What Happens to Dad's Debts When He Moves to a Nursing Home and Has No Money?

Probably your father doesn’t have to do anything, but you’ll have to let the creditors know the situation. It sounds like your father is “judgment proof,” meaning that even if he were sued and the creditors won, they wouldn’t get any money. However, you need to be aware of two potential problems.

First, the creditors may waive the debts and then send your father a 1099 reporting the debt foregiveness of income. This could result in taxable income for your father. This is more complicated, but still your father should be judgment proof from any claim by the IRS. Second, all of this advice depends on your father not having given funds to you or anyone else. If he has, the creditors might come after the recipients, claiming the gifts were a fraudulent conveyance.