Dealing with Credit Card Debt During Retirement

For America’s aging population, consumer debt is a serious problem. As many Chicago residents know, a substantial portion of the country’s unpaid consumer debt has arisen from costly medical bills, as a report from CBNC pointed out, and many of those patients facing seemingly insurmountable healthcare costs are at or nearing retirement age. In addition to hospital bills and healthcare fees, many of America’s seniors are also dealing with the fact that they lost much of their savings during the recession and do not have as much income for retirement as they expected. In some cases, Americans aged 65 and older simply do not have enough to live on with retirement savings and Social Security checks alone, according to a recent article in Bankrate.com. What happens when these seniors start relying on credit cards to pay for monthly bills and essentials?
How Seniors Amass Credit Card Debt
Most of us assume that, by the time we reach the age of retirement, we will have enough money saved that we will not need to consider filing for personal bankruptcy. However, more seniors than most of us might think struggle with debt. For example, the article in Bankrate.com gives an example of an elderly couple with medical problems. Given their financial needs, they end up maxing out a credit card on which they now owe $20,000. Because this elderly couple worried extensively when they were younger about their credit rating, they are attempting to make the minimum, interest-only monthly payment on the credit card, which totals around $600 per month.
What options do seniors in such a situation have? Is filing for personal bankruptcy the best option?


Generally speaking, there are a few options for elderly Chicago residents who are facing a lot of credit card debt:
Work to lower the interest rate on the credit cards. In some cases, a creditor will agree to lower the interest rate on a credit card. In many cases, credit card interest rates are very high—often between 20 and 30%. If the card issuer is willing to lower the payment, then monthly interest-only payments can save seniors hundreds of dollars per month.
Consider a reverse mortgage. For older adults, a reverse mortgage can provide extra money to pay off debt and to give seniors a financial cushion. It is a type of loan that is only available to borrowers who are at least 62 years old, and unlike a traditional mortgage, it does not require senior borrowers to make a monthly payment. In short, it gives senior homeowners a cash payment based on the amount of equity in their home.
Consider credit counseling. Seniors dealing with significant credit card debt may be able to lower monthly payments by working with a credit counseling agency, or by working with an experienced consumer protection lawyer who can advocate for a lower interest rate.
File for bankruptcy. Filing for bankruptcy can have cons in older age—for one, there is less time to rebuild your credit profile and to rebuild your savings, particularly when you are no longer working full time—but it may be able to help. When an individual files for Chapter 7 bankruptcy, retirement savings accounts and other assets can be exempt, meaning that they will not be subject to liquidation.
If you are struggling with debt, it is important to discuss your options with an experienced Oak Park consumer protection lawyer. A dedicated advocate at our firm can help. Contact the Emerson Law Firm for more information.
See Related Blog Posts:
News About Debt Collection Rulemaking

Comments

Post a Comment

Popular posts from this blog

New Information on Debts That Bankruptcy Cannot Discharge

If you are thinking about filing for bankruptcy in the Oak Park area, it is important to know that certain kinds of debts cannot be discharged in a bankruptcy case. Under U.S. bankruptcy law, these are known as non-dischargeable debts, or exceptions to discharge. There are certain types of debts that have long been identified clearly as non-dischargeable debts, while there are misconceptions about other types of debts that may or may not be dischargeable. As an article in CNBC discusses, the U.S. Supreme Court recently issued a ruling in the case of Bartenwerfer v. Buckley , which clarifies that debts incurred due to another party’s fraud cannot be discharged in an individual’s bankruptcy case. Our Oak Park bankruptcy attorneys can explain the Court’s recent ruling and provide you with additional information on dischargeable and non-dischargeable debts. Supreme Court Says Debt Incurred Due to Another’s Fraud is Non-Dischargeable The recent Bartenwerfer case involved a debtor attempti
Read more

Learning About Different Types of Wills

Whether you are young or old, single or married, wealthy or with limited financial means, healthy or dealing with a medical condition, it is important to make a will. Many people have incorrectly heard that wills are only necessary for particular people, such as those with a substantial amount of assets or for older adults in poor health. Yet wills are critical for adults of all ages, and an experienced Oak Park estate planning lawyer can help you to make one. Before you begin working with a lawyer on a will, you might start conducting your own research into wills in Illinois and the requirements for a valid will. In so doing, you are likely to come across information about many different types of wills, and you are probably going to wonder whether you will need more than one kind of will. In short, there are different terms that can be used to describe the form or function of a will, as well as some distinct types of wills. Our Oak Park estate planning attorneys can explain in more
Read more

Younger Parents Need an Estate Plan

It is critical for younger parents to have an estate plan, even if they know they are healthy and do not anticipate that anything will happen in the near future. Much too often, younger parents assume that they can wait until they are older to consider estate planning or until there is a health-related reason to begin the estate planning process. Yet estate planning is critically important for parents who have minor children. While estate planning is important for adults of all ages, it can allow parents to make important decisions about who will care for their children in the event that they become unable to do so themselves. Our Oak Park estate planning lawyers can explain in more detail. Naming a Guardian for Your Minor Children in Your Will Most importantly for younger parents, making a will allows you to name a guardian who can care for your child in the event of your unexpected death. Nobody anticipates a deadly accident or a sudden situation in which there is a need for another
Read more