Imagine Jean, a 51-year-old woman from Florida, who cares for her elderly mother.
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While the two are close, Jean has just discovered her 85-year-old mother, Marie, has stopped paying her credit cards over the past year, following a terminal diagnosis. She has spent much of her life living frugally and has now expressed some regrets about not enjoying life more in her younger years. Marie is now $25,000 in debt and the companies are beginning to call and send letters. Jean wonders if they can put a lien on her mother’s house or other income.
Marie’s financial picture is modest: she receives about $1,300 per month in Social Security and an additional $1,600 from her late husband’s pension. She lives in a house worth around $100,000, but it’s held in an irrevocable trust under Jean’s name. Her car is owned by Jean’s brother and there are no other retirement accounts or investments.
At this stage in life, the family isn’t so concerned about Marie’s credit score — but they do want to know whether collectors can seize assets or cause trouble down the road.
What assets can debt collectors go after?
Debt collectors don’t automatically get to swoop in and take property when someone stops paying their credit card bills. They must first take the borrower to court and obtain a judgment. Once they have that judgment, they may be able to pursue certain assets, though protections vary depending on state law. (1)
Generally, a judgment allows creditors to pursue things like:
- Non-exempt valuables: Jewelry, antiques, or collectibles above a certain value.
- Vehicles: A second car or a luxury vehicle, if state exemptions don’t cover it.
- Bank accounts: Funds in a checking or savings account, unless they’re specifically exempt.
- Real estate: Property owned in the debtor’s name, though a home in an irrevocable trust may be protected.
In Marie’s case, most of her assets are out of reach.
Social Security benefits are protected from garnishment by federal law (with the exception of debts owed to the federal government, like back taxes or student loans). Her pension may also be protected depending on how it’s structured. Since the house is in an irrevocable trust and the car belongs to her son, those assets aren’t in her name and therefore aren’t eligible.
That leaves only the small amount of cash in her bank account as a possible target — but even then, as Social Security funds are typically protected, Marie’s remaining money will likely be out of reach to collectors.
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Can you inherit debt?
One of Jean’s biggest concerns is what happens when her mother eventually passes away. Will she and her siblings inherit this $25,000 balance owing?
The short answer is no. (2) Children generally do not inherit their parents’ debt, except in specific situations — usually this means a co-signed loan. Credit card companies can only make claims against the estate of the deceased — that is, any assets the parent owned at the time of death. If there are no assets, or very few, the debt simply goes unpaid.
In Jean’s case, because her mother’s home is in an irrevocable trust and her car isn’t in her name, there won’t be much for creditors to go after. The credit card companies may file claims, but there will be little or nothing left in the estate to pay those debts.
For Jean and her siblings, the reality is that their mother’s credit card debt is unsecured and unlikely to impact her final years. Social Security and pensions are generally protected and assets in trusts or owned by others aren’t at risk.
How to help elderly family members manage their finances
Jean’s story highlights the importance of monitoring an aging parent’s finances before small problems snowball into larger issues. Here are a few ways families can help:
- Open the conversation early: Many seniors hide financial struggles out of pride or fear. Regular check-ins can help you manage challenges early.
- Review accounts together: Ask to go over monthly bills, account balances and credit reports. Spotting late payments early can prevent collection actions.
- Set up autopay for essentials: Ensure utilities, mortgage and insurance premiums are automatically paid to reduce the risk of lapses.
- Consider power of attorney: If a parent can’t reliably manage money, giving a trusted relative legal authority to handle finances can help protect them.
- Explore credit counseling: Nonprofit credit counseling agencies can sometimes negotiate lower payments or help set up debt management plans.
Families should be prepared for collection calls both now and after a loved one passes. It’s important to remember: you are not legally responsible for a parent’s credit card debt in most situations. (3)
If collectors reach out after death, inform them that the account holder has passed and direct them to the estate executor. Do not make any payments yourself — doing so could make you appear liable for a debt that was never yours.
Your elderly parent’s unpaid credit card bills shouldn’t weigh on your peace of mind. Focus on making sure your loved ones are comfortable and cared for in their final years.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Upsolve (1); Weisinger Law Firm (2); Consumer Financial Protection Bureau (3)
This article originally appeared on Moneywise.com under the title: My mom, 85, stopped paying her credit card and is already $25K in debt — but will the impact of her freefall pass to me?
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.