Walking Away?

A reader asks:

About 15 to 18 years ago we were trying to build our business back up from a fire, it was a cafe.  My mother used alot of credit cards to purchase supplies we needed to build back. They were mostly in her name but there were about six she used my name. We have not used these cards since that time, about 18 years ago.  We stopped paying on the ones in her name about 6 years ago because we just could not make payments on all of them.  I was told due to her age and not using them for such a long time that we had actually paid the principal and to walk off and leave them. We still receive phone call but we never respond. My mother passed away a week ago and I used her Social Security check to make these payments on the ones in my name.  I still have the business but am struggling to keep it open. I have a brother who lived with my mom, who is on diaylis and I try to help him.  Can I walk away from these debts after paying all these years and not getting anywhere on the balances. I don’t want to hurt my business because it does feed us. What can I do?

-Sandra

First, I am sorry to hear of your loss.    Well Sandra, it seems like you have had a lot of struggles, and you have not been very organized with your finances.   It is good that you are now trying to figure out your finances.

Unfortunately, it sounds like you are now in a bit of trouble.   The most frightening thing I am reading is that you are using your deceased mother’s Social Security checks to pay off your debts.   If you are cashing checks in her name and using them to pay off debts, I am pretty sure that is not legal.   I think you should speak with an attorney immediately to discuss that matter, along with the issues related to your mother’s passing and the disposition of her estate.   Don’t be afraid to do that as soon as possible.    In fact, since credit card debt is unsecured, her creditors may not have any claim to it.   Again, speak to a lawyer as soon as possible.

In referring to your late mother’s credit cards, you say that “They were mostly in her name but there were about six she used in my name.”    I see a problem here in your approach to this matter.   The credit card cards “in her name” accumulated debt that is now part of her estate.    The credit cards that “she used in my name” are your debt.   With the exception of fraud, it doesn’t matter who “used” them, it only matters who’s name they are in.    As far as the bank is concerned, the debts are yours alone.

Another problem I am having with your thinking is that you repeatedly refer to “walking away” from debt.    This is an incredibly short sighted approach to financial management.   I don’t know who advised you to “walk away” from credit card debt, but that is very disturbing advice, to say the least.    As you have discovered, the banks do not forget about the debt once you have.    Not paying your credit card debt can result in collection calls, court judgments, and even garnishment of wages.    Even if you are immune from garnishment as a small business owner, you are still doing tremendous damage to your credit.   That will affect all sorts of things from mortgage qualification to your auto insurance rates.

You should contact all the banks that you still owe money.   You need to negotiate your remaining balance down to something that you can afford to make payments on.    If you are not sure how to do that, you might want to consider speaking to a reputable consumer credit counseling service.    To find one, start at the web site for the National Foundation for Consumer Councelors.

Good Luck to you at this difficult time.