Judgement Proof...or is she?

[txtxyeha]

Is my mother "judgement proof" as I think she is?

My mother who is elderly and on a fixed income just sold her home and fetched $20K in proceeds from the home sale (i.e., the equity she had in the property). After paying some bills, making some car repairs, etc., she had $11K remaining which she gifted to my brother and his wife. They are geographically close to her and bear the brunt of caring for her. She now has:

$500 in savings
$300 in checking
a car paid-in-full
that's it!

Her income is Soc Security and a modest pension check each month. Again, that's it.

She owes $7K in credit card debt to the local credit union where she no longer banks. She does not intend on repaying them. We assume they will file civil suit against her to recover this obligation. Finally, she has no need to obtain credit in the future.

Am I correct that they have no means to settle a presumed judgement against her? What will we need to do when they serve her with papers? I know that any comments that follow cannot be construed as specific legal advice to her, but I think this is a classic "judgement proof" case but do not want to overlook something.

 

[JohnnyYuma]

Not an attorney, but it's my understanding that they could only get a judgement against the estate. Perhaps, if they thought the gift was a scheme to avoid the debt, they might try to come after you. I'll guarantee, there will be a real attorney show up here to give you the true answer!!. good luck.

 

[Sangre Naranjada]

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[txtxyeha]

Sangre - intellectually speaking I somewhat agree with you that her decisions that got her to this point have been met with reactions from disappointment to anger towards her and among her children on how to deal with this. Wth that written and given we're talking about my mother, i would prefer you take any other commentary and shove it up your a$$. If you have any helpful advice I'm all ears.

 

[Sangre Naranjada]

My helpful advice is for you to advise her, gently and with the love of a child for their parent, to pay her debts.

 

[EPThorn]

So where does she live now that she sold her home? "geographically close" doenst sound like shes living with them.

Also, I agree with the other poster. She should have paid off the the credit union with a portion of that 11K.

 

[NEWDOC2002]

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[Dionysus]

txtxyeha,

Serious question, no disrespect intended as I know that sometimes there are circumstances involved that others don't understand. But if this were my elderly mom I would want to ask her — if she can afford to gift the money to me why would she not pay that credit card obligation first? Is that not a fair question?

 

[Seattle Husker]

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[Larry T. Spider]

My understanding was that the money was going to help offset her cost of care that well exceed the amount of the gift. So she made the logical decision to contribute to her care instead of paying off a company that made the calculated decision to give credit to a person with very little money.

 

[Dionysus]

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[Larry T. Spider]

I'm not saying that she shouldn't pay the lender back. I'm saying that she was likely in the position where she had to choose between helping pay for her future care or pay old debt. In that position, it would probably be very hard to make the decision to pay a faceless company vs your own kid that's about the pay for your care until your last day.

I know what it's like to be the faceless guy that lends money and doesn't get paid back. I use an online trading platform to buy fractions of these types of loans. I go into it expecting to not get paid back by a certain percentage of borrowers. It sucks, but its also why their interest rate is usually 15-20% and no single person makes up a large percentage of my portfolio.

 

[l00p]

My siblings and I look at our Mother's debt as our debt. There have been times we've had to help her out with this and that as well as paying off some poor choices. Nothing to the tune of 7k at one time but over time more than that for sure. We keep an eye on her finances now to help steer her in the right direction. It has made all the difference.

We help her out. Can you help her out and do the right thing? I would think it's a lot better than wondering if somebody is going to make her pay what she owes, as an adult. Maybe get the debt cut in half, make payments and it's a win for both sides.

 

[BigXIIHorns]

She is basically judgment proof. What will happen is the credit card company will likely not sue for a judgment over $7,000 but rather just sell the debt. This means lots of phone calls to your mother that will not be fun. your family should also expect phone calls. Once the debt is sold, you should try to negotiate the debt down to a more reasonable number and settle. That should end the phone calls.

 

[Larry T. Spider]

I randomly heard about a similar situation. They settled 16k worth of debt for about 2k once it went to collections. The collection company probably paid about 500 for it and was happy to make a quick profit.

 

[Battleship]

She has 11K in cash, but instead of paying off her 7K debt and gifting 4K, she gifts it all? Sounds like a thief to me. It is one thing when you can't pay your bills. totally another when you are giving away cash and don't pay.