Financial Literacy and Saying “No”

Retired old couple planning their investments with a financial consultantAttorneys serving Clients who call the Legal Hotline for Michigan Seniors listen to many accounts of seniors dealing with a variety of financial issues.  It is disheartening to hear of seniors who have worked hard all their lives and are now living on a fixed income trying to budget all their financial liabilities.

Here are some simple financial “No-No’s” which may minimize your financial burdens:

1). Do not co-signing on a loan application. We speak to many seniors who have graciously consented to co-signing on family members’ loan applications, such as auto purchase loans or student loans. These seniors are calling the Hotline because the borrower has failed to make payments on the loan and the lender is seeking payment on the debt from the co-signer. While the desire to help family members is understandable, be aware that the co-signer is obligated to pay the debt if the borrower fails to make payments. The credit applicant’s need for a co-signer is most likely because of the applicant’s poor credit rating, unemployment, or perhaps low income. Such circumstances increases the likelihood that the primary borrower may default on the loan. When such a default occurs, the lender will seek payment from the party who co-signed the loan. The co-signer’s credit rating can be adversely affected in the event of a default, plus there can be more serious consequences as well. If the loan is not paid, the creditors can also file a lawsuit against the co-signer and obtain a judgment for the amount owed, which may also include late fees and court costs. After the lender obtains the judgment, collection methods such as garnishment of bank accounts and execution of orders to seize real or personal property can be used against the co-signer. If you find yourself in this circumstance, please call the Legal Hotline for Michigan Seniors for advice and information.

2). Do not let friends or family members have access to your debit cards, credit cards, or bank accounts without proper legal authority. Seniors also call the Hotline telling attorneys about giving a family member or friend permission to use a credit card or debit card for a limited purpose; however, the senior is most likely calling the Hotline because the recipient of the senior’s generosity has exceeded the scope of the permitted use. When this occurs, you should contact the card issuer in writing that the person is no longer authorized to use your debit card or credit card account. It may also be advisable to cancel the cards, have new ones reissued, and also to close the bank account and reopen a new one. Additionally, some seniors add a family member or friend’s name to their bank account, either to assist them in paying their bills or perhaps to avoid probating the asset upon death. You need to be aware that joint owners on bank accounts have equal access to the account and can withdraw money for their own use. If you need assistance in writing checks to pay your bills, you can execute a Durable Power of Attorney for Finances naming a trusted agent to handle such financial matters on your behalf.  If you need further information or advice on these matters, please call the Legal Hotline for assistance.

3). Do not become a victim of a scam. Most of us have received letters or telephone calls telling us that we have won prizes or services. In order to collect these “winnings”, the company may request the recipient’s personal information such as a social security number or a bank account/credit card account number. Common sense tells us to never give out such information to solicitors or unknown entities. The elder population tend to adhere more to standards of propriety and sometimes need to be reminded that they can simply hang up on such troublesome solicitors when they call. Also, if you suspect businesses of participating in such scams or fraudulent business practices, contact your local law enforcement agency or the Michigan Attorney General’s Office.

Financial generosity to family members or friends is a commendable virtue. However, saying “yes” to family members’ requests for financial assistance or to solicitors’ requests for personal information can be very problematic for your finances. Sometimes just saying “no” either politely or otherwise can be a simple way to promote personal financial stability.

Karen Flores is a Part-time Staff Attorney for the Legal Hotline for Michigan Seniors and the Mid-America Pension Rights Project. She first joined ELM in 1995 when it was known as the Legal Hotline For Older Michiganians (LHOM).

After 4 years at LHOM, she left the practice of law to stay home with her children. She returned to ELM in 2013 as a Volunteer Attorney and was hired in August, 2013.

She graduated from Michigan State University with a degree in Political Science/Pre-Law. After graduating from Cooley Law School, she clerked for Circuit Court in Midland County and also represented clients on appeals of Termination of Parental Rights Orders.

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