Question:
Dear Steve,
My 43 year old son has had 3 manic episodes this year and is finally on medication & realizing his life has turned upside down. He is living with us and in a daytime treatment center. In a manic phase he purchased an expensive 4 wheel drive vehicle and a travel trailer. He has debt to IRS and $1000 alimony payments. He lost his job because he was unable to function in it. He is on total disability for 3 months, perhaps it will be extended. Unsure at this time. He has insurance but has quite a lot medical expenses.
What can he do to get out of these debts? Is there any help for the mentally ill who run up debts?
Janis
Answer:
Dear Janis,
The least expensive solution that will produce the best results is going to be if he files bankruptcy. This will discharge his consumer debt.
I would also suggest you put a freeze on his credit reports to prevent access for future credit inquiry requests.
In my world it is not that uncommon to have mental illness result in problem debt. The manic phase of a bipolar episode is the most common time. Your son is not alone, click here to read these.
While you might be able to make an argument that he was mentally incapacitated at the time he entered into the purchase agreements, bankruptcy will be a cheaper and easier that will give him better legal protection moving forward. You might want to read How to Find a Great Bankruptcy Attorney.
If the IRS debt was more than three years old after he filed his returns, it is probably not dischargeable in the bankruptcy. You should talk to your tax preparer this year about if your son is eligible for the IRS disabled tax credit.
If you were able to run interference for your son for several years you could turn the car and trailer back in, they will come after him for the balance due but if he has no assets then they can sue him and attempt to garnish his wages but as long as he is disabled and unable to work, they won’t be able to. It’s a more painful route to take but there are options in case the bankruptcy attorney talks you out of an immediate bankruptcy to eliminate the truck and trailer debt.
Alimony debt is not dischargeable in bankruptcy. But again, getting payment on that will come back to if your son can work, is working, and is earning money.
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