Elder Care Guide and Information

A client just left our office with a concern I’m
seeing more frequently.

Her elderly mom can’t afford the high cost of health care
and may have to default on credit cards.

The daughter (our client) has believes in
paying credit card bills on time. To her it is a
sacred duty to protect credit ratings. She worries
that if her elderly mom defaults on the credit
cards it will affect her mom’s credit.

Credit card debt by senior citizens is growing at
a rapid rate. So are defaults by the elderly. Some
say credit card misuse by the elderly is nearing a
epidemic scale.

This past summer at least three families who came
to us for help had credit card debt greater than
$30,000. One was in debt a jaw dropping $90,000!

In this most recent case, my recommendation
shocked the daughter.

Her mom suffers from Alzheimer’s disease, has only
a few hundred dollars in assets and is applying
the Medicaid for help paying the nursing home
bills. While the mom has not been formally
declared bankrupt by a court, she is financially
bankrupt. Her debts far exceed her assets.

So what should this otherwise conscientious
daughter do about the elderly mom’s credit card
bills?

My advice…

Let her senior mom default on the credit cards.
Toss the credit card bills in the trash can. Don’t
even think about paying them a penny.

Sound Draconian? Not really.

For a senior citizen in her mom’s situation to
default on credit cards may not be “American” but
it is practical.

At this stage of her mom’s life a pristine credit
record only has an emotional value. There is no
practical financial value whatsoever. Once her mom
enters a nursing home, the need for future credit
vanishes. A credit rating in no longer important,
relevant or necessary.

Anyway, the Medicaid program doesn’t care about
those debts and will not allow any funds to be
used for debt reduction.

My answer violated her sensibilities. It went
against every thing she believes in. It’s her
opinion that her elderly mom should not default on
the credit cards. Normally, I’d agree.

But when a senior citizen has no assets and needs
money to pay for care, to default on a credit card
is a matter of survival. Creditors have to take a
back seat.

Filed under: Money Issues