ago, in the early 90's, I have used one of this CCCS organization that showed on my previous replies. I came to know this service through a tip from a creditor collector after she apologized that she couldn't lowered the rate nor the monthly payment anymore. 'Til this day, I wish she knew how wrong she was. By letting me be awared of CCCS, she literally saved my life.

I didn't pay a dime for the CCCS service. Their services lasted for over 4 years until all creditors were paid in full. CCCS explained that their non-profit organization was funded by the government. Most companies that takes monthly fees from consumers are individual operated.

As for negotiating the rates and payments with the creditors, I tried many times but were unabled to go as low as 0% interest. CCCS, due to who they were, was able to negotiate 12 out of 15 creditors down to 0% interest easily. 2 other creditors agreed to 7% and 8% interest. The only one that would not budged to lower the interest was Sears. However, they agreed to a much lower monthly payment. I doubt that the normal consumer could easily achieve this.

This system is better than declaring bankruptcy or even bringing your credit to a lower level.

In my case, after all payments were paid in full to the creditors, I closed all those accounts down except for 1. A few years later my credit score reached to normal and later to a higher score enough where I could purchased a car and a house with very low interest rates. I now have 2 credit cards opened and have been maintaining a low to 0 monthly balance for many years.

Although, Macey may not need this service, I am posting my experience for those that are in high dept to know that there is hope and that a non-profit organization such as CCCS do exist. It does no harm to check them out.

    Bookmark   August 20, 2007 at 12:15AM
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Even if you don't plan to file bankruptcy, here is a resource. The Bankruptcy court requires that before you file bankruptcy that an approved Consumer Credit counseling class be taken. I would think that consulting the Bankruptcy courts list would be the best bet because they check on the Counseling group and make sure they are non-profit and real.Those groups do not urge you to file bankruptcy--they want to be successful putting together a repayment plan.

In years past there have been groups that claimed to be credit counselors but some were owned by credit card companies. They were easy to spot because they wanted most of the money to go to credit card repayment and they never worried about mortgage late payments. Others were simply scams. There are real ones--the trick is finding them.

    Bookmark   August 20, 2007 at 9:16PM
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dont want this to sound the wrong way , but she is 85, why not just make the minimum card payment every month, and when she passes let the card company eat it? my mother in law is 79, and owes a fortune, its all in her name, when she passes. well thats that.

    Bookmark   August 20, 2007 at 10:53PM
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Macey - your Mom's finest assets are her children.

We reap what we sow. Good luck and God bless to all of you.

    Bookmark   August 25, 2007 at 11:51PM
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After considering many options, we've decided to go the reverse mortgage route. We went through the process of interviewing real estate agents, prepared for a garage sale and started packing up some of her stuff in preparation of selling the house. However, once we the packing begin, that's when it hit home to her that moving really isn't what she wants to do.

Eventfully her health will dictate the sale of the house. But for now the reverse mortgage allows her to stay in her home and pay off the cards. Monthly she will have enough money to live comfortably. My wife and I will pick up her house taxes and insurance. My other siblings will help her as needed.

Thanks to all.


    Bookmark   August 26, 2007 at 3:16PM
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Thank you for your loving care for your mother.

I am pleased that you have arranged a program that seems to be the best for everyone, currently, and with a good possibility of being the best available for the future.

Please pass on our thanks to others in your family who have taken a real supporting role through it all.

And our good wishes to your Mom.

To all of you, as well.

ole joyful

    Bookmark   October 2, 2007 at 10:53PM
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"dont want this to sound the wrong way , but she is 85, why not just make the minimum card payment every month, and when she passes let the card company eat it? my mother in law is 79, and owes a fortune, its all in her name, when she passes. well thats that."

Because then the rest of us have to pay for it through higher interest rates.

If only all deadbeats could be made to care about the rest of us...

    Bookmark   October 4, 2007 at 9:40PM
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