Hi all. I just stumbled across this site and it seems to support a large community. I am hopeful that I might find some of the advice I need here with the help of you good people. A little over a year ago my mother got cancer and didnt have health insurance. Nightmare. Unfortunately I know this is not a terribly uncommon occurance in this country. Making a long story a touch shorter I am happy to say that my mother has so far been able to beat the cancer, but what is slowly killing her are the bills. Up until this situation my mother had excellent credit and owned her home free and clear (no mortgage). Because of her excellent credit she was able to get a bevy of credit cards which she used to pay off the medical bills. I'm not sure that was such a good idea, but that's what happened. Now she is in the hole for somewhere around $50,000 and problems are beginning to mount. One of the cards she took out- MBNA- has a balance of $18,000 and she received a letter today saying that they were going to write this off as bad debt if she didnt pay the minimum balance immediately. They said that doing this would essentially destroy her credit until 2010. Apparently my mother had been sending them about $100 each month instead of the minimum balance- she also said she sent them a letter telling them of her situation and her intent to pay what she could. But to my knowledge that was never followed up on and the minimum payment continued to mount (since she was only paying $100/month). At this point the minimum payment is around $3,000 and my mother clearly can't pay that. I suspect similar situations are coming from other creditors. On the plus side my mother does own a home worth approx $300,000 (there in no mortgage on it). Other than that she has very limited assets, which are used for bare bones living expenses. She is 60 years old and doesnt work. Complicating matters is that she is in the process of trying to sell the home to move back up to New York (she currently lives in Georgia). Should she get a home equity loan to pay off the credit cards? I know that would come at a lower rate than the interest the credit cards are charging, but I'm not sure what kind of monthly payments would be expected for such a loan and/or whether she would be able to afford that. I wont make this post any longer- I've described the main points. I would really like to help my mother make sense of this situation without destroying her credit. If anyone has any advice or recommendations I/we would be most grateful. Also, what exactly are the repurcussions of having something like this MBNA balance written off as 'bad debt'? If that happens does that basically mean her credit is ruined for 7 years but she gets a pass on the $18,000? Again, thanks in advance for any and all help.
One basic question - Could she pay off the 50K with the proceeds from her house sale, and pay cash for another house? Has she put the house on the market?
No, she won't get a pass just because it's written off. All that means is the debt is charged to p/l but, collections activity may proceed. For $50K in credit card debt and owing MBNA $18K, there is a very strong likelyhod someone will sue your mother sooner rather than later. They've all done asset searches and realize she has an expensive home. If they get a judgment, they can place a lein on the property that must be satisfied prior to any transfer of ownership or,a re-ri. I'd suggest she try and settle with the cc companies and use a portion of the proceeds from the home sale for that purpose. And, her credit will be impacted for a long time.
I think that's the goal but until the house is sold she is unable to do anything. And it's not even on the market yet- she plans to put it on in the next month or so.
Even at this stage her credit will be impacted for a long time? What if she is able to work something out with the credit card companies? Is it already too late to avoid having her credit crushed?
I don't want to break your heart, but chances are, with making less than minimum payments, here credit is probably already at least somewhat trashed. It really depends on what their reporting. You would need to pull her 3 credit reports to see. But don't despair, this is the place to help repair it to the best of all abilities.
