Senior debt
Mezzanine debt - Chris Tapp, UK deputy director of Credit Action, said:
"Retirement should be a time for some well-earned relaxation, but for
all too many it is a time of financial stress... when we consider that
inflation hits the over-60s hardest, pension provision is looking
increasingly shaky, and we have moved away from a savings culture, we
can see that the levels of debt amongst the over 60s, as well as being a
serious issue now, is one which is only likely to get worse."
Though the above was discussing senior debt issues in the United Kingdom, the same issues apply in the U.S. and the world over.
According to a study done by the New York based research firm, Demos,
"The debt increase is particularly sharp during the first years of
retirement... people aged 65 to 69 saw their credit card balances grow
by 217%...." And according to research by Bankruptcy Project at Harvard,
retirees are now the fastest-growing segment of bankrupt Americans. As a
certified pre-bankruptcy counselor, I can agree with the Harvard study
and that a very large portion of my phone-ins are seniors.
So why are seniors being hit so hard? When you consider that retirement
income is usually less than a working income (and often fixed),
increased inflation affects purchasing even basic commodities... and it
can be staggering. Consider the increase cost of oil. Heating oil is bad
enough. But think about the cost of vehicle operation besides just your
car. Everything must be transported and the increased cost of
transporting even basic commodities has to be made up from someplace.
The only place it can come from is the consumer's pocket. Everything you
purchase has an increased cost. That can of peas or the new sofa costs
far more than it use to along with the gasoline to go purchase it.
But there is more. The younger generation grew up with wide-open credit
but the senior did not. Many times there is a cultural difference
between someone who grew up with credit cards and someone who did not.
Many seniors are bringing credit debt into their retirement with
retirement dollars straining to meet the budget.. Add to that increased
late fees, over the limit fees, even back charge fees and you have a
potentially catastrophic arena.
But there is also a longer life, increased health costs, deteriorating
health and a credit card industry willing to open the doors of credit to
nearly anyone that's still breathing. When you are desperate, it is not
an implausible thought that a credit card might look like the solution
even for basic purchases. Unfortunately, all a credit card does is
increase the inevitable. Like everyone else, seniors are paying for
today with tomorrow's dollars... dollars that are definitely shrinking
form a fixed income.
So what can be done? The obvious answer is to plan early... the earlier
the better. But what if early planning did not occur. Then tragically
the only solutions left are the exact same solutions for every other
consumer- increase income or decrease expenses.
Ahhh but therein lies the catch. How can you increase income when it is
fixed? Often times this can be accomplished through imagination and
creativity. Perhaps the senior can develop consulting opportunities or
an online business. Perhaps something can be sold. Hundreds of
additional ideas can be gleaned form online resources, written
publications, and senior advisors. The point is, plans must be developed
and enacted.
If increasing income is not an option then the only recourse is decrease
expenses. Call creditors and request a decrease in interest rate. This
may sound absurd but it is done every day. There are also scores of
magazines offering ways to stretch your dollar. Similarly your favorite
search engine will produce more frugal sites than you can ever read.
Each of these sites informs the reader of ideas to save money and to
accomplish exactly what you are already doing but for less.
Okay. You can't increase your income nor stretch your dollar any further
than it is already. Now you are down to credit counselling, debt
management programs or debt negotiation. I strongly encourage you to be
very careful in your selection of any of these avenues. In fact I
encourage you to read other materials by this or similar consumer
advocate authors, about each of these options. Tragically there are many
unscrupulous agencies that take advantage of opportunities especially
at the expense of seniors. Find out what the track record of the
perspective firm. What is their completion rate? What does the Better
Business Bureau have to say about them?
If the proper option has still not appeared, there is only one other recourse... bankruptcy.
