Expert: Kathleen Eads - 6/8/2006

Question
I am trying to help alleviate some anxiety for my in-laws and hope you can offer some concrete answers. In June of 2001, while my in-laws resided in Illinois, my mother-in-law opened a credit card in her name only. This was not a joint account, and my father-in-law was not on as an authorized user. In September 2001 my mother-in-law could not pay on it any longer and stopped. She never made another payment since (balance was about $900.00).

In October 2001 my in-laws moved to Tennessee, and never heard from the credit card company until about two weeks ago. My mother-in-law was served court papers that the collection agency that bought this debt is suing her in their local county for about $3,000... fees, interest, the usual. Her court date is the end of July 2006.

The debt is hers, she has no defense. My research suggests that this debt is still within the statute of limitations for both Illinois and Tennessee and that neither state is a community property state. It seems fairly certain that the collection agency will win in court and get a judgment against her.

My mother-in-law cannot and does not work; she has had several open heart surgeries (the first when she was only 29), multiple strokes, and an artificial heart valve. Additionally, she does NOT receive Social Security Disability (that’s another story). She has no income whatsoever.

The only income my in-laws have is an Illinois union pension plan from my father-in-laws retirement, and his Social Security. Their home and car are in his name solely, she is not listed on either. However, they have a joint savings and checking account. All money that gets deposited to both comes from only my father-in-laws pension and Social Security.

Here’s where I need some help:
1) Can a judgment or perhaps a lien be placed on their home or car? (again both are in his name only)
2) Can they access the joint bank accounts? If so, should my father-in-law close these joint accounts and open new ones in his name only?
3) What can happen, as my mother-in-law has no assets, no money, and will never work again?

Thank you for your time and any assistance.  

Answer
Scott,

The problem with judgments is that they may look great on the books, but they aren't worth the paper they are written on.  Society has become so suit happy, and while it sounds like your mother in law owes the money (admittedly so) I don't know why an agency would pursue her in court for a $900 debt.  

I have found the following website that speaks about separate and community property, and if it is as you say (everything is in his name), I'd say they can't touch him.  You may want to read for yourself to clarify:

http://www.legalzoom.com/law_library/living_trust/glossary_introduction.html#644

It's my understanding the house and cars would be off-limits.  I do like the sound of separating the bank accounts, though I don't know that it's necessary, given what I've read.  They are both on a fixed income and it may be that the court awards a judgment that will never be paid....(it won't be the first time...nor the last).  

Hope they get it worked out,
Kathleen Crabtree-Eads