Personal Backruptcy Chapter 7 for the Mother-in-Law

[Hugh R]

You may have seen this thread about my SIL I hate my Sister-in-Law (Rant)

My MIL lives with me and has about $50K in CC debt due to my SIL. The old lady is 80 and lives with me. She has about $50K in a bank account and one of her sons is the financial guy for her. I trust him. The MIL is eventually going to need hospice type care. I provide for her 100%. The other siblings don't seem to care about her. I see that eventually she'll require hospice care to the tune of $3K/mo. I think she should bail on the CC debt which is mostly monies from her writing checks against her Visa card for the cu(t SIL. I don't see the SIL's and BIL's stepping up to the plate to pay $3-4,000/month for Mom's hospice care. So I'm thinking BK for the old lady. After all, she'll need the $50K she has in the bank before I start telling the brothers and sisters that they have to pony up $1,000 each/month for mom's care.

The wifey is worried about Mom's self esteem about BK, my thought is the MIL kind of gave that up when she gave all her monies to the evil SIL over the last 20 years. I'm the one providing her the MIL's living (100%).

I guess my point of this post is any BK tips? MIL has no assets worth attaching.

[slodave]

Sorry to hear this. No advice, but I do know an attorney.

[911Rob]

I don't believe in BK, it's lower than welfare imo. Go after the SIL's.
just my 2 cents

[slodave]

Rob is right. The attorney I know doesn't recommend it either. Anyway, I can get you his info, maybe a consult is a good idea. He's a client of mine and I happen to overhear him talking with prospective clients from time to time.

[the]

Originally Posted by Hugh R

My MIL lives with me and has about $50K in CC debt due to my SIL.

She has about $50K in a bank account and one of her sons is the financial guy for her. I trust him.

After all, she'll need the $50K she has in the bank

This does not make sense.

A Chapter 7 is a liquidation bky. When she files, a trustee will be appointed, whose job it will be to collect all of the assets of the bky estate, and distribute them to creditors. Immediately upon filing, all of her assets (subject to some exemptions) no longer belong to her, but instead belong to the Chapter 7 estate, under the control of the Ch 7 Trustee.

Her $50K in the bank will be an asset of the estate. It will be gone if she files bky (a very tiny amt of it may be exempt, depending on where it came from), it will go to her creditors.

When she files, she will be required to disclose all assets and accounts, and all bank accounts held by her or for her benefit in the last year. Signed under penalty of perjury, and filing a 7 while hiding/failing to disclose assets is treated very seriously.

[the]

If she wants to evade the CC debt, there are other ways of doing it, immediately filing a Ch 7 likely isn't the right way under her circumstances.

[K9Torro]

Wack the SIL and BIL...........

[ramonesfreak]

i agree with The

im not clear on the new laws....but before they changed, that 50K would be taken by the trustee

probably best to figure out what to do (transfer legally) with the 50K so the CC cant attach her bank account and then just let the CC bills go into the shredder

do i understand you right,that she has $50K in the bank?

see a bankruptcy lawyer - there are presumptions of fraud sometimes when transferring money or assets in the face of pending bankruptcy and understand that the laws have changed to benefit the creditors

[Hugh R]

Thanks for the info. Yeah, I'm all for wacking the SIL, but not a viable option. Good points about the bank account and pending fraud if that money suddenly gets transferred out of her account. Gotta think this one through. Maybe calling the CC companies and saying "Hey, you want $1K to settle, or do you want nothing?"

[ramonesfreak]

unlikely a CC will negotiate with a demand of something nominal by her IF she has been paying somewhat regularly....why should they, they been gettin paid

your primary goal at this point should be legally sheltering the $50K from creditors.....very tricky situation

see an expert (estate planning attorney that knows bankruptcy laws)

its been many years since i have thought of this issue...there may be some form of a medical trust or something that is immune from creditors in the way that social security benefits are .. not sure

good luck

[the]

OK, here's what most people would do. I'm not saying this is the right thing to do, but it happens often.

The $50K currently in the account gets dissipated. I.e., it gets "spent" on living expenses, bills, etc. over the next year. Bottom line, a year from now, it is not going to be there anymore.

In the meantime, credit card bills get paid at the bare minimum payments for as long as possible to avoid a default.

At some point, when the account is gone or near gone, the payments on the credit cards stop.

It takes months for the credit card companies to send it to collection, send out ever-increasing demand letters, etc. etc. etc.

At some point, the debtor responds, "I am 80+ year old, no job, no income, living off of social security (that income is exempt from creditors), can't pay ya, sorry."

Credit card companies either go away, or bring suit, which the debtor ignores.

Maybe the CC companies go to judgment, maybe not. If they ever start to really try to collect, or otherwise bring the heat to where it gets unbearable, a Chapter 7 is filed. It is a "no asset" case, which goes through to discharge with no fanfare.

[RANDY P]

+1

little chance of recovery by the creditors since it's unsecured. Not like she's going to need credit anytime soon.

The statute of limitations if I remember correctly in CA is 4(?) years - so if the debts go unpaid after 4 years of being in collections and nothing has happened legally there's no obligation for the debtor to repay.

However, that does not mean the collections people won't try and like, cheat and basically harass the debtor into paying for it. There's a bunch of other fine print involved but basically if the MIL manages to stay out of court (not filing BK) or getting sued and a judgment placed for the next 4 years or so you should be cool.

I'd just change her contact number and let the creditors go crazy. Chances are they'll just harass her, and that's it.

rjp

Originally Posted by the

OK, here's what most people would do. I'm not saying this is the right thing to do, but it happens often.

The $50K currently in the account gets dissipated. I.e., it gets "spent" on living expenses, bills, etc. over the next year. Bottom line, a year from now, it is not going to be there anymore.

In the meantime, credit card bills get paid at the bare minimum payments for as long as possible to avoid a default.

At some point, when the account is gone or near gone, the payments on the credit cards stop.

It takes months for the credit card companies to send it to collection, send out ever-increasing demand letters, etc. etc. etc.

At some point, the debtor responds, "I am 80+ year old, no job, no income, living off of social security (that income is exempt from creditors), can't pay ya, sorry."

Credit card companies either go away, or bring suit, which the debtor ignores.

Maybe the CC companies go to judgment, maybe not. If they ever start to really try to collect, or otherwise bring the heat to where it gets unbearable, a Chapter 7 is filed. It is a "no asset" case, which goes through to discharge with no fanfare.

[vash]

i thought chap 7, needs 1 mil of debt?

[Dueller]

I'm a little more deviant. So you say SIL wrote checks on mom's CC accounts? Did she have signature aythority? Or did mom do it for dtr? If not, rock along and pay minimum. When mom kicks, open an estate and notify CC company sister forged mom's name on the checks...turn it over to their fraud division...let them do the dirty work. Sit back and enjoy the show

[Christien]

FTR, I agree with Rob 100%. BR trustees are the lowest form of life, at least those that try to convince people to write off debt (and from my experience that seems to be most if not all of them).

I have no idea what BR laws are like there, but here a judge has to approve it. If a judge saw $50K of cash and $50K of debt he'd throw it out. But rather than go that far, a trustee would first do up a consumer proposal. Basically, an official and legal offer to creditors saying "either accept xx cents on the dollar or we go for the full BR". I would think you'd have to prove that at least some of the $50K cash would be required for care in the immediate future, and prove that there's no other income.

Oh, and if you decide to clean out the account and then declare BR, it can be denied without proof of where that money went to, and why it can't be given back. One of the questions to be answered is "have you gifted any cash in the last xx months or years".

Again, laws are different here, so none of this may apply.

[RANDY P]

Originally Posted by vash

i thought chap 7, needs 1 mil of debt?

Nope, it's a complex formula based on a bunch of factors, such as residual income after bills and what you owe divided by approximately 1/60th.

You also have to make LESS than the median income for the county you're in to qualify

it's confusing but something like that.

Christen- exact same thing would apply here, every scenario would wind up exactly the same way..

[Rot 911]

First off if mom in law incurred the debt perhaps she should pay it.

That aside you have received some decent advice.

1. Forget BK unless your MIL is willing to give the 50K away and she waits a year before filing. If she files prior to that, as pointed out above, the trustee can track the money down and try to recover it.

2. "the" has some good advice as to making MIL judgment proof. If MIL has no income that can be garnished by a collection agency, just have MIL give the money to someone, preferrably someone who is willing to use the money to take care of her. Then just quit paying on the credit card. No minimum payment. Just quit paying. Unlike a BK trustee, a collection agency can't go after money that was given away. The can only go after money your MIL has in her possession at the time of judgment.

[Christien]

Originally Posted by Kurt V

Unlike a BK trustee, a collection agency can't go after money that was given away. The can only go after money your MIL has in her possession at the time of judgment.

Again, laws may differ, but here a creditor can, by way of the courts, petition someone into bankruptcy, in which case the given-away money may be fair game. I'm not positive of this, though.

[rammstein]

All I can say is that you're a real man for being the one to do the right thing and take care of her. You are probably the best thing in her life, becuase you truly care. Good for you.

[Hugh R]

Thanks all. I don't like not paying your debts. In this case, it's the MIL's debts. The SIL took advantage of a elderly and admittedly weak willed mother. I have to do what's best for the MIL. She'll eventually need hospice care, and that costs money. I can't depend on the other siblings to chip in to the tune of $4,000/month. So it's got to come from me, and I can't afford all of it. The only other way is to preserve her $50K in the bank and use that as well. No other choices here that are viable.

I'm rethinking the BK option, and may well have the funds transferred to some medical trust fund that the creditors can't ever get their hands on and simply shred the CC bills.