[barneyfife]

Two questions. My father recently passed away and had about $50,000 in credit card debt. We talked to a lawyer and he said that the house and furnishing could not be touched by his creditors. The house has reverted to my mother. My mother was beneficiary to a life insurance policy and I was told that was safe as well. We have had his vehicle picked up and to be sold at auction. Since there was no estate to speak of is there anything the creditors can get?

My mother also has about 70,000 in credit card debit. She has Alzheimer's, and her pension and SS doesn't even cover the monthly bills. Should we do some type of debt consolidation for her debts? We would not want the creditors getting any profit made from the sale of the house, if it can be avoided. Please advise. Thank you.

Barney

[lobrobster]

This is really tough. First, I'd get a 2nd opinion on whether this lawyer is correct. I think in some states a creditor can go after a deceased person's assets. If this house was in your father's name, it could be a problem. But some credit card companies won't bother. It might behoove you to call the credit card companies and explain your father's death and see what they plan to do.

As for your mother, it's important to start working on improving her financial health immediately! Stop the bleeding. She must have (or did have) good credit in order for her to have borrowed 70k. If her credit is still good, by all means look to consolidate this debt (at a lower interest rate), if at all possible. Good credit should make this do-able for her.

Also, it's imperative to make sure what assets she does have are protected. Double check to make sure the house can't be touched by your father's creditors. Ditto with the life insurance money. You don't say what the mortgage is on the house, but perhaps a home equity loan can be taken to reduce her credit card debt.

There are all kinds of things that can be done. If you're at a loss, consult a "legitimate" financial advisor to help. Best of luck!

[ScottGem]

I suspect the house was in your parents names as joint tenants with right of survivorship. In that case, the house passed to your mother OUTSIDE the estate. The same is true of a life insurance policy. It passes to the beneficiary outside the estate.

The only entity responsible for your father's debts (assuming they were solely in his name and not held jointly with your mother) is the estate. If there is nothing in the estate then the debt is uncollectable.

I would speak to an estate attorney as to how to deal with your mother's estate. She may want to "sell" you half the house so you would be a joint owner with right of survivorship.