What Debt Settlement Options are Available for Seniors
As per the Employee Benefit Research Institute, the debt burden of American families with a head of household aged 55 or over had risen from 53.8 percent in 1992 to 65.4 percentage in 2013. The retirees also have reported that they have incurred the following types of credit card debt: credit card (27% of retired people) mortgage (23 percent) and home equity line, or credit (17 percent) and auto loans (17 percent). As the elderly age to a fixed incomes such as pension and social security however, as the cost of living increases and they are falling behind in their payments.
This is a sad situation because the elderly citizens of our society prefer to live their final years enjoying their leisure following long and successful careers. However, many of them are required to work well past their peak to survive. In certain instances it’s an issue of remaining active until they’re physically incapable of working.
The good news is that seniors who are in debt do not have to continue working until their bodies go out to them. When they seek out the right type of help and talking with the appropriate people, debt can be reduced to manageable levels. These are some initiatives that helped Americans overcome financial burdens as they age:
- Negotiation of debt Debt negotiation is a term used to refer to the efforts to settle the debt of a debtor who hires an outside business to make a deal on behalf of him. The firm will notify an individual creditor the fact that the person isn’t financially stable and has only some working years left in his or her.
- The concept of consolidation The concept of debt consolidation is that there are a variety of debts the senior has to pay. In offering a new loan to pay the debts, debt consolidation companies like banks as well as credit unions consolidate the existing debts, which reduces the amount of interest that a senior is obliged to pay.
- The management of debt Debt management is a different option for those who are struggling with financial hardship. A debt management consultant is a professional charged with recommending a sensible and viable strategy to pay back the debt. The financial advisor will assist in negotiations for a new payment method with the debtors, alleviating the financial burdens of the customer who is stretched his resources to the limit.
- Credit counselling getting guidance from an experienced credit counselor can aid the senior citizen to come up with a strategy to repay the debt. Credit counseling: The credit counselor will assess the financial situation of the senior and develop a plan of action that will fit his budget and life style.
To pay for this all at once the senior agrees to save some funds by depositing a set amount every month. If he is able to save enough money to pay for the entire amount in this account The debt settlement firm contact the lender and negotiates on behalf of the debtor. When the lender agrees with those terms, the initial amount due to the senior is decreased and the debt is paid in full.
This kind of settlement for debt is ideal for those who have a significant amount of debt (at minimum 10,000 or greater) and are not able to pay their monthly bills which causes the balance to rise in excess of.
Although all debts are put into one account, and paid off with one loan but the amount due to the creditors is the same. In addition, not all individuals can take part in this program. If the loan has defaulted or if the senior doesn’t have a minimum credit score that is required, then they will not be eligible for this program. Other elements that may impact the decision to consolidate debt include the monthly income, home ownership and the kind of loans that you initially obtained.
If they’re eligible the senior can enjoy the convenience and ease of only one loan that has lower interest rates. In certain instances, monthly payments will be reduced, but the loan will remain on the books for longer than the ones that originally were intended to.
In contrast to debt consolidation, where one must still pay the same amount of debt the debt management consultant may solicit the lender to cut the cost of interest, or reduce the monthly payment. Even with these savings however, the senior will have be able to give the company an amount that is minimal to use their service. The typical fee is between $10 and $13 per month per debt that is enrolled.
This is the best option for seniors who require lower monthly interest rates and who can stay with the repayment plan for the entire duration of five years.
In addition the counselor is also able to help the senior to manage his finances to avoid getting in debt again. The counselor can suggest an elderly person a debt reduction program that is suited to his preferences and needs. There are many credit counseling services available for cost-free, however there are certain services that are profit-oriented.
The retirement of seniors is a time for tranquility. They must be free of anxiety associated with collection companies and credit card firms. One way to achieve this is to use the debt settlement solutions mentioned above. If you’re at the final stage of your career, however you’re still struggling with significant financial burdens, think about getting help now.
Looking for more details? Check out our complete guide below, which goes through the various options available to seniors:
Your golden years are the most rewarding time in your lifetime. You get to relish the fruits of your youth.
Unfortunately, the majority of people aren’t ready for the eventuality of retirement. Seniors and debt shouldn’t mix, however that’s not usually the situation. Seniors have reported having many types of debt, such as: credit card, mortgage and home equity line credit and auto loans. As people age and move to a fixed-income lifestyle, they often find themselves behind on their payments, and have financial obligations that be a source of worry for them into their 70s and 60s.
Luckily, nothing is all is not lost. There are many options for those who are in debt, and is worth considering. Let’s talk about the various options available that range from debt relief for seniors to helping seniors with bills.
Look into loans for seniors to consolidate the burden of
The option of taking out a single loan to pay off several debts may be a wise choice based on your personal situation. You could negotiate for lower interest rates that will reduce the amount you owe. It’s also easier to manage.
One example is making use of your home equity to take out a loan or obtaining reverse mortgage. These are excellent loans for seniors with bad credit.
If you’re not able to build up sufficient home equity, and are in good credit standing, a personal loan might be the solution. Look into the calculator for debt consolidation if like to find out what this option is suitable for you.
Make use of your retirement savings with attention
Retirement savings can be an excellent source of cash to pay off obligations in the event of a crisis.
But, you need to be extremely cautious when managing your retirement money since it’s a finite source. This is particularly true if you’re retired for all of your life and have no stable source of income.
Take note that retirement funds are tax-deductible. The more money you take out and pay taxes, the more you will be taxed and the less money you’ll be able to pay off debt. Make sure you take this into consideration.
Adjust your lifestyle
If you’re not already changing your life is a fast solution you can implement right now to achieve lasting benefits. It’s about removing everything that isn’t needed to save money.
Some examples could include reducing travel — a popular pastime for seniors–or selling your expensive house objects. It is also worth considering reducing your car to a more affordable model, or taking public transport.
It is important to implement lifestyle changes that might be initially difficult however, they will yield more longevity over the long term.
Be sure to pay your bills in time
It’s tempting to use all the money available to pay off debt, particularly if you’re making a substantial income.
In reality, not paying your current expenses is making it more difficult in the near future. Unpaid bills can quickly grow due to interest charges which can result in an almost endless amount of credit for you.
The most important thing is to find another source of income, or reduce unnecessary expenses in order to be able to pay off obligations.
Put a debt repayment plan in place
The process of paying off debts takes a lot of planning and preparation. That’s why it’s important to examine the different ways to repay your debts that you could use to deal with your debts.
The most straightforward is the snowball approach that involves paying off your debt one by one starting with the debt with the lowest balance. You could also consider the debt avalanche technique which focuses on paying off debt with high interest first.
The most important thing is to stay to your plan until you have paid everything off.
Utilize senior programs for debt relief
The state and federal government generally has a number of senior debt assistance programs implemented to aid in the process of easing debt for seniors. The majority of them offer financial assistance with housing, food and medical requirements.
It is also possible to look into non-government sources for debt relief. You may be eligible for programs for repayment or debt forgiveness to help you pay your credit loan or credit card better.
In addition, seniors may get legal assistance from the Administration on Aging if creditors are in the process of harassing them. They also provide health as well as wellness and other senior-related services.
Apply for bankruptcy
It is generally an option last resort for those who have debts that they cannot pay by any other means. Although it’s associated with negative things but filing bankruptcy could be beneficial.
Bankruptcy can help you liquidate your possessions which allows you to pay off your debts through a the repayment plan which lasts for three years. In certain cases your loans may be repaid. The positive side is that retirement savings are secure in bankruptcy. Also, you get to keep a part of the equity in your home.
The drawback is that it could dramatically decrease you credit score. However, it’s a situation that can be restored with time. You can find out more about this possibility in our article on debt relief and bankruptcy.
The process of removing debt for seniors can be a daunting task however, it’s not by any way impossible.
If you’re retired or nearing retirement however, you’re still struggling with financial burdens you should consider getting help now. Join us for a no-cost meeting with one of our helpful Debt Consultants, who are not judged to discuss ways we can help you get started with your debt-relief journey. Or, utilize the Savings Calculator to see how you can save.