With debt payments and rising expenses, many older adults don’t have enough wiggle room to save for the future and have a comfortable life. Attorney Lyle Solomon discusses available debt forgiveness options for seniors.
Many older adults’ primary source of income after retirement comes from social security payments or retirement funds.
After paying for essential expenses and debt payments, many people don’t have enough wiggle room to save for the future and have a comfortable life.
And unfortunately, the public safety net continues to shrink smaller as the years pass by.
So if you’re caring for an older adult with a massive debt burden on their shoulders, know that they’re not alone.
Rather than spending sleepless nights worried about debt, explore debt forgiveness options for seniors.
Debt forgiveness through consolidation and settlement
Credit card debt and payday loans are common among older adults, especially payday loans.
Knowing that seniors are dependent on social security payments and their retirement funds, lenders often don’t hesitate to issue loans.
This may be beneficial to the lenders, but it is not always easy for the older adults because they don’t have enough breathing room when it comes to their money.
If they get stuck, there are programs that can help them consolidate and more easily settle their debts.
4 ways to help seniors consolidate and settle their debts
1. Payday loan debt consolidation
Payday loans are easy to get and a good credit score isn’t required. The drawbacks are the short repayment period (fourteen days) and the high-interest rates.
Payday loans are like debt traps; they trap the vulnerable and exploit them.
The best option is to enroll in a payday loan consolidation program and then make a plan to systematically pay off cash advance loans.
2. Balance transfer credit card
A balance transfer credit card helps consolidate all of your debt into a single account. This way, you only have one fixed bill payment every month.
Then, use this card to pay off pending loans and credit cards.
3. Debt settlement
Debt settlement is also a great way to help lessen the weight of the debt.
Here, debt negotiators will negotiate with creditors to agree upon an amount that your older adult will be able to pay. After making the payment, they’ll be debt-free.
4. Reverse mortgage
A reverse mortgage is quite similar to a home equity loan. The only difference here is that there aren’t any monthly payments.
The loan payments come due upon the death of the last living borrower. It’s the responsibility of the living relatives to either pay the mortgage or sell it to balance out the payments of the loan.
You must be 62 years old to qualify for a reverse mortgage, have a considerable amount of equity in the house, and be able to afford monthly payments for items like property taxes and insurance.
Or, debt forgiveness through bankruptcy
Many people carry debt into retirement, which can lead to lower quality of life and higher expenses.
Medical bills, mortgage payments, and even student loans can pile up and put a heavy burden on older adults after retirement.
In some cases, filing for bankruptcy can be a good option to help lessen the burden.
When someone files for bankruptcy, numerous debts like credit card debt, personal loans, medical bills, utility bills, etc are eliminated.
Harassing phone calls from debt collectors will also stop after filing bankruptcy.
Moreover, pension accounts, retirement accounts, and social security payments are all protected by bankruptcy – debt collectors won’t be able to touch them.
There are 2 main types of bankruptcy
Chapter 7
Through Chapter 7, someone can liquidates their assets to pay off their debt. In most cases, all debts can be eliminated except for child support, alimony, student loans, etc.
Chapter 13
When someone declares bankruptcy under Chapter 13, they’re put into a repayment plan which usually lasts for three to five years.
Foreclosures on homes won’t happen under Chapter 13 because they’ll be permitted to maintain all of their assets.
Recommended for you:
- Financial Help for Seniors: 2,500+ Federal, State, & Private Benefits Programs
- Seniors in Financial Trouble: 5 Ways to Help
- 4 Financial Assistance Programs for Seniors and Family Caregivers
Guest contributor: Lyle Solomon is a principal attorney for the Oak View Law Group in California, where he specializes in consumer finance. He has also written several articles on financial well-being. Connect with him on LinkedIn or tweet him at @lyle_solomon
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