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.
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