Credit card debt is increasing when it comes to individuals over the age of 65, according to a recent study. Many seniors are carrying this credit card debt into retirement. Medical debt can compound the problem. When seniors face health issues, putting the additional out of pocket costs not covered by their insurance can be tempting. In fact, medical debt is the leading cause behind U.S. bankruptcy filings today.
According to a 2018 report from the Employee Benefit Research Institute, approximately 42 percent of all houses where the head of household is between the ages of 65 and 74 carried credit card debt. This figure is a 10 percent increase from 1992 to 2016. When it comes to individuals over 75 years of age, 26 percent of them carry credit card debt, which is a six percent increase from 1992 to 2016.
According to the research associate who conducted the study, usually the median debt amount decreases when an increase is seen in the percentage of homes carrying credit card debt. For senior citizens, however, the increase is seen both in how many have credit card debt and how much debt they carry, which leads many to question why the increase has occurred.
Many different reasons can be attributed as to why credit card debt is rising amongst seniors. One reason is the fact that seniors are relying on a fixed income following retirement. For many, this income is just enough to pay for necessary living expenses, but if any increase in these expenses occurs or if the senior has a medical or unexpected financial emergency, his or her income may not be enough to meet the expense.
Additionally, many seniors come to the Miami area to retire, but they do not anticipate the higher cost of living. When they are already on a tight budget, they will resort to credit cards to keep up with extra expenses. However, problems arise when they are not able to pay the balance from these expenses from month to month. Health insurance and medical costs can also be an extreme burden for aging Floridians. The result of this is many of these senior citizens are carrying debt into retirement.
This fixed income can be a combination of pension, other retirement funds and Social Security. It is estimated that approximately 21 percent of married couples and 44 percent of single adults currently rely on Social Security for 90 percent or more of their income. With the average Social Security check being $1,413, this does not leave much wiggle room. It only takes one financial crisis for that person’s entire financial situation to implode.
Several different steps can be taken to help a senior who is struggling with credit card debt get out of his or her situation. The worst thing that a person can do is to ignore the debt in hopes that it will go away. Debt collectors are persistent when trying to get payment on a debt, and they do not discriminate based on the age of the debtor. Ignoring the debt will also lead to higher interest rates, fees and penalties that can make the situation even worse.
If a senior citizen finds that he or she is not able to pay on a debt, many of these credit companies will work with the debtor on a payment plan or settlement on the debt. The cardholder is within his or her rights to work directly with the creditor on a mutually-beneficial resolution, including a settlement on the debt or a lower payment.
Of course, bankruptcy is always a viable option depending on the situation. A person can spend years struggling with medical and credit card debt that would otherwise be eliminated in a Chapter 7 bankruptcy case. Someone’s age should not be a deterrent if bankruptcy is the best option for him or her. A bankruptcy attorney can meet with the individual free of charge to discuss his or her financial situation and determine the best path forward.
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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.
Related Resource:
https://www.nerdwallet.com/blog/credit-cards/seniors-credit-card-debt/