Shownotes
How can the death of a spouse affect the surviving partner's financial stability and credit score, and what steps can be taken to mitigate these impacts?
We discuss financial challenges facing Ohioans aged 50 and over, with a specific focus on surviving spouses. Featuring consumer law attorney Laura Nesbitt, the episode focuses on the financial instability that can arise after the death of a spouse, emphasizing the importance of managing banks, bills, and credit scores effectively.
Laura highlights that accessing accounts often requires a death certificate, and autopay bills can become problematic without account access. Estate planning should extend beyond a will and power of attorney, incorporating detailed financial documentation to facilitate smoother transitions during crises. Technology aids like Monarch Money, Quicken, and password management tools can help manage finances and account access. Regular credit report checks from major agencies are recommended to monitor and manage accounts.
Addressing legal responsibilities, Laura advises against paying a deceased spouse's bills, except in joint account situations. She explains how nursing homes might wrongly bill family members and the need to verify any obligation to pay. Estates with assets or debts generally go through probate, allowing six months for creditors to file claims post-death. Informing credit bureaus of a spouse's death and freezing their Social Security number can prevent new debts and identity theft, while freezing one's own credit can be protective and temporary.
Laura discusses the burdens and stigmas of homeownership and bankruptcy. Full mortgage leverage can risk financial instability if the market drops, making Chapter 13 bankruptcy a viable solution for stripping second mortgage liens. She highlights that renting may be more economical for older individuals with no home equity.
The financial impact on surviving spouses can include reduced Social Security benefits and loss of additional income. Comprehensive financial information and family support are crucial, with open discussions about managing finances and knowing available resources. For families with dependents like grandchildren, seeking financial contributions from other household members is vital.
Laura emphasizes that people often delay considering bankruptcy despite its potential benefits, due to the credit industry's stigma. Bankruptcy can stop creditor contact and prevent further credit score damage. Suitability for bankruptcy depends on individual circumstances, with certain debts like student loans and recent tax debts being non-dischargeable.
Key Moments
00:00 Consumer law attorney, bankruptcy expert since 2009.
03:08 Importance of managing credit scores after spouse's death.
09:17 Utility bills can impact credit if reported.
12:40 Ensure personal account responsibility; avoid joint accounts.
13:24 Keep financial accounts separate to avoid issues.
16:32 Organize finances and passwords for estate planning.
22:07 Check credit reports quarterly to monitor accounts.
24:08 Verify responsibility before paying deceased spouse's bills.
27:42 Consider freezing credit, especially for security.
31:28 Research carefully before entering debt management programs.
35:47 Evaluate finances and debt; bankruptcy may help.
38:25 Chapter 13 bankruptcy can strip 2nd mortgages.
40:09 Older spouse survivor faces reduced income sources.
43:09 Generosity often leads to personal financial debt.
47:27 Merging firms for comprehensive tax and bankruptcy services.
49:00 In-house services streamline, avoid restarts, ensure continuity.
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Recorded in Studio C at 511 Studios. A production of Circle270Media Podcast Consultants.
Copyright 2024 Carol Ventresca and Brett Johnson
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The views and opinions expressed by the experts interviewed on this podcast are their own and do not necessarily reflect the views of the podcast hosts or any affiliated organizations. The information provided in these interviews is for general informational purposes only and should not be considered as professional advice. Listeners are encouraged to consult with qualified professionals for specific advice or information related to their individual circumstances. The podcast host and producers do not endorse or guarantee the accuracy, completeness, or reliability of any information provided by the experts interviewed. Listener discretion is advised.
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Listener Disclaimer
The views and opinions expressed by the experts interviewed on this podcast are their own and do not necessarily reflect the views of the podcast hosts or any affiliated organizations. The information provided in these interviews is for general informational purposes only and should not be considered as professional advice. Listeners are encouraged to consult with qualified professionals for specific advice or information related to their individual circumstances. The podcast host and producers do not endorse or guarantee the accuracy, completeness, or reliability of any information provided by the experts interviewed. Listener discretion is advised.
Transcripts
Looking forward our way podcast addresses today's critical issues affecting those 50 and over in Ohio. We focus on issues that affect our money and our neighborhoods. Our expert guests are here to provide the information and resources needed to address those challenges. Hi. This is Brett. We are looking forward our way from studio c in the 5 one one studios. That's just south of downtown in the Brewer District, downtown Columbus that is. Hey, Brett.
Brett Johnson [:Hey.
Carol Ventresca [:How's it going today?
Brett Johnson [:I had to catch my brother go I think
Carol Ventresca [:I kinda caught you off guard. Yeah. Yeah. So so today's, talk is gonna be a little different than what we've done in the past, and we've talked a lot about financial issues and legal issues. Well, this kinda comes together today. You know, financial stability can be so difficult to maintain in good times. You could be affected by unemployment, changes in your income or wages, changes in the number of hours you're working. But one situation came to to mind as I was sort of researching some things.
Carol Ventresca [:It's reported that a critical situation affecting individual financial credit scores occurs with the death of a spouse. You're thinking, like, why is that an issue? Well, the surviving spouse suddenly becomes tangled up in banks, bills, and bounced checks. But our expert guest is going to lead us through the issue and provide information and tips needed for those who are in those hardships. So we welcome Laura Nesbitt, a Central Ohio attorney and owner of Nesbitt Law Firm. Laura, thank you so much for coming today.
Laura Nesbitt [:Thank you for having me.
Brett Johnson [:Laura and I have known each other a long time and it's, in in a in a different world, not professionally, but just we worked with each other. So I'm really excited to have her on podcast. When we talked about this topic couple couple years ago, I knew she couldn't make it because of things going on in her world professionally. It's like, okay. Let's get this going though. So but but we know this is a difficult topic, but we've got to talk about it. You know, one that could save a survivor a lot of pain and difficulty. But let's hear a little bit about you first so we can set the stage of why you're here, why we consider you the expert, your journey to this area of the law, and and your legal practice.
Laura Nesbitt [:Well, thank you. Thank you for for having me today. I'm happy to be here and share this with your audience because it is a really important topic. And my background and legal experience is mainly dealing with consumer law, protection, and bankruptcy. I've been in practice specifically focusing on that since 2009, And, a majority of the the clients I help are for bankruptcy cases. I do try to provide information on my website, my social media to try to keep people out of bankruptcy, but sometimes that resort is really the most necessary. So clients always have questions about credit scores. They have questions about how to stay on a budget, what resources they can have going forward to make sure that the success that, we are seeking with getting out of debt is something that they can maintain for for the rest of their lives.
Laura Nesbitt [:So so I kind of have an understanding of the full realm of, anything from consumer rights, when it relates to dealing with creditors, or, you know, even within the bankruptcy realm of what creditors are allowed to do during and after bankruptcy. So talking today about, spouses and credit scores when when a spouse dies is something that is really important because people don't think about it. Having to deal with the death of a loved one is hard enough. And finances are not always top of mind, for people at that time. So to have this information now, before you're in the midst of a of a crisis, emotionally, to be able to have in the back of your head information and tips and resources that you can turn to when you're ready, you know, to to start looking at that and and dealing with that sooner than later. So you don't have this problem of your credit score going down or, you know, things coming up that were unexpected that you didn't budget for, hopefully will be helpful to all those who are listening.
Brett Johnson [:Yeah. Of any finances that you think about, you probably look at it from the standpoint. Okay. Do I have enough money to move forward? It's not that, oh, I'm gonna get, oh, I didn't realize that was out there. Start, oh, you know, that's where I think to handle those scenarios. Yeah. Right. Right.
Carol Ventresca [:And, Laura, one of the things that hit me when I was reading about this topic is death loss of income with the death of a spouse is bad for anybody. I mean, it's it can it can be traumatic. We've gone through years of women who hadn't been working and suddenly the working spouse is gone and all those kinds of issues. But what I noticed in the articles I was reading is that the older the survivor is, the more critical and the more difficult difficult it is to recover. They at their age or they may have a disability, it may preclude them from employment to make up that income, and it it really could lead to a financial disaster for that individual. What exactly does that drop in a credit score mean?
Laura Nesbitt [:So to be clear, I always tell my clients that a credit score indicates that you're being judged in a way. The score reflects something. And scores generally are indicative of games. And so you have to play the credit game correctly in order to have a good score. And if you fail at that game, if you make the wrong move, you do the wrong play at the wrong time, your score is going to be negatively affected. So when a score goes down, it's it can affect many things. Not just your ability to have credit, but it can affect the interest rates of the current credit accounts that you have. It can even affect things like insurance rates and anything where there is an underwriter or a process for being able to obtain a policy or a benefit from a third party.
Laura Nesbitt [:Life insurance sometimes is looking at credit scores. Car loan industry is definitely looking at your credit score. And when you're making larger purchases, a credit score and even a percentage point can greatly affect how much money you're spending in the end on that potential asset that you're seeking to purchase, with credit. So, a number of things can happen if a if a credit score goes down. But at the same time, in in playing the game correctly, you can increase your credit score. So tips that we're gonna go over today will help, your listeners to know if the score is going down. If I see it in a downward direction, why is that happening? And what can I do immediately and in the long term in order to ensure that my score stops the downward trend and starts evening out and moving back up?
Carol Ventresca [:And I that is so important. I was always amazed. We had a a a former guest expert come in and talk to us about banking issues, and, she was an expert in financial education. And the bottom line is, especially young folks don't understand exactly what a credit score is and what it's measuring. And if you don't understand that, then you can't really control it. So I recently paid off the mortgage of my house, and the big joke is my credit score goes down because I have less debt, quote, unquote. And you're like, seriously? So it's not a credit score isn't saying whether you are a good person or a bad person or you have a lot of money or no money. It's really saying how you are, as you said, playing that game with the accounts that you have.
Carol Ventresca [:But those older individuals who, again, have lost income and are suddenly have bills monthly bills due, and they can't pay those bills, that affects this that score. I it and not paying a bill, I think, affects it more so than a lot of things.
Laura Nesbitt [:Absolutely. And congratulations on paying off your mortgage. That's awesome. That's really great.
Brett Johnson [:Thank you.
Laura Nesbitt [:It's a big step in life.
Carol Ventresca [:It is. It is.
Laura Nesbitt [:So so yes and no as far as the bills do. It's funny. My husband, when we, put our finances together after we got married, I took over the finances. And that's one of the things that that we'll talk about is who who does the finances and how savvy is the other spouse, with those finances. So so I'm the bill payer. And when he was paying bills, I noticed that he was always paying late. And I said, you know, why are you paying these bills late? And he said, what do you mean? And I said, well, the due date's such and such, and you paid it a week later. And he said, oh, I thought that was a suggestion.
Laura Nesbitt [:Needless to say, that's why it took over paying the bills. It's not a suggestion. Now there are I've
Carol Ventresca [:never heard that excuse. Neither. It's almost like the dodging of my homework.
Brett Johnson [:Do you like it? I know. I I but yeah. It's not gonna work, is it? No. Yeah.
Carol Ventresca [:Good for him.
Brett Johnson [:Yeah. Yeah. Yeah.
Laura Nesbitt [:So so necessarily not a suggestion. But at the same time, there are priorities that I would say if if you're having a money crunch, as far as paying bills. Because some bills really aren't reporting on your credit report. Things like consumer bills like your gas and electric bill, the threat there is that they'll shut them off, not necessarily that they'll report. Now if the it goes delinquent, it's shut off, and it and the accounts defunct for so long, it will likely be sold to collections and that collections company might report. You can also request, AEP sometimes or one of your providers for utilities to start reporting on your credit report, your monthly payments in order to build credit. But you've got to realize that's a 2 edged sword because if you fall behind on 1 month, then that's gonna report negatively and then you just shot yourself in the foot. Well, here, show that I'm not paying this on time and my creditors won't like this and then my score will go down.
Laura Nesbitt [:So so you gotta be careful with what's reporting, knowing what's on your credit report, and and making sure that at least the bills that are on your credit report are being paid on time. And if you have a crunch, seek assistance because there are programs out there especially for older individuals, that utility providers have to cap or, to budget the utility costs or, you know, one time assistance sometimes is available if you fell behind and you can't catch up because you're on a limited or fixed income.
Carol Ventresca [:Right. And, you know, also a plug to our, our partners at Central Ohio Area Agency on Aging because they have a fund for older adults who need a onetime emergency fund to do just that, pay a mortgage, pay the taxes, pay a utility, that kind of thing. So there are resources out there. So that's a good point. Thank you.
Brett Johnson [:Yeah. So let's go with that, you know, couple splitting the responsibilities of of, you know, paying the bills or, you know, at least it's getting done. You know, that sort of thing. So, in in your eyes, how far should they go? I mean, what are the consequences when a spouse maintains accounts under their own name? I mean, to that extreme or, you know, create debt without letting them know, sorts of things. Obviously, that sounds bad already saying it out loud, but maybe even going to the point of of, you know, I I've heard situations a spouse maintaining under one name, and I I guess I never understood that situation but it could have been strategic. I I have no idea. I didn't dig any deeper but kinda go over those scenarios I guess because I know they exist.
Laura Nesbitt [:Sure. Absolutely. And that's a pretty loaded question. So I will kind of split that up I know what it is. Yeah. Exactly.
Brett Johnson [:Break it down. Yeah. Please.
Laura Nesbitt [:So so first and foremost, hopefully, you have a spouse you can trust. Because if you don't, it certainly can lead to financial abuse and, it can affect the others mental health, financial health, all of the above. So let's go with we are trusting our spouse and, if there is a lack of knowledge from what accounts are out there, what's happening, it's because there's just a lack of communication, I would say. And so I would say, first and foremost, there are usually, in my experience with clients, 2 types of couples. One that's kind of like my household works. The one person is familiar with all of the accounts, how to pay the accounts, where to pay the accounts, when to pay the accounts. And the other one is familiar usually just with what money flows in and out. They see it happening.
Laura Nesbitt [:They think, you know, they they know everything's okay. The problem that you mentioned kinda comes in when the spouse who's tasked with that isn't doing the tasks. And that can be very difficult, especially if that spouse is paying accounts that are in the other spouse's name because it's affecting the other spouse and not necessarily the paying spouse. So they may have less of an interest or less of a a priority to make sure that the other accounts are paid. So so that can lead to problems. So I would say always know what accounts are out there in your name, 1st and foremost. Even if you're not the one handling them, if they're in your name, you should at least be looking at the statements and making sure that that account is getting paid. For joint accounts, first of all, I don't ever recommend them.
Laura Nesbitt [:If you can have just your own account, that's what I would recommend. Because putting your credit together in any way shape or form is usually not helpful at all, and usually causes more harm when the account falls behind or there's an issue with the account. It's just on one spouse and not on both. So at least you're keeping the other party safe. So I would always say keep all accounts separate if at all possible, regardless of who's paying them. And then as far as, just in general, how to go about splitting the bills, the other way that a couple could do it is you pay the mortgage, I'll pay the insurance and I'll pay for all the gas and, you know, whatever it is, whatever utilities they're splitting, some couples do it that way and they have their finances completely separate. And that's good and that's bad too. And it works for some and it doesn't work for others.
Laura Nesbitt [:And I always find that regardless of which category you find your your situation in, you can't imagine it being the other way. You don't understand how people split their expenses and how do you keep track of all this. And the others, you know, don't understand.
Carol Ventresca [:Well, how
Laura Nesbitt [:can you just put all your money together? Where do you have your own money? So so having that discussion, I suppose, about how you're going to handle that is helpful just so you know you're on the same page with your spouse. Because you certainly don't wanna be in a position where you think one party is doing one thing or all of the things and they're not.
Brett Johnson [:Right.
Laura Nesbitt [:Or or the other way around where, you know, you're splitting things and all of a sudden electricity's off because your spouse didn't pay the bill that that they're tasked with paying. So even if you're splitting bills or putting things together, it's always good to have a handle on what all is out there that is being paid for the household.
Carol Ventresca [:One of one of the things that that I, again, I saw in reading on this topic was that a spouse had a an account with only their name on it, and that account was tied to some automatic bill paying. And so when that person died, then the then the surviving spouse couldn't get into that account. And so couldn't get to those bills didn't realize those bills weren't being paid because they didn't have access to those funds. Yeah. So it it it can be really complicated.
Laura Nesbitt [:That's that's very true. And that happens more frequently than we would like to have happen. And it's because of the privacy and access to that account that the the creditor can't provide without certain legal documentation. So if when your spouse dies, one of the first things you're gonna need is a death certificate. And that takes time. I mean, that does take sometimes weeks, to get. And so until that happens, you're kinda stuck in a in a frozen position as far as paying bills, receiving bills, or just having money come out of your account that you're like, why is this happening? It must be on autopay, but I don't know how to change this. And then you're faced with, do I close this bank account and have to reset everything or what else can I do? So there is modern technology, that's helpful like automatic bill pay, online accounts, things like that.
Laura Nesbitt [:But it's also not helpful because if you all of a sudden can't get into your spouse's email and there's only access online to the account because they don't have paper billing statements, You're not sure what's happening. So a little bit of an aside, but an important aside is in a state planning when you're creating your will and your last your advanced directives for last will and testament, healthcare power of attorney, living will, things like that. A good attorney will go through more than just those things and talk about finances and, you know, maybe creating either, you know, a simple excel spreadsheet for what's all out there on a monthly basis or using apps like, Monarch Money, Quicken, You Need A Budget. Things that keep track of your finances in one place so that you can know exactly what's in that account or what is being tracked by that app. And if it's in there, at least you know, okay, AEP, this is, you know, what's happening with this account. Here's how to contact them. Here's the information, customer service, so on and so forth. So, yeah, you could certainly use things like that for that purpose, but it would be truly helpful if especially with that one payer household where, for instance, like me, I'm paying all the bills and I know all the passwords and I wouldn't know where all the accounts are, to have that password key where it's an app that you simply type in a password key and your spouse has access to it and they can get into everything just with that one thing.
Laura Nesbitt [:They don't need to know much. I also found recently and this is really cool, it's called Scribe How and it's an app that you can basically capture your screen on a computer as you're going through and doing something, and then keep it and save it. So how to pay the a e p account? You could do a scribe how. And you start with, you know, Google and go to a e p and go here and go here and it creates links and it shows this. And if you type in a password, you can change it. So you can say the password is this. And so your spouse can kind of follow it like a tutorial if they, you know, if you're out of the country or, you know Yeah. God forbid if they die, to know how to pay the critical things so that you have electricity, you have Internet, you have, you know, hot water.
Laura Nesbitt [:And then, you know, when the death certificate comes, let's deal with the other things maybe. Because credit card cycle on a 30 day basis and so do all bills. But generally, you want to make sure that while you're trying to stay current, you're paying the critical things first. So And
Carol Ventresca [:and you said it was scribe, h o w? Scribe how?
Laura Nesbitt [:Yes. Scribe.com? I think so. Yeah. Yeah. If you Google scribe how, you'll find it. And there's a free, it's free if you do less than, I think, 4 a month maybe. And if you wanna pay for it, it's probably pretty affordable. But I would say, you know, having that free account and doing 4 a month, that's a pretty lofty goal if you haven't created anything like that before for your spouse.
Brett Johnson [:Right.
Laura Nesbitt [:Just show them how to look up the mortgage balance, how to, you know, pay the electric bill, how to get into my email if I'm not here anymore. You know, the things that if you think about if you sit down and really think about, if I'm not here tomorrow, what does my spouse really need to know?
Carol Ventresca [:And and that this is really leading right into my next question was, you know, how do you do all this documentation? It and it's important not we're we're specifically discussing spouses, but it could be you have a guardian who's taking care of an older person's estate or accounts and things. Or for somebody like me who's not married, there's who is the executor. So there are people there don't think of it only in terms of a spouse, but think in terms of your children or other person who is involved in your accounts that you need to have all the information someplace for them and maybe depending on who they are, you filter some of that information.
Laura Nesbitt [:Yes. Yes. Actual actually, that's that's right. Because it's not just anyone that's married. You're exactly right. It's it's anyone that is going to come after you and try to pick up your affairs for you and either close things out or continue certain things.
Carol Ventresca [:Right. And and they can't assume that because they have a password, they're allowed to do something to the account.
Laura Nesbitt [:That's a very good point. That yes. So that so if you have a a password to AEP, you don't wanna go in there and, you know, let's say that a spouse passes and you're like, okay. Well, this account was in my name, but my spouse has now passed. I'm gonna put it in his name and then not pay it because no no problem. He's not there. But things like just paying the account and and accessing it to just pay, I think would probably not be a problem. That's really what we're talking about.
Laura Nesbitt [:Not changing things, not charging new charges on accounts that aren't in your name after a person has passed. Yeah. Those are all big no no's. You can't assume somebody else's role. But making sure that the account is paid if you're if you're looking for information on how to do that that that probably would be okay.
Brett Johnson [:Well, anything tricky that you do is gonna have a time stamp on when you changed it.
Carol Ventresca [:That's right.
Brett Johnson [:Obviously, you know, you logged in at a certain time. It's like, wait a minute. Your spouse was the owner up until then? And, yeah, that sort of thing. It sounds as though if I'm hearing you right it it's communication. Sit down and talk. Whether it's spouse to spouse or that third party maybe that's, you know, this, the trusted daughter, daughter-in-law or you know it's usually the daughter and daughter-in-law. It tends to be that sort of thing. Is is that what you're saying basically?
Laura Nesbitt [:It's communication and it's also knowledge because you're not gonna know where to start unless you have a tidbit of information. And so one of the things that you probably wanna do on a quarterly basis is get a credit report for it's free at annualcreditreport.com to pull a report, from each of the, 3 major credit reporting entities once a year. So if you pull Equifax in March and then you pull TransUnion in, let's say, July, and then you're gonna pull another one in November from, Experian. And so you have all 3 of them, and so you have a check at least every quarter on what is going on with your credit, what accounts are in your name, things like that. And so that's always a good place to start. If your spouse passes, you know, well, these are the accounts that I know I need to pay. Even though he was paying them, what do I need to do? How do I need to access them? Because your credit report will have the contact information and phone number for that creditor. And you could simply say, hey.
Laura Nesbitt [:I have a I have a Amex card out there. I don't know how to pay my bill. My spouse just passed. This account is in my name. How do I deal with this? You don't necessarily have to worry about your spouse's AmEx. And that's why I'm saying a joint account is probably not helpful and I never recommend it. Because if it is joint and your spouse has passed and he's been paying it, now you need to go figure out how to pay it. Whereas, if it was just in his name, hey, that's his estate's problem.
Laura Nesbitt [:That's not your problem anymore. You don't want to pay. And some people don't understand this. You do not want to pay your deceased spouse's bills any longer if they're not, you know, the utility staying on in your household. If it's a Amex, if it's a credit card of any kind, if it's an old medical bill that you weren't a responsible party for, you don't need to pay that. Even nursing homes sometimes will bill you for your spouse's care when they may not be able to do that. When somebody checks into a nursing home, they sometimes request a responsible party or guarantee from the spouse that the spouse is gonna pay. But that doesn't always get signed.
Laura Nesbitt [:Sometimes the paperwork they forgot. Or sometimes there wasn't a spouse. Right? And now they're billing a child or somebody that didn't guarantee the payment, but they know well, you know, Junior was always here. And we know Junior's phone number and address, and we're gonna send Junior this bill and sure, Junior will pay it. And they don't have to. So I would say anything that's coming in from your deceased spouse's, bills that are just in his name, and they're now asking you to pay. You wanna do a double check and make sure that you're actually responsible because you don't wanna waste your money, especially if you're on a limited income, paying something that you really aren't required to pay.
Brett Johnson [:Beyond beyond the basics of electric, that sort of thing. Yeah. Okay.
Carol Ventresca [:Well, and that's I had heard through a friend who went into a nursing home that she couldn't be admitted until they agreed to pay the bill. Somebody was going to pay that bill. They were not gonna have that happen. So you have to be really careful and read all those little fine prints. To to piggyback on what Brett was asking too, all of these issues could create, a situation in which the person's estate ends up in probate. Is that correct?
Laura Nesbitt [:Yes. If there are assets or debts, I suppose, then generally, an estate will need to be probated. There are a cert I'm not an expert on probate estates, but there are certain in Ohio. There are certain exemptions, like one vehicle can be transferred outside of probate. Usually, if you have a house joint tenancy with right to survivorship, that's not a probatable asset because it's already in your deed that when this person dies, you get the house. You just simply file the death certificate and notice of death and you transfer it to the surviving spouse. And I'll add to that creditors of a probate estate. So the person who's passed owes money to Amex, let's go with again.
Laura Nesbitt [:The creditor has 6 months to file a claim against the probate estate after death or they're out of luck. They don't get paid. So if there's not a sometimes a strategy for a probate attorneys is let's hold off on opening the estate until 6 months and a day, and then no one's gonna file a claim. Yeah. Because probate can be opened by a creditor, if they do want paid. They they'll rush and and open a probate estate to make sure that they get their claim in so that if there is one that's going to go forward, that they can get paid out of the assets of the estate.
Carol Ventresca [:I have a I have an off the off the rail question that just it just hit me. I went through this when my parents passed. We thought there was a possibility that my father's Social Security number had been stolen. So one of the things I did was went to the credit bureau and had both of their Social Security numbers locked down.
Laura Nesbitt [:Yes. That's really important. I would absolutely, inform the credit bureaus of the person's death, so that they know that there shouldn't be any new debt issued in their name. But if they're past, you know, it's I would just say that if they file a claim, it was a fraudulent claim. You can you can deal with that in probate. But, yeah, if if the person is still living, absolutely. Especially if they're a vulnerable older adult, you do wanna have their credit locked down. You don't want any new accounts being created fraudulently in their name, without knowledge of whoever's taking care of their money or if it's them still trying to take care of their finances.
Laura Nesbitt [:It's really easy these days. I I I feel like everyone's Social Security number is on the Internet 3 or 5 times by now.
Brett Johnson [:I was just saying I got a notification that they have some scrape or whatever. I think it was Experian had said, yeah, we found your social on on the dark web.
Carol Ventresca [:Oh, yeah.
Brett Johnson [:You know, and I go, well, okay. Is this a sign I should probably just go freeze? Everything's like, okay. I mean, I saw it for a reason. That's where things like and and to that point it's really easy to do just creating the login information. Absolutely. Freezing thaw that sort of thing. So just remember that it is frozen that when it you know depending on your age what if you're going to go open up another credit card or you know open up that whole or you know reopen that home equity line or something like that that it's gonna block it but at the same time it's like it felt good to do it you know but I know if I were 30 years younger probably not I mean because I'm going to be going through a lot more home stuff, that sort of thing. But now, yeah, I probably can have it frozen.
Carol Ventresca [:Right. I'm okay. Right. Well and and too, because I was in on the recent hack here in Columbus, actually, in plus that plus the National Data Center hack. And and I'm I think those are the, like, 9th 10th hacks I've been in. So my accounts have been frozen down for years. But what I noticed was that if you freeze in 1, it will ask you, do you want us to send this closed down or freeze down to the others? And it does, and I got notified that it did. So it it's really not hard to freeze your credit.
Carol Ventresca [:It's a little problematic if you wanna get a new credit card and you gotta unfreeze
Brett Johnson [:it. Sure.
Carol Ventresca [:But they'll let you do that on a sort of a a time it so that it doesn't stay open very long. The other thing oh, that when I paid my mortgage, I had gotten some information about people trying to take over the deed of your house.
Brett Johnson [:Really?
Carol Ventresca [:And I talked to the county recorder's office, and you can go in and every like, every time you pay your taxes, you can go in and check the recorder's information online about your house to make sure it's still under your name.
Laura Nesbitt [:Wow. I hadn't heard about that. So that's that's a new level of fraud there.
Carol Ventresca [:Because when you've got a when you've got a mortgage, it's held in the more in the mortgage company's name per se. And I'm like, okay. Well, now it's in mine, and I don't have that sort of second level of protection with the mortgage company. What do I do? And it was when I called and asked them about this, they're like, oh, that's really a good point. I don't think they'd thought of it. But, you know, the information's online, so you're good.
Brett Johnson [:You were on the cutting edge of fraud right there, weren't you? Yeah.
Carol Ventresca [:Well, you know, as I said, I'm into my 10 pack. So, you know, you you gotta figure out what's going on. And then I'm an older person, so I'm trying to make sure all my accounts
Brett Johnson [:are open.
Carol Ventresca [:So so so, Laura, you mentioned bankruptcy earlier. You know, it it's drastic. You don't want you people are people of my generation see that as a stigma. They don't wanna say that they couldn't pay their bills. But, really, what are the key issues that you identify to indicate that bankruptcy is really necessary? I'm sure there's lots of stuff you go through before you get to that point.
Laura Nesbitt [:Yeah. Unfortunately, a lot of people wait so long that they know and I know upon first conversation that a bankruptcy is definitely necessary. Now sometimes I feel like that stigma of bankruptcy is somewhat created by the credit industry. They don't want you to file bankruptcy. So they make it sound like it's terrible. But really the terrible thing is staying in the hole, and not having the freedom of having no debt to deal with. So I feel like I always ask clients, if you feel like you cannot pay your debt off within 12 months, you probably wanna consider some sort of debt management plan. Whether it's, you know, snowballing your debt and figuring out how to do that and, you know, budgeting tighter so you have more money to be able to pay those credit cards down, or filing bankruptcy.
Laura Nesbitt [:And both of those things are helpful depending on the situation. I don't usually recommend that people enter what's called a debt management plan, like a debt settlement program, unless they're very careful and do their research. Because it's sometimes a, industry that lacks regulation. Or I guess not regulation more than oversight. So there are lots of regulations dealing with the debt management industry, but the oversight is difficult for the federal government because it's really a federal government rule that keeps them in check. And so I actually work, for a law firm monitoring their debt management program. That's one of the only legit ones that I feel like is out there, and it's with DebtBlue. But really what you should be realizing and noticing is that you are not paying fees to the debt management program until they create a success full settlement for you.
Laura Nesbitt [:If they're taking fees out on a monthly basis and you haven't yet settled anything, that's a big no no and that's a big red flag. There's a major class action going on right now with one of the one of those programs because that's exactly what they were doing. Now there may be tangential services you're gonna sign up for that are paid for and that will come out monthly, like, if you want a lawyer, if you get sued because that's a possibility while you're trying to settle debt is that you could get sued. You're not protected by bankruptcy. But, you know, paying for a lawyer is one thing, but paying just the program to take your money and hold it until you get a settlement is not something that they're allowed to do.
Carol Ventresca [:So the the the big check here is don't believe what is on TV on the commercials.
Laura Nesbitt [:Yes. Exactly.
Carol Ventresca [:Exactly. Bank between debt management and tax debt management. Those those TV stations are making a lot of money on those ads.
Laura Nesbitt [:They are. And they're gonna have you sign a contract, and it's a legally binding agreement. You wanna read through it. And you wanna see because it's gonna tell you exactly how you're paying, what you're paying, and and what the program is going to do for you. So don't just sign, sign, sign, and let's go. You really do wanna read through that. And so on the other hand, bankruptcy is immediately going to protect the person who's in debt. So instead of waiting and working things out directly with the creditor, the person who's filing bankruptcy is saying, I have this level of federal protection under the bankruptcy code in Title 11.
Laura Nesbitt [:And you can't call me, you can't bill me, you can't report on my credit report any longer. So as soon as a case is filed, the credit report has to start reflecting 0 balance or in bankruptcy or some sort of, change so that it's not creating a negative remark going forward. Because that's really what's hurting a person's score when they're in debt. One of the factors is each month they don't pay or pay late, it's a delinquency remark. And each delinquency remark on each account is gonna add up really quick and your score is gonna tank. So that's one thing that bankruptcy does that's very helpful. So yes, it's drastic but it's drastically helpful too, to a lot of people. I don't see a lot of people walking into my office.
Laura Nesbitt [:I have seen it. But usually there's some mental issue going on that they don't quite understand their finances and they probably need, you know, somebody else to help them in life. Because people don't walk into my office with $5,000 in debt. They just don't. They're they're in over their head and they know it. They can't pay their bills. They're borrowing, debt to pay debt. You know, those types of things are are big red flags.
Laura Nesbitt [:If you have to go borrow money just to be able to pay your bills, you should probably be talking to a bankruptcy attorney about whether that solution is correct for you in your circumstance.
Carol Ventresca [:Is there a threshold, a low threshold of when you you're pretty sure bankruptcy is going to be the next step in terms of debt amount?
Laura Nesbitt [:It's no. Because it's so different. So if somebody has an income a fixed income of $1900 a month, $10,000 is a lot of debt. They're never gonna pay that off. Whereas, you know, I have a client clients that are making 200,000 and still need to file bankruptcy because they're in a pickle in a in a different way. Right? They may be able to pay off all of their debt in the next 60 months, but they can't do it right now with the way the creditors are asking for it and jacking up their interest rates and things like that. So so there's really not a threshold level. You can file debt with a doll you can file bankruptcy with a dollar in debt.
Laura Nesbitt [:Probably not gonna do it. But, it's really about kind of the comparison of how much money you have now that you're earning, future earning capacity, and then what your debt profile looks like. Do you have secured debt, unsecured debt, tax debt? You know, what is your debt picture look like, and how can bankruptcy fix or not fix that? Because there are things that don't get fixed in bankruptcy like Right. Student loans are excluded unless you file a separate adversary complaint to seek discharge. Tax debts that are newer can be non dischargeable. So sometimes you can have a lot of debt and still really not want a bankruptcy because it's not fixing that issue that you have. But I will tell you that a bankruptcy attorney is probably the most well versed person even if you don't wanna file bankruptcy to tell you what your options are.
Carol Ventresca [:And, you know, people always, as I said, there was a lot of stigma, at least in my generation, on on bankruptcy. But what I saw in the early 2000 when the recession hit, housing market dropped. People had pretty much put themselves out there with large house pay of large house payments, large homes, and then suddenly the house was worth half what it they owed, and they their job collapsed and the market collapsed. And it took 10, 12, 15 years for people to dig out of those issues, whether they even ever dug out of the bankrupt I mean, you're stuck with a house that you can't afford, but nobody else can afford to buy it either. So what do you do? And then, 2, when the pandemic hit, how many people lost jobs? It's not because they overspend. It was that, you know, income was suddenly gone.
Laura Nesbitt [:Right. Exactly. And it's really hard to adjust a budget so quickly sometimes because you do have those fixed expenses or, you know, you thought you could pay the credit card and now you can't because you've lost income. So anytime you lose a job, it's probably helpful to speak with a financial, representative if you have a financial planner. You know, do I have certain assets I can convert for just, you know, short period of time without a tax consequence? What do I do here? And if they're say and if your financial planner is saying, you have you don't have enough to pay this, then you probably, again, wanna talk to somebody in the bankruptcy realm. But, yes, the the early 2000, that was the the big mortgage crisis. And bankruptcy was crucial in fixing that actually because what we call them were 80 20 loans. Where they would loan 80% and then the other sub mortgage lender, the second mortgage would agree to take the other 20 on.
Laura Nesbitt [:And you've got a 100% leverage house and yes. If the mortgage if the I'm sorry. If the market goes down and your house is worth less, now what do you do? Well, bankruptcy came in and there's part of the code that fixes that that says if there's no if there's not a penny of security and equity against this loan, you can strip it. So we were stripping 2nd mortgage liens left and right. It's a chapter 13 option so it is a repayment plan that almost every third case that walked into my office would would be an 80 20 loan and we would strip the 2nd mortgage and at least try to get some equity back. Sometimes there still wouldn't be equity. And that's when you start talking about do you really want this house? Because in bankruptcy, you can surrender things and get out of the debt and get rid of the asset or the asset that's not really so much of an asset anymore. So, yeah.
Laura Nesbitt [:That was it it was a big time for bankruptcy
Carol Ventresca [:as well. Equity. You could walk away from it. You're not losing really losing anything.
Laura Nesbitt [:Right. Exactly. And people, you know, just like people you feel like have the stigma of bankruptcy. There's this a reverse stigma of homeownership being, like, the ultimate, you know, goal for everyone in America. And sometimes I talk to people and I'm like, why do you wanna own a home? Because it's expensive. I mean, there's upkeep, repairs, taxes, things like that. And yes, your rent can go up if you're renting, but you're also not mowing the lawn, you're not fixing the sink, you're not, you know, you're not doing a lot of things. And the cost of home ownership can be beneficial if you're younger.
Laura Nesbitt [:But for the older folk out there that either don't own a home or have no equity in a home and it's a burden at this point, maybe you do look at surrendering the house and moving. If if it if you're capable of doing that and if your family can assist you. I mean, it you know, there are some physical limitations to moving sometimes and finding the right place out there. But homeownership can be good for some and and really not good for others.
Carol Ventresca [:And and as we were getting we go back to our original thought about an older spouse survivor, who loses income, they may have had 2 Social Security checks. Now it's down to 1. Even if it's the larger one, it's still only 1 compared to 2. You could lose pensions that are that don't go past the life of the person. There there could be the the spouse who passed could have had a part time job that was bringing in income. I mean, there are lots of those kinds of things and so, have I think the I think the bottom line here is have as much information as you could get, use all the resources that you can find, make sure you've got your family helping you, family, friends, people in in the know helping you and asking a lot of questions.
Laura Nesbitt [:Yes. And and hopefully, you know, like you said, the answers to the questions that you can't ask once your spouse has passed. So if it if you take anything away from this, I hope that your listeners today have at least one conversation with their spouse about finances. And do I know what's out there? And do you know what's out there? Or, you know, if you're like me dealing with it all, go home and say, I just want you to know about these things. And here's how I'm gonna show you so you know later, for whatever purpose you need it for. To make sure that while you're dealing with a a big emotional trauma, you don't have this other piece of baggage that, you know, you're dealing with.
Carol Ventresca [:Good. Great point. Thank you.
Brett Johnson [:Yeah. And so far we've been talking about that, you know, you have the the 2 spouses, you you lose 1 spouse and then you're alone. But there are other scenarios where that family unit had other dependents, could be a a, you know, a generation to generation below, like grandparents taking care of grandkids. And you have one spouse left with grandma's left or grandpa's left, that sort of thing. Are there resources that a survivor in that scenario could utilize to kinda help them get through? Because they're basically taking care of a family. It's not just themselves now. It's that I have 5 people depending we it's in our home.
Laura Nesbitt [:Mhmm.
Brett Johnson [:That's a whole different scenario.
Laura Nesbitt [:Yeah. Yeah. It certainly is. And, you know, if you're if you're you know, you have the children and grandchildren and all of these, you know, whatever the mixed family is that you're taking care of and all of a sudden taking care of on your own. You know, I always think that when you have those scenarios, there's always something that you're leaving on the table if you will. There's always somebody that could be contributing in some way that you just haven't asked yet and they would be happy to or maybe not happy, but willing to, let's say, sometimes.
Brett Johnson [:Knowing of the situation.
Laura Nesbitt [:Knowing of the sit like, hey, you know, this you know what happened and this is what my situation is and, you know, since you're living with me and your kids are living with me, do you think that and you're working and I haven't asked you to pay rent, do you think you can start contributing rent now?
Brett Johnson [:And it sounds like it sounds like you've asked that question of your client. Yeah. Absolutely. Just the way you're taking it. Okay.
Laura Nesbitt [:Yes. You know, and that's a lot of sometimes the reason why people are in debt is they're too generous. And they're taking care of others that they have no legal responsibility. You don't take care of your 30 year old daughter, you know, necessarily. But you're used to it and you have been and then her kids move in or, you know, maybe she was not on her feet at one point and then it's just become the norm and and you probably have benefits like it. You love your loved ones and you want them close, so why not stay here and that type of thing. And, you know, I don't wanna take your money or maybe you're the caretaker for the grandchildren and even though they don't live with you, you haven't ever asked for a penny for their care. But now all of a sudden going to McDonald's and buying that $10 for the child and you know, driving them to the baseball game is is difficult, but you wanna keep doing it.
Laura Nesbitt [:I think communicating with that loved one, I really still wanna do this, but I feel that perhaps if you could help with the transportation and food costs that I have been contributing out of my pocket in the past, that would be helpful to me being able to continue to do this thing that I like to do for you.
Brett Johnson [:Yeah. Yeah. No. That's good. That's good. I I I I hadn't thought about that scenario. It's like, ask the family member if if if they're available, you know, to do so, depending on the scenario of why that mixed family exists. Yeah.
Carol Ventresca [:Right. Well, and as you said, it an individual could lose a spouse. Their their child and grandchildren are in homes, they could also have their parents still living. Oh gosh. Yeah. Or in a nursing home or needing and and there's nothing cheap about caregiving. You may be giving your time, but there is always a lot of cost to caregiving. Yeah.
Carol Ventresca [:So, yeah, there's there's lots going on there. So, Laura, this is a lot of information for us to take in in a in a short period of time, and we really appreciate you joining us. We always ask our guests if they have any last words of wisdom for the audience.
Laura Nesbitt [:I would I would just say to be open to talking with your spouse and and with others, with with professionals, with community members, with resources because there and you could do a whole podcast on this. But there are so many resources out there that go untapped because people don't know about them. Caretakers who could be receiving the check that since you're foregoing the home health care nurse that you could be being paid for that service from the government. Things like that. So I would always say keep your, keep your knowledge source constantly replenished. Always be looking for information and knowledge on how to help yourself and how to help others financially because everyone that is struggling, there's a solution for it. You just have to seek it. Sometimes people aren't just going to hand you something.
Laura Nesbitt [:But if you go looking for what you need, usually, you're gonna find it.
Brett Johnson [:Yeah. Yeah. Well, before we end though, let's talk about some really great news happening with you Yeah.
Laura Nesbitt [:With the
Brett Johnson [:law firm instead. So give us the lay of the land, what's going on, especially if someone is a listener is thinking about contacting you, to to know is, like, oh, this is cool stuff going on with you.
Laura Nesbitt [:Yeah. Well, thank you very much. So I've been working on this since probably April. I have had my own practice at Nesbitt Law Firm since 2013, and I started it to help others and to make sure that they were getting the absolute best financial advice for them, related to how to deal with debt creditors, things like that. And law is very specific. You know, your personal injury attorney is likely not gonna be your divorce attorney and is also not gonna be your criminal defense attorney. We all have our niches, because for example, bankruptcy which is my focus area, is a lot of reading if you wanna read through the code. Right? It's a huge code.
Laura Nesbitt [:And and their state law and property law and things that come into that. So really focusing on one thing is what you have to do in order to really be good at it. So as it relates to that, a lot of my clients have tax issues. And as I said earlier, taxes can't always be dealt with in bankruptcy. They're not dischargeable or it's not the best forum to seek help with tax debt. But it's a debt, and sometimes it's a huge debt for some of my clients that also need bankruptcy. So I really wanted to partner with a law firm that was like me, but on the tax world. That new tax and specialized in tax and does it well and does and and kind of the white glove treatment for the client.
Laura Nesbitt [:Because that's the way I treat my clients, and I wanted a firm that did that for theirs, but in the tax realm. And so I found, Tax Workout Group that's a national tax firm that helps their clients either with tax compliance, like filing returns, getting books together, bookkeeping, making sure they're compliant with all the tax laws and filings. Or if they, oops, messed up and now they're in tax debt, which is maybe where they contacted me and I'm referring them out to them, that that they can help them there with either an offer and compromise or strategies for reducing tax attributes, and filing an amended return or, you know, whatever the case may be waiting out a statutory period and then filing bankruptcy. So so we are now merging because referring things back and forth is great, but the kick the continuity for the client was lacking. And so now we're merging into a tax workout group. And although it sounds like just a tax firm, we do bankruptcy there. I'm their bankruptcy person. We're hiring a bunch of new paralegals and attorneys because we're opening 5 offices here in Ohio.
Laura Nesbitt [:We have offices in Florida. We are getting ready to open, California and New York. So so we're really growing pretty quickly, because of the tax practice and the bankruptcy practice combined. Our clients are having that same continuity and familiarity with who's helping them, who's on their team, and knowing that we know their file front to back, not only for debts that we can discharge a bankruptcy, but debts that we have to deal with outside of bankruptcy or in some other way.
Brett Johnson [:Yeah. That sounds really positive that it's everything's in house Yes. Rather than saying, okay, I'm gonna refer you over and then you have to start all over again almost, you know, in regards to the conversation. No. That's it sounds fantastic. Yeah. And I can imagine the debt tax and financial kind of hand in hand to it because there are a lot of oops. It's like, didn't know that was coming sort of thing.
Brett Johnson [:Right. At least then it's 1st 1st year, 2 years after spouse passes. Yeah. To know the cycle of it. Yeah.
Carol Ventresca [:Well, congratulations on this great move.
Laura Nesbitt [:Yeah. Thank you. Super.
Brett Johnson [:Good. Thank you very much. Well, thanks again to our guest expert, attorney law, Laura Nesbitt, owner of Nesbitt Law Firm, for joining us today. Listeners, thank you for joining us. You'll find the contact information and resources we discussed in the podcast show notes and on our website at looking forward our way.com. And we're looking forward to hearing your feedback on this or any of our other podcast episodes.
