Debt Relief For Senior Citizens- What are your options?
You worked hard all your life and were wise with your finances. But now, as you’re coming closer to retirement, you’re struggling with debt. The harsh truth is that many senior citizens are spending their savings and utilizing credit cards to pay for their medical bills and other expenses.
Senior indebtedness is one of the major problems in the USA. There are many reasons why people end up in debt after their 50s. The big layoffs and reduction in government and media jobs are some of the reasons. However, some may also be facing dual financial problems of meeting the educational expenses of their children and carrying the financial burden of their old parents. Once retired, it’s unable to keep up with the debt payments and living costs with a fixed income. Fortunately, seniors who have incurred debts have relief options to reduce their stress.
Debt relief solutions for seniors
Firstly, if you’re a senior citizen getting constant calls from creditors and collection agencies, you need to be aware of your rights. According to CFPB, if you receive any assistance from social security, the veterans’ administration, and the supplemental security income program through direct deposits or government-backed prepaid cards, it is safe from debt collection efforts. You can consider a few options if you’re struggling with immense amount of outstanding balance:
- Assistance programs
- Credit counseling
- Reverse mortgage
To help you monitor and get the due pension benefits, the US Administration on aging provides pension counseling and information programs. Moreover, AOA also offers a nutrition program to provide meals to older adults.
There are several government-backed programs that could help you cover up the medical expenses. These benefits could help you to utilize your income towards paying your outstanding bills.
Credit counseling and debt management plan
Credit counselors can provide you personalized financial plan at a low cost if you’re having money issues. The debt relief solutions may include enrolment in a debt management plan or combining your payments through consolidation. A DMP allows you to pay off your debts in three to five years. Further, it also helps you to reduce the interest rate.
A reverse mortgage is the best debt relief option if you have no successor. It’s a loan for seniors aged 62 or more. A reverse mortgage allows you to borrow a loan against the value of a home and receive a lump sum payment. You don’t have to make any loan payments in a reverse mortgage. It’s a good way to settle your credit card bills. But you have to be cautious of piling up more debts once it is paid.
Moreover, to be eligible for a reverse mortgage, you must be at least 62 years old and either be a homeowner or must possess a very little amount of mortgage. Once you get a reverse mortgage, you cannot refinance to reduce your future debt burdens.
Senior considers bankruptcy as an embarrassment. Bankruptcy should be treated as a last resort when you find no way out to deal with unpaid bills. Moreover, you must consider bankruptcy only when you find it challenging to meet your needs with over dues.
When you must turn over your finances
If you forget to pay your bills or fail to recognize what’s happening with your finances or feel scared of managing your money, you must hand over your finances to your close ones. If you find it difficult to manage your financial affairs, you can set up a power of attorney. However, you must ensure that your POA is a trustworthy person. You can change the person anytime you want.
A large number of seniors are carrying debts today as compared to earlier times and entering into their golden years without gold. Although debt relief for seniors is a challenging task, it’s not impossible. There are various ways to manage your arrears by establishing a realistic budget and seeking the help of a credit counseling agency. In the worst circumstances, you can also consider bankruptcy.
So, if you’re retired or close to the age of retirement and dealing with an enormous amount of arrears, consider getting help to find the best debt relief program for your individual circumstances.