Like other Americans nowadays, a growing number of seniors living in Arizona face large balances accumulated on multiple credit cards and personal loans that literally increase daily due to high interest. This means that minimum monthly payments to each bank and credit card company often makes little progress toward eliminating cumbersome consumer debt.
A recent article profiled a 76-year-old man with monthly income of $3,400 from Social Security and pension benefits who owes $20,000 on a personal loan and credit card debt. With assets of only $8,000, he was considering discontinuing payments to save for reduced settlements. He wondered if a negative credit rating due to delinquent payments was significant, given his age and lack of plans to obtain new auto or home financing.
Nonpayment might result in creditors commencing litigation to force liquidation of his meager assets and garnish pension benefits to satisfy a judgment far larger than current balances because of legal fees and court costs. Moreover, depending upon the applicable statute of limitations, creditors may have several years following the last payment to file suit and attach assets of deceased debtors’ estates, leaving very little for intended beneficiaries. Besides this, an adverse credit rating might increase insurance premiums and utility deposits as well as inability to cosign loans that help younger relatives establish credit.
A debt consolidation loan or assistance from a debt management provider might afford relief through reduced interest rates or account balances. Filing for bankruptcy is another alternative that may result in a discharge of many outstanding financial obligations. A bankruptcy attorney may be able to advise a client of available forms of debt relief that are appropriate for a particular situation.
Source: FOX Business, “Too Old to Manage Debt and Good Credit?“, Janna Herron, January 20, 2014