I receive a ton of calls from sons and daughters whose elderly parents are being harassed by collection agencies for debts. Many times these debts are old and the parent does not remember whether it is a legitimate debt or not. Many times the debt has been sold at least once and is owned by a collector and mom or dad have no clue what the collector is trying to collect or who they represent.
More importantly, your parent is scared and intimidated by the telephone calls as well as the accusations and, in many cases, lies.
So what do you do when your parent is in debt and scared?
- Try to get a true picture of your parent’s finances. Are there a lot of debts out there? Check their credit reports to see the real picture. This will help determine a strategy and help determine whether the debt in question is in fact a legitimate debt.
- Determine whether you parents have any unprotected assets under the exemption laws in your area. For instance, you can review exemption laws on this website by searching for Chapter 7 and exemptions. Once you have determined the financial picture, have checked the legitimacy of the debt as best you can, and determined whether there are unprotected assets, you are ready to examine the best course of action, which is step three.
- If you find that the debt may not be legitimate, or is stale, past the statute of limitations, you should consult an attorney to contact the collection agency demanding proof that the debt can still be acted on.
- If you find that the debt is legitimate, but it appears to be the only debt out there, you may want to consider a settlement IN WRITING with the creditor.
- If you find that there is a lot of debt out there, and limited assets other than retirement funds, you may want to discuss a bankruptcy filing with a consumer bankruptcy attorney.
There are many instances, however, where my office does not recommend the filing of a bankruptcy for the elderly, especially when there are no assets to protect.
WHY? Because social security and pension benefits are generally exempt from bank restraint or any other action by general creditors. In other words, if mom or dad simply have social security and/or pension deposited into their bank account AND NO OTHER FUNDS ARE DEPOSITED IN THAT ACCOUNT, it is more than likely that a general creditor cannot touch the funds.
So, the question then becomes: if you are no longer worried about mom or dad losing their funds deposited in a bank account, would there be any reason to file a bankruptcy?
THE ANSWER: Yes and No.
Yes, if the creditors are driving your mom or dad crazy with phone calls, etc. and it is worth having these scary calls stopped.
No, if mom or day are just worried about their bank account and could care less about the phone calls.