As POA of my Mom how should I let her creditors know she cannot pay them anymore due to entering a NH?

I think it's supportive to provide people with the correct information, not to mislead them in ways that could cause financial difficulties later on.

Margarets, this is a support group not a collection agency. Maybe its just me but you are rubbing me wrong today.

PinkLA, that doesn't make sense. If the debt were truly cancelled, there would be no need for liens and no need for you to pay off lawyers, and no need for a check to go to creditors before your mother got the proceeds of the house sale. The fact that creditors wanted their piece means that the loan was definitely NOT cancelled.

If dying really meant that debt was cancelled, everyone would go on a spending spree starting on their 70th birthday or the day they get a terminal illness diagnosis, because they would never have to pay it back. No way banks would let that happen.

margarets, my father's debts were forgiven when I mailed the creditors his death certificate. There were several credit union loans that he had taken out for my niece and I took in his death certificate and he was removed from the loan.
and, yes, I did pay off the lawyers who had put the liens on the house. I did that so that they wouldn't lose their house. If I had left them on there then when the house was sold the creditors would have had to be paid prior to a check being issued to my mother since the lien had been put on the house when my father was still on the title for the house.

PinkLA, if you had to pay your father's creditors to avoid liens on the house, his debt was NOT cancelled. It just means that you paid from your own assets instead of his.

As a rule, everyone is responsible for their debts. Sickness, old age and death don't change that.

My father's debts were cancelled when he passed away. I had to send them his death certificate. While he was in the nursing home and when he eventually went home I had to pay off the creditors a few dollars each month. That kept them at bay. A couple of them had already put liens on my parents home and I had to pay those off out of my own pocket so that their home was clear of debtors. I guess I could have left those on there until the sale of the house but I didn't want any obstacles in the future sale of the home.
I am under the assumption that once my mother goes into a nursing home that she would still be liable for any debts she has (I've cleared up the majority already). Is this a wrong assumption?

There are only 2 ways out of debt.
Die with ZERO assets or bankruptcy.
You do not have to cover mom's debts from your assets, but be certain the creditors will try to collect as is their legal right.
They can decide the cost of chasing the money vs the likelyhood to collect. They can file in court or hire collectors, they can even sell the debt.

Not a matter of nice or mean, not a reason to like or dislike. Note if they were automatically unable to collect from estates, they could make a case for not lending to people over the age of X or with illnesses......name x.. 70? 80? but then we would call that discrimination.

In his 90 s dad wanted a new car, I was certain nobody in their right mind would provide 5 year financing... They would...I was floored..I was able to prevent this. I agree it would have been dumb to allow someone a debt they likely would not live long enough to pay.

Stressful stuff
Good luck

L

Interesting answers to my Mothers situation on entering a NH and having debt. I am her POA. Yes, I have tried to handle her finances to the best of my ability. When dealing with parents with dementia, It is extremely hard to tell when they are out of whack until they actually enter stage 5-6. They do want things and feel they deserve it. They worked and accumulated savings their whole life.. Then they out live their savings. My Mother does not have her home, or her savings. Just her SS check. They do not keep up with inflation affecting the price of Doctor visits or dentists, etc.... they do live in the past.
What really gets my blood boiling is when I read that old people on medicaid should have to pay their debt. What about our Banks, CEO's and government officials that use OUR money to pay themselves Hugh salaries. Deliver propaganda to get people to believe they are correcting their unfortunate ways of handling their business's debt, when they have not. Why I am suppose to pay for my Mothers debt , I did not create it. She did. I do believe I am suppose to take care of her needs as in health, safety, food, etc...the basics. Our own Health System does not even take care of our aging population properly. If the aging do not have an advocate, they can not wrap their heads around medicaid. The Government makes their programs extremely hard to understand. Why? I do believe it is so they do not have to pay as much money out to those that deserve it.
I do not feel I am responsible for my Mothers debt.
I do not feel bad the creditors have to suck up the debt. They created this colossal mess too. Where are our checks and balance's? Why do they not decrease my Mothers amounts she can have on her credit cards when she turns 85? or when she sold her house? Not my fault.
I do take offense to those of you saying not paying debt owed by your parents is the POA's fault. It was their when I got POA of my Mother.
Geez....
When is the American population going to wake up?
take a stand and say,"We are NOT going to take this anymore!"

I wonder if I will live to see this in my life time....

My experience is that Medicaid doesn't give a ant's butt if the Medicaid recipient has outstanding debt, BUT Medicaid does require that the Medicaid recipient pay all their monthly income less a small "personal needs allowance" as their co-pay to the NH. The allowance is between $ 35 - 90 a month - the amount depends on each state (as each state administers Medicaid under overall federal guidelines).

The co-pay is called different things…SOC (share of cost), resident responsibility, income deflection (got to love whomever thought that one up). But whatever it's called, means that there will be no real money to pay towards any other debt. The PNA is really to pay for their haircuts and some clothing replacement. If the NH has a separate fee for cable or phone, that alone can eat up all the PNA. Some NH really press for them to get the residents SS or other monthly income sent directly to them, so you don't even have the PNA funds to deal with as it becomes an on site resident trust fund (the NH cannot force you to do this, but both of my mom's NH really pressed on doing it this way…., yeah sure, not happening).

So whatever their debt, from maybe a few hundred to Macy's to thousands to Visa's, there won't be any of mom's $ to pay on the debt. For the elderly in a NH on Medicaid, dealing with debt is really different than for those who still need to get or keep credit. Your impoverished in order to even qualify for Medicaid. There isn't extra money to probably pay for bankruptcy, plus they may not be able to go to court or participate in bankruptcy proceedings. If all they have for income is SS or other protected retirements, those can't have a lein placed on them, so the cc creditors are just s**** out of luck on getting that income. The only thing that could be an issue is if they have a home. Then your state laws on homestead rights come into play. Like FL & TX are very pro-property owner so no lein or judgement can be place on one's home except for IRS or mortgage companies or workman's lien. CC companies are totally out of luck for that approach in those states.

Sideways, ? for you, does mom still have her home?

No, margarets IS correct: your mother will remain in debt, and should she pass away her estate will be liable for the debt, unless the debt is paid or your mother is declared insolvent.

As POA you are responsible for using HER money to pay HER debts. But YOU are not personally liable - you cannot be pursued by her creditors asking you to pay HER debts with YOUR money.

And the point I'm wondering about is, will Medicaid consider that its rights to your mother's income and assets take precedence over the claims of other, earlier creditors?

POAs are supposed to MANAGE the person's money but are not required to spend their own, legally. If there is no estate, creditors will go unpaid, but if there is an estate Medicaid and creditors can make claims on it. You may also consider a REPUTABLE credit counselor, an estate planner or eldercare attorney to help you make the best decisions on what to try to pay, and what will be uncollectable. Bankruptcy lets a person keep their home; Medicaid lets them keep the home as long as they "intend to return" but will typically have a lien on it for the amount they spend on care. It is complex enough and varies enough state to state to make sure you get expert help.

I have been told by an attorney, that I am not responsible for my Mother's debt. I do send a form letter when she goes on Medicaid. Getting the PO Box was very good advice. Then he told me I will not be hassled and it affirms that she is not connected to me. Debts are not carried over to family members or POA's when parents die.
margarets, you apparently got bad advice. that is not correct.

If OP's mother paid small suppliers or tradespeople with her credit card, then payment from the CC company to the suppliers/tradespeople is between the two of them. (I think they get paid either way. The benefit of the arrangement to them is that they don't have to chase down payments from individual customers.)

Ultimately it doesn't matter. Debt is debt is debt. If dying doesn't discharge debt, I don't see why merely getting old & incompetent should.

I largely agree, but I wouldn't mind some credit companies being more discerning about who they give cards to, too. They're perfectly capable of monitoring spending patterns when it suits them.

The other thing that's worrying me, though, is whether there might also be other, small suppliers or tradesmen with much tighter profit margins who are owed money? The decent thing to do would be to negotiate as fair a settlement as possible, although not as far as sideways taking on actual liability for the debt; that's why I was wondering about the Medicaid angle.

Maybe there should also be a heads-up for other POAs to act as soon as they feel their parent is spending recklessly: a sharp pair of scissors could be helpful, there.

It's not my patch either, which is why I recommend professional advice.

My reasoning is that if being in an NH got a person out of debt, like a get-out-of-jail-free card, then lots of people would do it (run up debt they do not intend to repay, counting on it being cancelled when they finally get to an NH) and that would lead to all kinds economic problems that no government wants to deal with. So I'm pretty sure that loophole has been closed, somehow. Also, the financial services industry pays a lot of lobbyists to take care of its interests.

And let's not forget that it's not the credit card companies who cover unpaid debts, it's all the other customers, through their interest, fees, etc. So I do not understand why this behaviour is encouraged (I've seen it elsewhere on the forum).

So Margarets, how does Medicaid view it? Are they ok with agreeing that debts take precedence, or will they start doing their look-back thing on it? (I'm asking, not disagreeing with you, by the way - this isn't my patch)

I don't know where this idea that going into a nursing home means that debts are cancelled. DYING doesn't mean debts are cancelled. As PoA, YOU are responsible for managing your mother's finances. That includes paying off her debts from her assets. Why did you let an incompetent woman run up so much debt in the first place?

Anyway, you must now sort out how to use her assets to pay off her debt and if her assets are insufficient, figure out the bankruptcy options. To do so, you need professional legal, tax and other advice. The choices you make now will also affect how her estate is dealt with after she passes.

The idea is to turn yourself into a wall. Never apologise, never explain (or not more than you absolutely have to). Compose a standard form letter, which you then customise, print and send to anyone submitting invoices, reminders, polite death threats, etc. along the lines of:

Dear Sir

Ref: [your mother's name and address, plus any relevant account number(s)].

Please be advised that as of [date], Mrs Bloggs' remaining assets and income will be sequestered in consequence of her permanent move into Medicaid-funded nursing care.

Please address any further correspondence to [Box No. (great idea from igloo!)]. I look forward to receiving your acknowledgment of this advisory notice by return.

Yours faithfully

Alice B Toklas, POA pp Mrs Bloggs.

You thus give reputable creditors a small window of opportunity to make reasonable proposals for ameliorating the debt; and if that isn't possible you still have the option of, at least, expressing regret about it if you feel so inclined. This isn't your fault; and it most certainly is not your liability. I shouldn't shed too many tears for the credit card companies.

Thank you all for the advise. When should I let the creditors know of my Mother's situation? She is in the NH but for the first 100 days , on Medicare. After that , medicaid and then they will take her SS check. Is this when I let them know or before it gets to this point?

Check in with a credit counselling agency in your area. They will have seen this situation many times and will know about the legal and tax implications of whatever actions you take. I don't think her being incapacitated discharges her debts.

If you can afford the $1,500.00, bankruptcy will save you aggravation and stress. It is free to talk to a bankruptcy attorney.

Sideways - the debt collectors will be relentless. You are not responsible for the debt but that won't stop the collectors from hounding you.

Depending on how many and how much debt mom has, you might want to do a couple of things to make your life and sanity easier. My late MIL was real financial terrorist and it took years (& a natural disaster) for the fall out from her stuff to go away…….I would suggest:
- send all letters certified and with a return registered mail card (the green card) from the USPO. This will run about $ 8.00 a letter and well worth the investment. The green card gets returned to you with a date stamp and signature which you can copy and send to future collection companies to keep them at bay. What happens is that the debt will be sold and re-sold again & again. Even if Chase, Discover, etc have written it off. the debt collectors who buy the debt are true bottom feeders and will be relentless…..now to keep their correspondence at a distance, I'd suggest you go an rent a mail box for mom. All the letters you send have this as mom's new address and in the letter state clearly & in BOLD that any and all contact must in writing to this address. Some UPS stores have mailboxes and then there tend to be some MailBox Etc. type of stores by college & university campuses. Rent one for mom and that is now her new address for everything. this way your home address doesn't get crossed with mom's debt. If mom's name is close to your name, this can be a problem for your credit. The rented box helps in keeping that from happening and then you go once a week to see what's there to deal with. You don't want the collectors to start contacting her @ the NH either.

Also run a big 3 credit check on mom this month. You can do this on-line as her DPOA. We all get 1 free report a year from them, so take advantage of this. There may be some older debt out there you may not be aware of, but it will be on the credit report.

As this is January, you want to be on the look-out for a couple of things that are important for mom's finances: her SS should send out the statement for 2014. If she is also getting a retirement, they too will send out a statement for 2014. Keep these someplace you can access easily.

Also be on the look out for mom getting any 1099-C's. A 1099-C is a Cancellation of Debt and is reportable to the IRS for income. 1099-C's are imho kinda loco to figure out what to do with. Any business who writes off a debt can issue a 1099-C and it doesn't always get done for the year in which the debt was written off either.
yeah, tons of fun there! 1099-C's are done routinely for those that do foreclosures's or short-sales and the IRS info is geared to how to deal with that. But for those that get a 1099-C for cancellation of cc debt, it is all "phantom" income and taxable and can sometimes cause income problems for Medicaid. The actual amount can morph up due to interest, late fees, etc, too. The 1099-C is reported to IRS as income so could surface as income if your state dovetails with IRS. If mom gets one, you should think about contacting a tax pro to deal with filing taxes for mom and them doing the impoverishment forms for her. imho it is not a DIY filing. Good luck & keep a sense of humor in all this!

Thank you to those who have answered my question. I am grateful for this site and the people that help all of us. We do need to keep helping each other. More and more of my friends are experiencing issues with their parents and loved ones. Our health care system is failing a lot of these people. Keep being tenacious, keep at it, all will be alright. It always is if you keep a positive frame of mind and attitude.

pstiegman is correct. You do not have to pay. If your mother in mentally incapacitated, send the documentation copies of the letter along with you only being POA.

NO you do not have to pay her bills. Just make up a form letter advising them she is confined to a nursing home as of (the date) and that she is on Medicaid. Tell them specifically NOT to call you, that you are only the POA. If any unscrupulous bill collectors call you, tape the call and tell them " I am tape recording this call and if you ever call me again I will report you to the state attorney general's office. Do you understand me?"