What happens to credit card debt if someone is on old age pension only and has no assets?
What happens to $12,000 credit card debt if someone is admitted to long-term care in a nursing home is on old age pension only and has no assets? The cost of the nursing home uses her pension leaving only $120 dollars a month.
The laws covering what funds are protected against the collection actions of creditors vary from state to state, and I would strongly encourage you to consult with an attorney in your area regarding your specific situation.
That said, generally speaking, funds like social security benefits, disability benefits, and pension proceeds are usually exempt and cannot be garnished by creditors. However, if you deposit those benefits into a bank account and then co-mingle the funds with money from other, non-exempt sources, you may be putting the all the funds at-risk, including the pension funds.
My suggestion is to open a new bank account into which only pension funds are deposited, and maintain another account for any non-exempt funds received (gifts from friends, family, etc.). Taking this step, along with the fact that you state that the debtor in question has no assets, will make it unlikely that a creditor can do anything legally to force a payment on the debt.
I will say it again because it is important: Discuss the situation with an attorney licensed in your state to determine specifically what steps you need to take to best defend yourself against possible collection actions.
Good luck and hope that the information I have provided helps you Find. Learn. Save.