If someone goes into a nursing home, he may not be in a position either physically or financially to manage his credit card debt. If a caregiver is available, he may be able to act in the debtor's best interest regarding the amounts owed on credit cards. However, the status of the credit card debt does not change simply because someone enters a nursing home.
If someone goes into a nursing home and has a joint debtor attached to his credit card accounts, the co-owner can manage the affairs of the accounts. Any late payments or other mismanagement will appear on the credit reports of both owners, but no legal paperwork is needed to transfer control of an account. However, someone in a nursing home could also sign a power of attorney form giving control of his account/accounts to another individual.
The costs of a nursing home can be financially crippling. Someone entering a nursing home may not be able to keep up with credit card payments, in which case negotiation can help. It's possible that creditors would be sympathetic to someone entering a nursing home. Negotiations might be effective in achieving deferred payments, lowered interest rates, or reduced balances, usually in exchange for a lump-sum payment. However, the ball is in the creditor's court, and if negotiation doesn't work, the original terms of the account still remain in effect.
Debtors who default on their credit card debt may face lawsuits, judgments, liens and wage garnishment, even if they are in a nursing home. This may not have much effect on someone in a nursing home without much property or a regular income, as creditors will have nothing to seize, even with a court order. However, the mere process of enduring collection calls and letters can cause stress, particularly for someone with health problems.
For some debtors in nursing homes, bankruptcy is a viable option. Bankruptcy affords qualifying debtors the ability to wipe out most debt, usually including all credit card debt. For a debtor with low income, Chapter 7 affords the opportunity to eliminate debt without having to make any payments to creditors, although some property may be sacrificed. Since most people entering a nursing home won't be earning a regular wage, Chapter 7 is often the only option, as Chapter 13 requires years of monthly payments to creditors.
If someone dies in a nursing home, his heirs are not responsible for repayment of the debt. Creditors should be notified in the case of a death, and claims may be filed against estate assets. However, if a person's estate doesn't have sufficient funds to pay creditors, his heirs are not legally liable.
- Bankrate.com: Sharing Credit Card Accounts
- ElderCareLink: Understanding and Selecting a Financial Power of Attorney
- Nolo: Do Heirs Have to Pay Credit Card Debts?
- The Washington Post: Credit Card Firms More Willing to Negotiate with Customers
- Bankruptcy in Brief: Lawsuits
- Nolo: Bankruptcy FAQ (Chapter 7 and Chapter 13)
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