My mom recently moved into a nursing home, and I’m trying to figure out what to do about her $10k credit card debt with Chase. She has a small amount left in the bank ($8k) that we’d like to keep for her care, and a life insurance policy worth $17k that we’d prefer not to touch. Her only income is Social Security, which will go straight to the nursing home each month as part of Medicaid rules.
Her credit score isn’t a concern, but we’d rather not let the credit card default and risk Chase freezing her bank account or putting a lien on the house. The house is in a life estate, so I will continue paying the mortgage.
Would it be worth calling Chase to ask if they can reduce or forgive the debt? Are there any downsides to even bringing it up with them?
Her mortgage and bank account are also with Chase, so I’m unsure if that could complicate things if we stop paying the credit card.
Banks don’t just let people walk away from $10k. They definitely won’t do it just because someone is older or in a tough situation.
Here’s what could happen:
She might be able to settle for a lower amount if she claims financial hardship, but that could lead to a 1099-C, which means she’d owe taxes on the forgiven amount. If you’re paying on her behalf, you can make the payments without using her bank funds.
If she stops paying, the debt won’t just disappear. Chase could charge it off, but they can still try to collect or sell it to a debt collector.
If she passes away and her estate doesn’t have enough to cover the debt, Chase will write it off as a loss. Life insurance money paid to beneficiaries doesn’t count as part of the estate.
@Mica
If they do settle and issue a 1099-C, what’s the downside? She’d owe taxes on the amount they forgive, but that would be way less than the full debt.
Cary said: @Mica
If they do settle and issue a 1099-C, what’s the downside? She’d owe taxes on the amount they forgive, but that would be way less than the full debt.
It depends—sometimes a 1099-C can mess with eligibility for government benefits if it makes her ‘income’ look higher for the year.
Cary said: @Mica
If they do settle and issue a 1099-C, what’s the downside? She’d owe taxes on the amount they forgive, but that would be way less than the full debt.
Just to clarify—if the debt gets charged off, she still owes it. It doesn’t automatically get forgiven. They can still try to collect, sue, or sell it to a collector. A 1099-C only happens if a settlement is reached where part of the debt is forgiven.
You need to speak with an expert in your state. There are bigger issues here than the credit card debt:
Nursing home contracts: Some facilities require assets to be used for care costs. Make sure nothing was signed that could put the house at risk.
Medicaid and assets: If the home is still in her name, it could impact Medicaid eligibility. Some states have a five-year lookback period where they can take assets to cover costs.
I wouldn’t tell Chase anything just yet. Since her mortgage and bank account are also with them, it’s best to have a solid plan first.
The $10k debt isn’t the main issue here—it’s making sure her long-term care is covered without putting other assets at risk.
Cary said: @Jamie
We’ve already worked out the house situation. Medicaid and the nursing home accepted the life estate setup, so they aren’t touching the house.
Still, I’d check with an estate lawyer just to be sure. Different states have different rules, and you don’t want any surprises later.
@Neo
Yeah, we looked into it already. In NY, Medicaid allows up to $30,175 in assets, and my mom is under that limit, so she qualified. Some states only allow $2k. I think California recently removed asset limits for regular Medicaid, but I’m not sure if that applies to nursing home care.
Move the Chase balance to a new credit card with a different bank, then stop paying and let them try to collect. If they take it to court, they might reduce it based on her finances. Chase will be more aggressive since they also hold her mortgage and bank account, so it might be better to move the debt first.
