How to untangle a hidden financial mess?
August 31, 2023 8:02 AM Subscribe
My mom has Alzheimer's. My sister is her caretaker/POA. She found out about a massive hidden debt we didn't know she had. What actions can my sister take?
Mom was officially diagnosed in late July 2023. My sister has been taking over her financial and health stuff as she is the only child close enough to be her caretaker. (I am the only other sibling, and I live in Canada). One of the tasks my sister and her husband are doing is going through her account because we can't understand why she seems like she never has any money.
Well, my sister discovered a series of debts owing money to the shadiest of cheque-cashing places (totalling $34k!!!). When asked about why she used those places insteading of coming to her children, she says she doesn't remember. If you press any harder, she starts to get agitated and cry. It's the same if you ask her what that borrowed money was for.
Even between the four of us (my sis and her husband, me and mine), we do not have that kind of money to pay off a debt is STILL accumulating interest as we speak. So what I want to know what are our options for re: our mother's debt? She also let her life insurance lapse without telling us so my sister is worried that will impact her getting an offical on-paper diagnosis re: possible alleviation of the debt.
Things I know:
* She has $34k of debt payments to at least FIVE cheque cashing places we know about
*Her entire income is the combined SSN of her and my deceased stepfather (who was also spectacularly bad with money)
*The only valid expenses she has is her apartment rent, her food, meds, and the occasional vet visit for her cat
What we don't know:
*We had her on a real budget that worked for a few years but she didn't tell us when it stopped working
*What the money she drew against at the cheque cashing places was for
My family is located in South Carolina. My Canadian husband wonders if having her declare bankruptcy is an option to wipe the debt. No one's name is on these debts except my mother's, so none of us have been named as the people to pay up if she can't. Like, this is real shock to us. We had no idea. And we have always helped her in the past, whether financially or emotionally, so we are at a loss as to how this happened and how it got this bad. Like, what did she put up as collateral? She doesn't own property, my sister took her car (which probably part of the collateral) because she cannot drive with her condition, so we cannot figure ANY of this out.
With my sister as official POA, what are the options here?
Mom was officially diagnosed in late July 2023. My sister has been taking over her financial and health stuff as she is the only child close enough to be her caretaker. (I am the only other sibling, and I live in Canada). One of the tasks my sister and her husband are doing is going through her account because we can't understand why she seems like she never has any money.
Well, my sister discovered a series of debts owing money to the shadiest of cheque-cashing places (totalling $34k!!!). When asked about why she used those places insteading of coming to her children, she says she doesn't remember. If you press any harder, she starts to get agitated and cry. It's the same if you ask her what that borrowed money was for.
Even between the four of us (my sis and her husband, me and mine), we do not have that kind of money to pay off a debt is STILL accumulating interest as we speak. So what I want to know what are our options for re: our mother's debt? She also let her life insurance lapse without telling us so my sister is worried that will impact her getting an offical on-paper diagnosis re: possible alleviation of the debt.
Things I know:
* She has $34k of debt payments to at least FIVE cheque cashing places we know about
*Her entire income is the combined SSN of her and my deceased stepfather (who was also spectacularly bad with money)
*The only valid expenses she has is her apartment rent, her food, meds, and the occasional vet visit for her cat
What we don't know:
*We had her on a real budget that worked for a few years but she didn't tell us when it stopped working
*What the money she drew against at the cheque cashing places was for
My family is located in South Carolina. My Canadian husband wonders if having her declare bankruptcy is an option to wipe the debt. No one's name is on these debts except my mother's, so none of us have been named as the people to pay up if she can't. Like, this is real shock to us. We had no idea. And we have always helped her in the past, whether financially or emotionally, so we are at a loss as to how this happened and how it got this bad. Like, what did she put up as collateral? She doesn't own property, my sister took her car (which probably part of the collateral) because she cannot drive with her condition, so we cannot figure ANY of this out.
With my sister as official POA, what are the options here?
I am so sorry this is happening to your family!!
I think your best step is to consult (free) with an attorney, first one who may be able to represent you in a potential financial fraud case, and second with a bankruptcy attorney.
Prior to that, try to collect all of the documentation you can about the accrued debts. I would not reach out to the predatory companies prior to speaking with an attorney - an attorney may want to compel them to provide documentation, etc., but best to wait to see what direction that conversation goes.
Depending on the state you live in, bankruptcy can cost in the $3k - $5k range. Make sure you get clear information on what assets can be attached in a bankruptcy prior to filing. Most states provide allowances for, say, a minimal amount of cash holdings, one car, etc. It really is a state-by-state thing. You will be required to provide a comprehensive list of other assets, including furniture, jewelry, home, retirement accounts, etc. Depending on the total value, some may ordered to be liquidated.
It might also be worth seeing if SS benefits can be attached to pay off any portion of the debt, or if a bankruptcy filing, in any way, could limit future care for your mother, if she needs to placed in a memory care facility.
Depending on the particulars, it may be possible to get the debts discharged, if there are shady things happening in the securing of the debts. Otherwise, bankruptcy is a good option.
This is a terrible thing to have to sort out. I wish you strength.
posted by Silvery Fish at 8:24 AM on August 31, 2023 [1 favorite]
I think your best step is to consult (free) with an attorney, first one who may be able to represent you in a potential financial fraud case, and second with a bankruptcy attorney.
Prior to that, try to collect all of the documentation you can about the accrued debts. I would not reach out to the predatory companies prior to speaking with an attorney - an attorney may want to compel them to provide documentation, etc., but best to wait to see what direction that conversation goes.
Depending on the state you live in, bankruptcy can cost in the $3k - $5k range. Make sure you get clear information on what assets can be attached in a bankruptcy prior to filing. Most states provide allowances for, say, a minimal amount of cash holdings, one car, etc. It really is a state-by-state thing. You will be required to provide a comprehensive list of other assets, including furniture, jewelry, home, retirement accounts, etc. Depending on the total value, some may ordered to be liquidated.
It might also be worth seeing if SS benefits can be attached to pay off any portion of the debt, or if a bankruptcy filing, in any way, could limit future care for your mother, if she needs to placed in a memory care facility.
Depending on the particulars, it may be possible to get the debts discharged, if there are shady things happening in the securing of the debts. Otherwise, bankruptcy is a good option.
This is a terrible thing to have to sort out. I wish you strength.
posted by Silvery Fish at 8:24 AM on August 31, 2023 [1 favorite]
She also let her life insurance lapse without telling us so my sister is worried that will impact her getting an offical on-paper diagnosis re: possible alleviation of the debt.
I'm assuming you meant this to be health insurance? If so, don't worry about it having lapsed. Go to HealthCare.gov to see what plan you can sign her up for and once that's active, get her to a doctor and start the diagnosis process. It's going to take time but in order for your family to get the help you are going to desperately need in the future, your best bet is to start now. She might qualify for Medicaid and that's both good and bad: good that it will basically cost her nothing to access health care but bad in that there aren't as many provider choices as self-pay insurance.
If you didn't mean health insurance, can you elaborate as to why your sister thinks your mother not having life insurance affects this whole situation?
posted by cooker girl at 8:24 AM on August 31, 2023 [1 favorite]
I'm assuming you meant this to be health insurance? If so, don't worry about it having lapsed. Go to HealthCare.gov to see what plan you can sign her up for and once that's active, get her to a doctor and start the diagnosis process. It's going to take time but in order for your family to get the help you are going to desperately need in the future, your best bet is to start now. She might qualify for Medicaid and that's both good and bad: good that it will basically cost her nothing to access health care but bad in that there aren't as many provider choices as self-pay insurance.
If you didn't mean health insurance, can you elaborate as to why your sister thinks your mother not having life insurance affects this whole situation?
posted by cooker girl at 8:24 AM on August 31, 2023 [1 favorite]
Please make sure it's actually her debt: 'Predatory' payday loan scammers thrive with stolen data, BBB says. What to watch out for.
If it's legit: consumers' rights w/r/t payday loans
posted by Iris Gambol at 8:28 AM on August 31, 2023 [17 favorites]
If it's legit: consumers' rights w/r/t payday loans
posted by Iris Gambol at 8:28 AM on August 31, 2023 [17 favorites]
If she has no assets, she has no assets. When she passes the debts will be closed out, there will be no inheritance. Only thing to do is ignore ignore ignore.
You could declare bankruptcy but if she's not going to be doing anything with her credit there is no reason to really bother with all of that in my opinion.
Lots of people have a strong sense of morality about debt. Here is the thing, whoever was lending money to your grandmother with cognitive issues doesn't deserve their money back. End of story. That's why there is interest rates because of risk of nonpayment. Social security payments are a form on non garnishable income ( unless it is the government itself like overpayment) so no one can come and take her current income.
The life insurance is another matter. I'm not sure what is getting a on papery diagnosis has anything to do with that.
posted by AlexiaSky at 8:28 AM on August 31, 2023 [27 favorites]
You could declare bankruptcy but if she's not going to be doing anything with her credit there is no reason to really bother with all of that in my opinion.
Lots of people have a strong sense of morality about debt. Here is the thing, whoever was lending money to your grandmother with cognitive issues doesn't deserve their money back. End of story. That's why there is interest rates because of risk of nonpayment. Social security payments are a form on non garnishable income ( unless it is the government itself like overpayment) so no one can come and take her current income.
The life insurance is another matter. I'm not sure what is getting a on papery diagnosis has anything to do with that.
posted by AlexiaSky at 8:28 AM on August 31, 2023 [27 favorites]
It sounds like you need legal help. Someone needs to look carefully at the debt and assess whether it is valid and whether it can be challenged. It is possible that the debt is not enforceable, such as because your mother was taken advantage of or because the lender is not following consumer protection laws. I think you should try to find a clinic or legal assistance organization local to your mother to try to get some legal analysis. Alternatively if you can pay a lawyer in the area of consumer protection/debt relief, this is another option, though I think there are some real scams/sharks in that area so be careful.
Also, it may be possible to negotiate some smaller payment to take care of your mother's debt, especially if you can show credible legal challenges to the debt. I.e., if you get legal help, you may be able to talk to the lender about a reduced payment/payment plan to settle the issue. You may be able to show the lender that the $34k is not collectible, because of legal problems and because your mom does not have it. They may accept something much lower. This may be cheaper/less disruptive than bankruptcy.
posted by Mid at 8:28 AM on August 31, 2023 [1 favorite]
Also, it may be possible to negotiate some smaller payment to take care of your mother's debt, especially if you can show credible legal challenges to the debt. I.e., if you get legal help, you may be able to talk to the lender about a reduced payment/payment plan to settle the issue. You may be able to show the lender that the $34k is not collectible, because of legal problems and because your mom does not have it. They may accept something much lower. This may be cheaper/less disruptive than bankruptcy.
posted by Mid at 8:28 AM on August 31, 2023 [1 favorite]
Response by poster: cooker girl -- It was definitely life insurance; Mom knows she doesn't have much in the way of a financial legacy for us, she took out a small policy on herself in 2018 so she could leave us something. All of her healthcare is through either Medicare or Medicaid, so a lot of her health expenses are covered (including a surgery in 2021). I don't know why my sister thinks that it will affect anything.
Iris Gambol - There are some definite red flags about this debt. My husband is wondering if someone she knows in her apartment complex is taking advantage of her.
posted by Kitteh at 8:29 AM on August 31, 2023
Iris Gambol - There are some definite red flags about this debt. My husband is wondering if someone she knows in her apartment complex is taking advantage of her.
posted by Kitteh at 8:29 AM on August 31, 2023
Perhaps she co-signed someone else's loans. In any event, just because a balance is written on a piece of paper does not mean that it is enforceable. A lawyer or other consumer rights person should look at the paperwork.
posted by Mid at 8:37 AM on August 31, 2023 [6 favorites]
posted by Mid at 8:37 AM on August 31, 2023 [6 favorites]
Does anyone have a power of attorney for your mom? If so, it will be much simpler for you to get information on the debts. You can write to each of the check-cashing creditors, asking for the full information on when the debt was incurred, what the interest rate/fees are, and a copy of each contract your mom signed. (Be alert for signs that the debt was not incurred by your mom at all, but by someone taking advantage of her.)
At the same time, pull her credit reports to see if there are any other debts you don't know about. You need all three- TransUnion, Experian and Equifax--as some creditors only report to one bureau.
It seems unlikely your mom would ever be able to pay off this $34,000 or more high interest debt on social security retirement or disability income. It is just not possible. Take the debt information to a bankruptcy attorney or two. You may be able to have the check-cashing agencies write off (meaning forgive) the debt without trying collect it, and without having her file bankruptcy.
Also, look for a "Legal Assistance for Seniors" type of legal aid organization to help you with this. they deal with this all the time. They should have some shortcuts for you.
posted by KayQuestions at 8:43 AM on August 31, 2023 [4 favorites]
At the same time, pull her credit reports to see if there are any other debts you don't know about. You need all three- TransUnion, Experian and Equifax--as some creditors only report to one bureau.
It seems unlikely your mom would ever be able to pay off this $34,000 or more high interest debt on social security retirement or disability income. It is just not possible. Take the debt information to a bankruptcy attorney or two. You may be able to have the check-cashing agencies write off (meaning forgive) the debt without trying collect it, and without having her file bankruptcy.
Also, look for a "Legal Assistance for Seniors" type of legal aid organization to help you with this. they deal with this all the time. They should have some shortcuts for you.
posted by KayQuestions at 8:43 AM on August 31, 2023 [4 favorites]
Ooof. What a nightmare.
First, if you haven't already, you (or your sister) should contact your local Office on Aging for assistance to see if she qualifies for any help. For dealing with $34,000 of debt (and hopefully no more), getting a lawyer would be advisable if possible.
Second, it sounds like scammers probably got their hooks into your mom and that's where the money's been going. Does she use email? If so, as POA your sister should be able to get access to her accounts to check if they're communicating that way. If not, it's probably by phone. If she still has/uses a phone, she needs to get a new number right away. Check her phone (if a cell) and her call records (if landline) for mysterious numbers. You can (and should) report them to the FTC, but understand that this is very, very unlikely to get any money back. It's also possible that she's been, e.g., writing large checks to charities--what do her bank records and credit card records say? As POA, your sister should be able to access them.
Third, those check-cashing places are generally as sleazy as you think. File complaints against them with the state--their internal division of labor is somewhat confusing and with the facts being hazy I think this is the right division, but be aware that lending is split up over several divisions so read carefully, and if a car is involved you may have to file those complaints with another division. There has been considerable work done lately against companies failing to protect obviously vulnerable elderly, and an old person with dementia should not be able to wander into a check-cashing place and take out thousands of dollars in personal loans (or title loans?). While the state is not supposed to take a side in individual consumer disputes, often the threat of negative attention in particularly egregious cases will back companies off. Simultaneously, file a complaint with the CFPB.
Fourth, here is some good news: Social Security payments are not garnishable nationwide. Whether a judgment by one of these credits against your mom can even have any effect depends in considerable part on whether she has any assets they can reach that aren't exempted from attachment. Read about that here. If your mom has nothing beyond the exempted amounts for them to take, her creditors, even armed with judgments, can go whistle Dixie. I would call the number on the linked page to see if you could get a consultation with South Carolina Legal Services; your mom may be able to avoid bankruptcy this way.
Finally, please don't press your mom about this. Her judgment is compromised, and she was (most likely) taken advantage of by sophisticated scammers. It's not her fault!
posted by praemunire at 8:43 AM on August 31, 2023 [7 favorites]
First, if you haven't already, you (or your sister) should contact your local Office on Aging for assistance to see if she qualifies for any help. For dealing with $34,000 of debt (and hopefully no more), getting a lawyer would be advisable if possible.
Second, it sounds like scammers probably got their hooks into your mom and that's where the money's been going. Does she use email? If so, as POA your sister should be able to get access to her accounts to check if they're communicating that way. If not, it's probably by phone. If she still has/uses a phone, she needs to get a new number right away. Check her phone (if a cell) and her call records (if landline) for mysterious numbers. You can (and should) report them to the FTC, but understand that this is very, very unlikely to get any money back. It's also possible that she's been, e.g., writing large checks to charities--what do her bank records and credit card records say? As POA, your sister should be able to access them.
Third, those check-cashing places are generally as sleazy as you think. File complaints against them with the state--their internal division of labor is somewhat confusing and with the facts being hazy I think this is the right division, but be aware that lending is split up over several divisions so read carefully, and if a car is involved you may have to file those complaints with another division. There has been considerable work done lately against companies failing to protect obviously vulnerable elderly, and an old person with dementia should not be able to wander into a check-cashing place and take out thousands of dollars in personal loans (or title loans?). While the state is not supposed to take a side in individual consumer disputes, often the threat of negative attention in particularly egregious cases will back companies off. Simultaneously, file a complaint with the CFPB.
Fourth, here is some good news: Social Security payments are not garnishable nationwide. Whether a judgment by one of these credits against your mom can even have any effect depends in considerable part on whether she has any assets they can reach that aren't exempted from attachment. Read about that here. If your mom has nothing beyond the exempted amounts for them to take, her creditors, even armed with judgments, can go whistle Dixie. I would call the number on the linked page to see if you could get a consultation with South Carolina Legal Services; your mom may be able to avoid bankruptcy this way.
Finally, please don't press your mom about this. Her judgment is compromised, and she was (most likely) taken advantage of by sophisticated scammers. It's not her fault!
posted by praemunire at 8:43 AM on August 31, 2023 [7 favorites]
Oh, and if you find out it's someone local to her taking advantage, call the cops. South Carolina has laws against financial exploitation of vulnerable adults. Obviously, it's the cops, so how satisfactory the results will be is...hard to say. But such people deserve to at least be hauled down to the station for uncomfortable conversations, and, if they're local rather than Nigerian, there's a small chance you may be able to recover some of that money.
posted by praemunire at 8:50 AM on August 31, 2023 [3 favorites]
posted by praemunire at 8:50 AM on August 31, 2023 [3 favorites]
If she has no assets, she has no assets. When she passes the debts will be closed out, there will be no inheritance. Only thing to do is ignore ignore ignore.
You definitely need to speak with a lawyer on this count. Every state has its own laws governing debts. If your names are on your mother's accounts, you might be able to be held responsible for the debts. Also, a few states have filial liability laws wherein the children can be held liable for their parents' debts.
posted by Thorzdad at 8:54 AM on August 31, 2023 [1 favorite]
You definitely need to speak with a lawyer on this count. Every state has its own laws governing debts. If your names are on your mother's accounts, you might be able to be held responsible for the debts. Also, a few states have filial liability laws wherein the children can be held liable for their parents' debts.
posted by Thorzdad at 8:54 AM on August 31, 2023 [1 favorite]
The good news then is that her lapsed life insurance has absolutely zero bearing on any of this. Hopefully that at least puts your sister's mind at ease.
Nthing speaking with a lawyer. And also your mom's local Council on Aging.
posted by cooker girl at 8:55 AM on August 31, 2023 [1 favorite]
Nthing speaking with a lawyer. And also your mom's local Council on Aging.
posted by cooker girl at 8:55 AM on August 31, 2023 [1 favorite]
Every state has its own laws governing debts. If your names are on your mother's accounts, you might be able to be held responsible for the debts.
I am not aware of a state in which just having a joint personal account of some kind makes you liable for a non-spouse's debt. If a holder overdrew an account that was joint at the time of the overdraft, all holders might be held liable for that. If a joint checking account were overdrawn while joint, here, though, presumably the kids here would be aware of that, since they'd have been able to see it happening as it happened. (Also there's no way a bank would let a random customer overdraw by even $10K, much less $34K.)
Also, a few states have filial liability laws wherein the children can be held liable for their parents' debts.
(a) South Carolina has no filial liability laws.
(b) These pertain to the cost of provision of necessities for an elderly parent's life or health, not random other debts.
The family should unquestionably speak to a lawyer, but there's no need to panic anyone any worse than they already are.
posted by praemunire at 9:04 AM on August 31, 2023 [2 favorites]
I am not aware of a state in which just having a joint personal account of some kind makes you liable for a non-spouse's debt. If a holder overdrew an account that was joint at the time of the overdraft, all holders might be held liable for that. If a joint checking account were overdrawn while joint, here, though, presumably the kids here would be aware of that, since they'd have been able to see it happening as it happened. (Also there's no way a bank would let a random customer overdraw by even $10K, much less $34K.)
Also, a few states have filial liability laws wherein the children can be held liable for their parents' debts.
(a) South Carolina has no filial liability laws.
(b) These pertain to the cost of provision of necessities for an elderly parent's life or health, not random other debts.
The family should unquestionably speak to a lawyer, but there's no need to panic anyone any worse than they already are.
posted by praemunire at 9:04 AM on August 31, 2023 [2 favorites]
Response by poster: Does anyone have a power of attorney for your mom? If so, it will be much simpler for you to get information on the debts. You can write to each of the check-cashing creditors, asking for the full information on when the debt was incurred, what the interest rate/fees are, and a copy of each contract your mom signed. (Be alert for signs that the debt was not incurred by your mom at all, but by someone taking advantage of her.)
The second sentence of my post clearly states there is a POA involved. My sister is tracking down as much info as she can about these debts.
You definitely need to speak with a lawyer on this count. Every state has its own laws governing debts. If your names are on your mother's accounts, you might be able to be held responsible for the debts. Also, a few states have filial liability laws wherein the children can be held liable for their parents' debts.
No one but my mom is named on her account. My sister wants her to close it out so they can open a new account run by my sister to distribute Mom's income to real bills she has, not this weird bullshit that popped up out of nowhere. My husband and I definitely think an attorney should be contacted.
posted by Kitteh at 9:09 AM on August 31, 2023
The second sentence of my post clearly states there is a POA involved. My sister is tracking down as much info as she can about these debts.
You definitely need to speak with a lawyer on this count. Every state has its own laws governing debts. If your names are on your mother's accounts, you might be able to be held responsible for the debts. Also, a few states have filial liability laws wherein the children can be held liable for their parents' debts.
No one but my mom is named on her account. My sister wants her to close it out so they can open a new account run by my sister to distribute Mom's income to real bills she has, not this weird bullshit that popped up out of nowhere. My husband and I definitely think an attorney should be contacted.
posted by Kitteh at 9:09 AM on August 31, 2023
First, please literally stop, close your eyes, and take a deep breath. Then let it out slowly. This is such an unwelcome shock. Thankfully, it is not something that can or needs to be taken care of overnight. You have time to put together a plan. Bankruptcy would be a final step, not an initial one.
The first step is to get a handle on the situation. You can't address what you don't know the extent of. The suggestion to pull all three credit reports is an excellent one. The only site where this is free and authorized by the federal government is annualcreditreport.com. It's not a guarantee that all debts will be listed there but it's a decent chance that they are. Get a freeze put on her credit. If you think there's a chance she will physically go the check-cashing place, you might consider going over there with a picture and letting them know she is not legally competent and they should not lend to her. These actions will at least stop the bleeding.
The second step is to do some sleuthing about how these debts came to be. Did your mom previously frequent check-cashing stores? It's pretty common. Is there a neighbor you can ask to see if she was getting visits from a new "friend"? Are there calls on her phone? The goal here is twofold: find out who was instigating the loans to stop future ones, and get context for whether they were on the level. Shame about being broke is a powerful motivator, possibly her spending got out of control and she did the only thing she could think of to cover the gap. Maybe the opposite is true and there is some elder abuse going on.
Then I would try to start resolving the debts. Not with your own money, that is, literally, good money after bad. Do not believe any for-profit "credit counseling" service, those can be worse than the payday and title lenders! Your mom has lots of rights under the Fair Credit Reporting Act. Have them confirm the debt in writing, that will help with step two and if they can't confirm, the debt doesn't exist! If they do confirm, I would explain (again in writing, no phone calls) that she has a dementia diagnosis, her only income is social security, and that she has $X in assets that will be consumed by her care before she dies. In some cases the creditors will settle for almost nothing, less than 10% on the dollar or even nothing (let them make the first offer). They truly only care about people who have money that they can get access to. Someone who knows their rights and has no garnishable income and no significant assets is not worth going after. The reason I would try to retire the debts is just peace of mind, to stop thinking about it and stop what must be frequent calls and letters dunning your mom.
Sorry about all this.
posted by wnissen at 9:14 AM on August 31, 2023 [3 favorites]
The first step is to get a handle on the situation. You can't address what you don't know the extent of. The suggestion to pull all three credit reports is an excellent one. The only site where this is free and authorized by the federal government is annualcreditreport.com. It's not a guarantee that all debts will be listed there but it's a decent chance that they are. Get a freeze put on her credit. If you think there's a chance she will physically go the check-cashing place, you might consider going over there with a picture and letting them know she is not legally competent and they should not lend to her. These actions will at least stop the bleeding.
The second step is to do some sleuthing about how these debts came to be. Did your mom previously frequent check-cashing stores? It's pretty common. Is there a neighbor you can ask to see if she was getting visits from a new "friend"? Are there calls on her phone? The goal here is twofold: find out who was instigating the loans to stop future ones, and get context for whether they were on the level. Shame about being broke is a powerful motivator, possibly her spending got out of control and she did the only thing she could think of to cover the gap. Maybe the opposite is true and there is some elder abuse going on.
Then I would try to start resolving the debts. Not with your own money, that is, literally, good money after bad. Do not believe any for-profit "credit counseling" service, those can be worse than the payday and title lenders! Your mom has lots of rights under the Fair Credit Reporting Act. Have them confirm the debt in writing, that will help with step two and if they can't confirm, the debt doesn't exist! If they do confirm, I would explain (again in writing, no phone calls) that she has a dementia diagnosis, her only income is social security, and that she has $X in assets that will be consumed by her care before she dies. In some cases the creditors will settle for almost nothing, less than 10% on the dollar or even nothing (let them make the first offer). They truly only care about people who have money that they can get access to. Someone who knows their rights and has no garnishable income and no significant assets is not worth going after. The reason I would try to retire the debts is just peace of mind, to stop thinking about it and stop what must be frequent calls and letters dunning your mom.
Sorry about all this.
posted by wnissen at 9:14 AM on August 31, 2023 [3 favorites]
My sister wants her to close it out so they can open a new account run by my sister to distribute Mom's income to real bills she has, not this weird bullshit that popped up out of nowhere.
If the alleged debt was discovered via weird auto-debits draining your mom's bank account -- or even if it didn't -- contact the bank's fraud division, which should halt the payments during their investigation. Meanwhile, the family can look into the debt via other avenues. Identity theft may have played a role (she lives in an apartment building, someone may have taken sensitive mail and gone from there), and you'd want to start documenting that with the bank.
posted by Iris Gambol at 9:33 AM on August 31, 2023 [1 favorite]
If the alleged debt was discovered via weird auto-debits draining your mom's bank account -- or even if it didn't -- contact the bank's fraud division, which should halt the payments during their investigation. Meanwhile, the family can look into the debt via other avenues. Identity theft may have played a role (she lives in an apartment building, someone may have taken sensitive mail and gone from there), and you'd want to start documenting that with the bank.
posted by Iris Gambol at 9:33 AM on August 31, 2023 [1 favorite]
Response by poster: Quick update from my sister: Those payments were being autodrafted out of her account by the shady cash & go (as my sister calls them) to the tune of $1850 month in addition to her usual expenses. And I guess I don't have to tell y'all that her SSN cheque doesn't cover those totals!
My sister is going to close out Mom's bank account with Mom's consent so we can at least stop the autodrafts. She is also going to get Mom's credit reports pulled. And yes, there is talk of getting a lawyer involved too. And any new bank account will still not be co-signed. Either Mom gets a new one, or my sister takes over all her bill-paying from her own account.
posted by Kitteh at 9:54 AM on August 31, 2023 [5 favorites]
My sister is going to close out Mom's bank account with Mom's consent so we can at least stop the autodrafts. She is also going to get Mom's credit reports pulled. And yes, there is talk of getting a lawyer involved too. And any new bank account will still not be co-signed. Either Mom gets a new one, or my sister takes over all her bill-paying from her own account.
posted by Kitteh at 9:54 AM on August 31, 2023 [5 favorites]
Seriously, get your mom's bank involved. Let them know what's going on before you shut things down. Even if the debts are "legit" or "legal" the bank should be able to help you understand how they originated, what's happening with them, etc. But, fingers crossed, they may also be able to offer you support via their anti-seniors'-fraud programs.
posted by sardonyx at 10:00 AM on August 31, 2023 [9 favorites]
posted by sardonyx at 10:00 AM on August 31, 2023 [9 favorites]
Based on your mother’s reaction to being questioned about it, my gut feeling is that she was the victim of a romance scam. Be gentle with her.
posted by MexicanYenta at 10:24 AM on August 31, 2023 [5 favorites]
posted by MexicanYenta at 10:24 AM on August 31, 2023 [5 favorites]
Seriously, get your mom's bank involved. Let them know what's going on before you shut things down. Even if the debts are "legit" or "legal" the bank should be able to help you understand how they originated, what's happening with them, etc.
Yes, do this. Especially because sometimes the bank will honor payments on an old account against a new account as a "courtesy," especially recurring autodrafts, and you want to make sure you have reported to them that these ETF withdrawals, and any others from these companies, are unauthorized.
Shortly thereafter, write to each of the check-cashing companies individually (if your mom has any paperwork on these debts, look there for an address, but in the more likely instance that they don't, check the company's website for an address) informing them that she is revoking their authorization to make any ETF withdrawals from any of her accounts for any reason, effective immediately. (I am not your lawyer, but it's actually against the law to condition the extension of credit on mandatory use of ETF/ACH withdrawals, so whatever she signed she can't be "required" to allow ETF withdrawals. This is not going to give you leverage in court or anything, but it is to assure you in case they push back. Then you also have a record of revocation in case there's trouble later.)
The only site where this is free and authorized by the federal government is annualcreditreport.com. It's not a guarantee that all debts will be listed there but it's a decent chance that they are. Get a freeze put on her credit.
It will do no harm to check and you should, but a lot of these places do not report to the credit bureaus, nor do they underwrite their credit using their services, so if she's in the hands of the bottom-feeders, those loans may not show up, and a freeze won't necessarily stop a loan. Still a good idea, just be aware this is a scenario in which it's of more limited use to do so.
I am steaming on your mom's behalf.
posted by praemunire at 10:32 AM on August 31, 2023 [4 favorites]
Yes, do this. Especially because sometimes the bank will honor payments on an old account against a new account as a "courtesy," especially recurring autodrafts, and you want to make sure you have reported to them that these ETF withdrawals, and any others from these companies, are unauthorized.
Shortly thereafter, write to each of the check-cashing companies individually (if your mom has any paperwork on these debts, look there for an address, but in the more likely instance that they don't, check the company's website for an address) informing them that she is revoking their authorization to make any ETF withdrawals from any of her accounts for any reason, effective immediately. (I am not your lawyer, but it's actually against the law to condition the extension of credit on mandatory use of ETF/ACH withdrawals, so whatever she signed she can't be "required" to allow ETF withdrawals. This is not going to give you leverage in court or anything, but it is to assure you in case they push back. Then you also have a record of revocation in case there's trouble later.)
The only site where this is free and authorized by the federal government is annualcreditreport.com. It's not a guarantee that all debts will be listed there but it's a decent chance that they are. Get a freeze put on her credit.
It will do no harm to check and you should, but a lot of these places do not report to the credit bureaus, nor do they underwrite their credit using their services, so if she's in the hands of the bottom-feeders, those loans may not show up, and a freeze won't necessarily stop a loan. Still a good idea, just be aware this is a scenario in which it's of more limited use to do so.
I am steaming on your mom's behalf.
posted by praemunire at 10:32 AM on August 31, 2023 [4 favorites]
Any chance she had a romance scammer? Check her phone, email accounts, and social media messaging accounts.
posted by nouvelle-personne at 12:11 PM on August 31, 2023 [1 favorite]
posted by nouvelle-personne at 12:11 PM on August 31, 2023 [1 favorite]
Be aware that if these are sleazy scammers, they may resort to intimidation tactics once your mom stops paying off the debt. This might include threatening letters, phone calls, or, if they're really nasty, people turning up at her door. Here's what they're legally not allowed to do for your information (apologies if you've already found this page):
Here is some more about the Fair Debt Collection Practices Act (FDCPA).
posted by fight or flight at 12:55 PM on August 31, 2023 [2 favorites]
Debt collection agencies often use high-pressure tactics like threats of garnishments to intimidate the consumer into paying the debt. Although the U.S. has laws to protect consumers from debt collectors, some states have their own laws to further protect residents.I would definitely get your mom a new phone and a new phone number if you're able to do that. I imagine your sister is already monitoring her mail.
Residents of South Carolina fall under the Federal Debt Collections Protection Act, which prohibits collection agencies from harassing borrowers or using unfair or misleading tactics to collect debts.
Misleading or unfair tactics include falsely implying that they are attorneys or government officials; misrepresenting the amount of your debt; indicating that the forms they are sending you are legal forms when they are not; or implying that forms that are being sent to you are not legal documents when they are.
Debt collectors may not state that you will be arrested if you do not pay off your debt, or that they will seize, garnish, attach, or sell your property or wages unless the collection agency or creditor intends to do so, and it is legal to do so (garnishment is currently prohibited in South Carolina for the collection of most debts).
Here is some more about the Fair Debt Collection Practices Act (FDCPA).
posted by fight or flight at 12:55 PM on August 31, 2023 [2 favorites]
As someone who went through something similar with my mother, AlexiaSky's advice above is the right advice: ignore it.
posted by Vek at 12:59 PM on August 31, 2023
posted by Vek at 12:59 PM on August 31, 2023
Random comment Social security funds can be given on a form of a prepaid debit card called direct express. It kind of operates like a bank account in that the money gets put on the card every month and you can use the card and withdraw cash funds from a ATM. There are fees that can be associated especially with cash withdrawal. It is a little tricky to use as it will have less features than a regular bank account such as direct withdrawing and ACH transfers. But for a clean break from the bank account issues, it could be a useful option.
More info from SSA here
posted by AlexiaSky at 1:27 PM on August 31, 2023
More info from SSA here
posted by AlexiaSky at 1:27 PM on August 31, 2023
In South Carolina, the maximum payday loan amount is $550.00 (one loan at a time, 31-day term); lenders must be licensed, & check a database for any previous loans. A lender may not lend to someone with an outstanding loan. Criminal actions against borrowers are prohibited, and the statute of limitations is three years. (SC Code of Laws, Title 34; at-a-glance summary.)
So, untangle this mess by speaking with the bank, halting the auto-debits, calling the local Elder agency, and consulting a lawyer. A seeming $34K debt from 5 separate places really looks like your mom's a victim of some scam. That she qualifies for Medicaid by meeting certain income and resource requirements makes proper documentation crucial.
If I were in your sister's position, I would be leery of [accidentally giving the appearance of hiding any assets by] abruptly closing an existing bank account to open a new one -- not without the bank being aware of the suspected identity-theft fraud particulars and offering advice first. And, as pointed out above, a new account won't necessarily end these electronic debits.
Like, what if your mom's not the only senior at her bank branch, complex, or doctor's practice with this problem?
posted by Iris Gambol at 3:04 PM on August 31, 2023 [2 favorites]
So, untangle this mess by speaking with the bank, halting the auto-debits, calling the local Elder agency, and consulting a lawyer. A seeming $34K debt from 5 separate places really looks like your mom's a victim of some scam. That she qualifies for Medicaid by meeting certain income and resource requirements makes proper documentation crucial.
If I were in your sister's position, I would be leery of [accidentally giving the appearance of hiding any assets by] abruptly closing an existing bank account to open a new one -- not without the bank being aware of the suspected identity-theft fraud particulars and offering advice first. And, as pointed out above, a new account won't necessarily end these electronic debits.
Like, what if your mom's not the only senior at her bank branch, complex, or doctor's practice with this problem?
posted by Iris Gambol at 3:04 PM on August 31, 2023 [2 favorites]
AlexiaSky's advice above is the right advice: ignore it.
The problem is that bottom-feeder creditors tend not to ignore you and could hassle the already distressed mother in a very upsetting way. That's why, even if she does turn out to be judgment-proof, even if you really don't care about whether the scammer and the check-cashers roll anyone else and so don't want to spend time filing complaints, it's worth trying some pushback first. Statutory damages for an FDCPA violation won't reassure Mom getting calls all hours of day and night from abusive strangers, or scary official-looking letters in the mail, you know?
In South Carolina, the maximum payday loan amount is $550.00 (one loan at a time, 31-day term); lenders must be licensed
I'm not sure we fully understand what kinds of loans these are, as payday lenders usually want an incoming paycheck as "collateral," and she doesn't have one.
(I will say, SC's debtor protection laws are a bit better than I expected them to be! Not great, but not absolutely lousy, as with so many southern states.)
posted by praemunire at 3:28 PM on August 31, 2023
The problem is that bottom-feeder creditors tend not to ignore you and could hassle the already distressed mother in a very upsetting way. That's why, even if she does turn out to be judgment-proof, even if you really don't care about whether the scammer and the check-cashers roll anyone else and so don't want to spend time filing complaints, it's worth trying some pushback first. Statutory damages for an FDCPA violation won't reassure Mom getting calls all hours of day and night from abusive strangers, or scary official-looking letters in the mail, you know?
In South Carolina, the maximum payday loan amount is $550.00 (one loan at a time, 31-day term); lenders must be licensed
I'm not sure we fully understand what kinds of loans these are, as payday lenders usually want an incoming paycheck as "collateral," and she doesn't have one.
(I will say, SC's debtor protection laws are a bit better than I expected them to be! Not great, but not absolutely lousy, as with so many southern states.)
posted by praemunire at 3:28 PM on August 31, 2023
Elder abuse is a real thing, and I also want to encourage you all to be as gentle as possible in talking to your mom about this, and being clear that you all aren't mad at her. It sounds like she's trying to do right by you all and just can't keep up with everything. Good luck.
posted by bluedaisy at 3:31 PM on August 31, 2023
posted by bluedaisy at 3:31 PM on August 31, 2023
praemunire, "If you collect benefits from the Social Security Administration (SSA) and can verify your payments, you're typically eligible for a payday loan. Payday lenders welcome Social Security beneficiaries because, unlike part-time workers, their payments are stable and reliable." (AARP) But OP's mom did not necessarily take out these loans.
posted by Iris Gambol at 5:28 PM on August 31, 2023 [1 favorite]
posted by Iris Gambol at 5:28 PM on August 31, 2023 [1 favorite]
I stand corrected (wow, even as a deep subprime lender I would not be lending to people whose entire income may well be judgment proof, but that's just me), but, as you say, we don't exactly know what kinds of loans they are...OP mentions a car, so there might've been a title loan.
posted by praemunire at 5:37 PM on August 31, 2023
posted by praemunire at 5:37 PM on August 31, 2023
Please consult a lawyer if possible before communicating with the alleged lenders, to ensure the way that the POA deals with them does not have unintended legal consequences.
posted by lookoutbelow at 5:19 AM on September 1, 2023
posted by lookoutbelow at 5:19 AM on September 1, 2023
Re: the life insurance, there’s usually a 2-year period where you may be able to reinstate the policy if you pay the back premiums.
Also, the life insurance is a benefit to the beneficiaries. It is not part of the estate and so debts that the estate carries are not taken out of the life insurance benefit. (There are some special legal arrangements that could be different, but that’s generally for very rich people with financial planners, not your bread and butter insurance policy.)
posted by LizBoBiz at 12:09 PM on September 2, 2023
Also, the life insurance is a benefit to the beneficiaries. It is not part of the estate and so debts that the estate carries are not taken out of the life insurance benefit. (There are some special legal arrangements that could be different, but that’s generally for very rich people with financial planners, not your bread and butter insurance policy.)
posted by LizBoBiz at 12:09 PM on September 2, 2023
I don't know if anyone else covered it but it's also important that you or your sister not engage in any sort of takeover of obligation for your mother's debts. The scammers will no doubt try to get you to do so, but you have absolutely no obligation to play along with them.
posted by wkearney99 at 1:32 PM on September 2, 2023
posted by wkearney99 at 1:32 PM on September 2, 2023
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posted by COD at 8:23 AM on August 31, 2023 [7 favorites]