[daylily]

Hi folks,
I have a credit card question. My parents only income was SS and it's not much. 3 years ago my dad couldn't afford his health insurance (the other insurance besides Medicare) because it was $2500 per year, so after much thought, he put it on his credit card. He hated being in debt but felt he had to do this. Thank God he did because a few months later, he became sick and after a 16 day hospital stay, he passed away. Everything was covered by insurance.

Mom has struggled since May of 2008 to make credit card payments. She has not used the card at all since Daddy died. Our property taxes went up by 44% this year and she doesn't have the money to pay hers, around $2100.00. She suggested to me that she put it on the credit card. My first reaction was no, because it's been so difficult for her to make the payments.

But then I got to thinking, I don't know what will happen with the county about her taxes. I don't know how long they will give her to get it paid. Her thinking is this...if she dies, we would not be responsible for making the credit card payments but we would be responsible for paying the real estate taxes.

We live on a very small income and if we had the money, we would just pay everything off for her. We have a budget where we put a certain amount in savings every month to cover our property taxes, vehicle maintenance and a bit extra. With the 44% increase, we will just barely have enough to cover ours.

DS made up a budget for Mom and, with this tax increase, she doesn't even get enough money to cover everything. Her health insurance is almost $700 every three months. Her monthly income is $823. She is very frugal. She has leased some land to a Christmas tree grower but they won't be big enough to cut for a couple of years. She owns too much land to qualify for Medicaid, etc and is willing to sell at least part of it but is hoping to hang on until she can sell the Christmas trees.

What do you folks think? Is her idea a good one or not? Any suggestions would be very welcome.

Thanks,
Daylily

 

[Greebo]

Ok so for 2 years she's struggled with CC payments - but she thinks taking on more CC debt to keep the land is a good plan? That's what we called in aviation a graveyard spiral - you keep going around in circles, sinking lower and lower until you crash and die.

Also, she's wrong about this:

Her thinking is this...if she dies, we would not be responsible for making the credit card payments but we would be responsible for paying the real estate taxes.

The land is in her name, right? It'll pass on to you?

So when she dies, her ESTATE will be responsible for the CC debt. They'll be entitled to be repaid, and can force a lien on the property to guarantee that they do, and if the land becomes yours, so will the lien.

I'm wondering what the land is worth? Can it or part of it be sold? Cause Mom can't afford the taxes - and unless you can pay cash for the taxes, neither can you.

Or, since the land will become yours (presumably) when she dies, maybe you can raise the $$ to pay the prop tax.

But no more debt - it hasn't been a blessing - it's made the situation worse!

 

[daylily]

Greebo,
Thanks for the reply.

Yes, the land would become mine. There are around 80 acres, a lot of which is in Christmas trees. She has said that she would be willing to sell some of it.

The tree grower suggested that maybe she could lease the land for hunting and get as much as $1000 per year for that. I don't know what all is involved with that either.

 

[Greebo]

You have a short term immediate problem - the taxes - and a long term problem - the taxes.

Seems to me like the land is the solution to the long term problem, if you can turn it into income producing land - which you're doing now with the tree grower and there's more potential there for the hunting, once you do the research.

So you have a short term problem with the taxes - about 2.2 grand, right? You don't know exactly when it's due?

Ok - so taxes are actually a little different. Taxes are already debt - and they're a very very bad debt because they really have no boundaries. They can tack on insane fees, they can take your land.

So find out how long you have until the taxes start accumulating fees, and do EVERYTHING YOU POSSIBLY CAN - sell stuff, work extra hours, work another job, whatever, to raise as much as you can to cover those taxes.

As an ABSOLUTE last resort, take out a *PERSONAL* loan from the local bank. Only if you can't do that should you consider the CC - but don't put it on mom's, cause Mom's already struggling to make ends meet. Put it on yours and keep working like a man person until it's paid off.

But DO NOT let the long term plan go - find out what you need to find out to lease the land - and btw why is the tree grower getting to grow trees on your land for free? I know he needs to sell them to make money - but that's HIS problem - not yours. You should be getting SOME payment from him just for the use of the land... course you may have inked that deal already which would make it too late to change it...

But if you can get the grower to front you some $$ now to be deducted from what he pays you later (what is it, a % of the sales?) - then that could help too.

 

[daylily]

You have a short term immediate problem - the taxes - and a long term problem - the taxes.

Seems to me like the land is the solution to the long term problem, if you can turn it into income producing land - which you're doing now with the tree grower and there's more potential there for the hunting, once you do the research.

So you have a short term problem with the taxes - about 2.2 grand, right? You don't know exactly when it's due?

The taxes are due Dec 5 and there is a note on the bill that says so much will be added if not paid by Jan 5. It's not a lot extra but I don't know what happens after Jan 5. I will call today and try to find out.

So find out how long you have until the taxes start accumulating fees, and do EVERYTHING YOU POSSIBLY CAN - sell stuff, work extra hours, work another job, whatever, to raise as much as you can to cover those taxes.

My two DDs and SIL have been selling some of her antiques and collectibles on Ebay, Etsy and just yesterday at a flea market. They are making bits of money. Not many are buying but every little bit helps. Her health insurance will be due again Jan 1, and thats nearly $700.


But DO NOT let the long term plan go - find out what you need to find out to lease the land - and btw why is the tree grower getting to grow trees on your land for free? I know he needs to sell them to make money - but that's HIS problem - not yours. You should be getting SOME payment from him just for the use of the land... course you may have inked that deal already which would make it too late to change it...

Daddy made the deal with the tree grower years ago. Probably 15 years ago because he has done one cutting of trees and they generally grow about 7 years before they're big enough to sell.


But if you can get the grower to front you some $$ now to be deducted from what he pays you later (what is it, a % of the sales?) - then that could help too.

It is a % of sales but I don't know how much. I'd have to ask Mom. That is a possibility to look into.

 

[daylily]

Well, I didn't do that right. My replies are all mixed in with your quote. Hope it makes sense!

 

[Greebo]

Ah the tree grower scenario makes a bit more sense now - he's only got one field to use so he's growing a single crop on it, harvesting every 7 years. If you leased more land to him each year you could get a nice annual income coming in maybe?

 

[Missourimom]

When my grandmother died we had to wait a couple of months before the estate would release the money because they had to wait for all the creditors to finish sending bills. They had to be paid before I received my inheritance.

 

[daylily]

Greebo, actually he has several fields going with trees of various ages/sizes. I could be wrong on the start date, just guessing. I'd have to ask Mom to be sure but I know they got one cutting off and he told DH that there may be some next year and most certainly some in two years.

MissouriMom, thank you for your comment. I sure don't know much about inheritance laws, etc. I don't even want to think about her dying. She will be 74 in Jan but she had colon cancer surgery in 2009. So far doing well.

 

[ddmartin]

Can she get a deferral on her property taxes because of her age? Don't know to much about the process but have heard of people who have done this.

 

[Siebrie]

"they won't be big enough to cut for a couple of years" - would there be a market for small christmas trees around where you live? Studio dwellers, people living with family, pet owners who want to put a christmas tree up high, etc? Maybe you won't make enough to cover all of the taxes, but a part should be possible.

 

[daylily]

ddmartin, I don't know. I'll have to check on that but if she dies, we would have to pay them and we don't have the money either!

Siebrie, its very possible byt the grower has a contract with Home Depot in the East and they only want big ones. He did sell some table tops one year but none have been ordered this year, so far.

I called the county treasurer's office. They told me that you can make payments on your taxes. If you have made NO payments in 5 years, they turn it over to an attorney but if you're making payments, they don't.

The bill says "Under State law, a 5% penalty plus 10% interest per annum will be added on December 6. What does this mean in a year's time? Does it mean they add 5% penalty per year?

Would making payments be better than getting a personal bank loan?

 

[Greebo]

5% penalty + 10% interest per annum means that they'll tack 5% on the bill right off the bat and charge 10% interest on top of that.

So $100 would become $105, and as you're making payments they'll charge 10% interest (presumably accrued monthly) as you go forward.

Assuming your credit is good, you can walk into your local bank and get a signature loan with better terms than that.

 

[Nishu]

I would look more into leasing the property for hunting. You don't have to lease it to one person, you can lease it to several people for different times, seasons or game.

Hunting Lease | Hunting Rights Contract

Maybe a couple multi-year leases could help you pay down the taxes.

Good luck. I hope you get everything straightened out.

 

[daylily]

Greebo, thanks for the clarification. If something hasn't changed by the end of Dec , we will definitely look into getting a personal loan.

Nishu, thanks for the link to the article about hunting leases. I've been reading it and I think it's going to be very helpful. Thank you for your good wishes too.

Daylily

 

[Ceashels]

Would having a harvest of trees mean that it is agricultural land? If it is agriculture the taxes might be significantly lower. And it's not too difficult to plant a field - as a harvest isn't required to keep it agricultural status.

 

[island_fever]

The first thing I would do is to see a lawyer to find out if there is a legal remedy to alleviate the situation. It sounds like Mom has been through the mill and any addtional strain on her needs to be minimized.

Also, your location says you are in SW VA. If Mom is in VA, you need to call the Commissioner of the Revenue in your location and inquire about tax relief for the elderly. If you're not satisfied with the answer, call/write to Richmond.

This kind of stuff actually angers me, but I will refrain from the rant. If mom has supplemental insurance, and it is killing her, she might want to take a second look at whether or not she wants to keep it. What's the rationale? It's better to go into debt to a hospital than to a credit card. At least with a hospital, they will allow you to make payments based on income and not charge you interest. I know that where I am, Riverside Regional Medical Center will actually write off debts for the uninsured/underinsured. A family of 4 with an income of $40,000 per year can benefit from this. The debt to income ratio differs depending on the amount of people in the family or if it's an individual.

Also, see if Mom is eligible for any benefits other than SS. Call your local Council on Aging (or call Richmond). Call Social Services (that's not my ideal answer, but it's an option). See if Mom is eligible for any services. Don't hold your breath on that one; but you'll never know if you don't ask. She may be eligible for relief on utilities, medical, food stamps, phone, or who knows what - sorry I don't have the complete scoop on that part - the only thing I know is that food stamps are on some sort of plastic card.

Please, please seek legal advice. Gather as much info as you can and get Mom out from under this debt. I wish I were closer to you guys. But I'm in SE VA down near the Carolina border.
Let us know what sort of a resolution comes about. I know it won't be overnight. But, let us know. God Bless!

 

[island_fever]

sorry...I forgot to add that you should also look into eHealthInsurance.com

I found this in a Smart Money article

Should You Buy Private Health Insurance? - Spending - Deals - SmartMoney.com

 

[daylily]

Ceashels, yes the land is considered agricultural.

Island Fever, thanks for all the info! Our county has a tax relief program that is limited to taking off up to $150 per year. Mom applied in May but was denied because she owned too much land!!!

Mom hasn't put any of her health insurance on the credit card. She's been paying for that from her Social Security check. It was only Daddy's that was on it. Thanks for the links. I will read the articles and make the calls you suggested.

I very much appreciate everyone's advice here. I'm trying to get everything sorted out.

 

[daylily]

Just wanted you all to know that Mom was able to pay $500 on her tax bill last week!! She also has almost $200 in the "Grandmother's Parlor" Etsy account that the girls set up for her.

Some other things are in the works as well.