Mr. Edwards,
I have a rather complicated situation, but your blog postings have provided me with a wealth of information, and I value your judgment. I hope you can answer a couple questions for me.
The scenario in brief: My sister and husband had unsecured debts originating in 2011 or prior. Their only income is minimal Social Security and a paid-for 2006 mobile home in a park (no land) in Pennsylvania. My 84-year old brother-in-law became incapacited with dementia and a permanent resident of a nursing home in December 2012. Unable to continue paying the 3 debts, my sister originally contracted with a ‘debt relief’ firm and tried to pay them for about 8 months, before becoming unable to pay due to my brother-in-law’s medical and nursing home costs. Late last year my sister put the mobile home up for sale (value about $39,000) and I moved them to be near me in Colorado. She is in a low-income apartment and he is in a nursing facility here, and I am handling their business and finances. The mobile home is in joint ownership. The collection letters are addressed only to my brother-in-law, but I don’t know if they jointly signed for the original debt or not.
The question: The debt relief contract staved off the debt collectors for that time but my brother-in-law has received 2 notices from Viking Client Services (Minnesota) collection agency for one of the uppaid debts in the amount of $16,000. I am uncertain if I should inform the collection agency of their situation because I fear it will push them to file for a judgment and lien against the mobile home, making it even more difficult to sell; or just let them continue to make collection attempts and see if they go as far as trying to lien the property. What would you suggest?
I would greatly appreciate any advice you can provide that might assist me in handling this and not making it worse.
Thank you,
Sherry
Sherry,
From my standpoint, your relatives seem to be in pretty good shape as far as collections are concerned. Yes, I'm sure you're sitting there aghast that I just said that, but hear me out. Their only income is Social Security. When traditional collection methods fail, collectors sue. Once they have their judgments in hand, they immediately begin garnishing the debtor's pay and bank accounts. Unless, of course, the only funds the debtor has are exempt. So the debt collectors can whine and cry and wheel and deal and threaten all they like. As my grandmother used to say, "Can't get blood outta no turnip, boy." Personally, I'm surprised they kept paying as long as they did.
Now, if they own that mobile home a debt collector could conceivably place a lien on it--but that's highly unlikely. Highly. I worked in real estate for a few years (still do occasionally, if the contract's good enough) and I can tell you: there is nothing on this earth harder to sell than a mobile home. What would happen is that the collection agency would spend all this money on legal fees to take your family to court and for what? Non-garnishable income and a mobile home that would sit there and accrue property taxes because the collection agency couldn't sell it? Sure they could, but it takes more time and money and patience to seize and sell a mobile home than a traditional home or car. Collectors are all about the bottom line. Patience just isn't that industry's strong suit.
And to add fuel to this fire of madness, the mobile home is jointly owned. Since its located in Pennsylvania and Pennsylvania isn't a community property state, the collection agency would only be entitled to half of the proceeds from the home sale--making seizing this property a lot less appealing than it was originally.
So, here is my opinion and just my opinion: If it were me, I would waste no time in letting the collectors know that my family members were both on Social Security and that it is their sole income. I would also inform the collectors that one is in a nursing facility and the other is living with a friend. This tells the debt collectors three things right off the bat:
1. They have no paychecks to garnish.
2. It's illegal to hit them with a bank levy.
3. They have no property to seize.
I wouldn't lie. I would just omit the fact that they owned property in another state. You are under NO obligation to give a collection agency information that it needs in order to pursue your elderly family members. Your family members aren't completely judgment-proof, but they are enough so that letting a collector know these three things should get their debt written off the books. If they sue and take the mobile home, they sue and take the mobile home. At this point we have to just count on the smart business sense of the agency and your ability to make it clear that your family members are on Social Security and both are currently living in rental situations.
I genuinely don't feel these debts are a threat. I don't. The debt collectors will keep calling (because that's what they do) and you keep telling them the same thing (or stop answering the phone) and as soon as the statute of limitations for lawsuits expires, hit them with a cease and desist order. Boom. Problem Solved.
Best of luck,
Lee
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