If You Are Mentally Disabled Can Credit Cards Collect Debt?

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A legal guardian should never pay her charge's debt.
A legal guardian should never pay her charge's debt. (Image: Comstock Images/Comstock/Getty Images)

In the 1990s, the mentally disabled population were often granted credit cards, regardless of their ability to repay a loan or capacity to enter into a contract. Depending on the severity of a mentally disabled individual's situation, he may be protected from creditors. His assets, especially if they come from protected government payments such as Social Security Disability Income, are protected from creditors as well.

Requirements for Entering a Legal Contract

Not just anyone can enter into a legal contract, including agreeing to credit card repayment terms. Not only must a party be 18, but she must have "mental capacity and maturity," according to the website Legal Match. Although state laws vary, there are two tests that are used to determine capacity. The "appreciate effects" test determines whether or not a party understands the contract and what she's agreeing to; the "control" test determines whether she has enough self-control to properly abide by the contract's terms. Drunken persons, or those who have a history of drunkenness, may be able to escape liability as well.

Protected Government Payments

Some assets are protected from creditors. If the disabled party receives Disability or Veterans' income from the government, those assets cannot be garnished by creditors. Although creditors are able to garnish bank accounts, a new federal law requires banks to identify which funds are protected from collectors. Although a lender may attempt to bring a lawsuit against a mentally disabled borrower, unless the borrower has significant assets with which to repay the debt, it's unlikely that the lender would be able to collect.

Writing Off Debt Due to Mental Incapacity

Despite these laws that protect the disabled, simply "writing off" debts that a mentally incapacitated borrower has incurred is not usually possible. If you are his guardian, you may succeed in having the debt negotiated by simply writing the lender and submitting proof of guardianship, along with proof that the borrower was not legally able to enter a contract because of mental disability. You can also ask credit reporting agencies to note on his reports that he is not to receive credit, according to Nolo.

Your Options

If the borrower has the means, call the lender, explain the situation and offer to settle the debt. If the borrower is able to understand the "effects" of credit and has self-control, enrolling in a credit counseling course may be the best course of action. She may also enroll the card in a debt repayment plan through the counselor. The oldest and finest debt counselor is the National Foundation for Credit Counseling. It's a nonprofit, the first counseling session is free and borrowers can meet personally with local representatives.

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