Are you wondering about credit card forgiveness for the elderly? Whether you are looking for yourself or an aging parent or grandparent, it is understandable that you want to know about the available options.
The effects of mounting debt are challenging for people of any age. However, it can be impossible for retired people on a fixed income to manage their finances when the minimum payments on credit cards become high.
There are a few options elderly people can use to pay off credit card debt, including debt consolidation, downsizing, reverse mortgages, filing for bankruptcy, home equity loan, and a living estate sale. However, it is vital for people considering these options to know how they will affect their future.
Learn about the best credit card forgiveness for the elderly in this guide. It includes examples of ways to handle your debt and minimize its impact on your future.
What are the Options for Credit Card Forgiveness for the Elderly?
There are several options you have to address debt after you retire. However, not all methods of debt forgiveness offer the same benefits. So, take a look at the options below.
Many people facing high credit card bills consider debt consolidation. However, hiring a company to do it for you may not be beneficial. Debt consolidation agencies typically require you to stop making credit card payments and instead send them money.
Then, as you build money in a savings account, the company calls your creditors and negotiates debt settlements with them. However, your credit could be negatively impacted when you are going through the process, which often makes things more challenging for people trying to get out of debt.
Reverse mortgages are programs lenders offer to help people pay off debt and reduce their monthly overhead so they can live more comfortably during retirement. A reverse mortgage is not always the best choice, though.
Even if you do not have any relatives to leave your estate, taking out a reverse mortgage depletes the equity you built in your home. When you own your home, you can use the equity if you need to move into an assisted care facility.
Filing for Bankruptcy
Filing for bankruptcy can be beneficial if you face foreclosure and other collection efforts from lenders. Chapter 13 Bankruptcy is a good option for people with less than $2.75 million in debt.
It offers protection against foreclosure, and a trustee manages your case during the repayment period, which is between three and five years. Furthermore, when you enter into bankruptcy, the trustee negotiates forgiveness of part of your debts as long as you adhere to your debt repayment plan.
Follow the 10/20 Rule for Debt
The 10/20 rule for debt is beneficial to people of all ages. It can help you to pay down existing debt and manage your use of credit in the future. So, if you are considering other options here, you may want to try using the 10/20 rule first.
If you cannot address your credit card debt by budgeting, then moving to another solution may be best.
Home Equity Line of Credit (HELOC)
If your home is mortgage-free and you are considering bankruptcy or debt consolidation, it may be better to do a debt consolidation home equity loan.
You would then use the equity in your home to pay off your credit card debt, and instead of having a payment for each card, you would have one monthly payment for your mortgage.
To avoid going further into debt, do not take out more money than you need to pay off your debts, and try to negotiate a settlement amount directly with each company. Many card issuers will write off some of your debt if you pay the balance in full.
Have a Living Estate Sale
Many elderly people have homes filled with the things they collect throughout their life. So, if you have collectibles, high-end furniture, jewelry, and other valuable items, you may want to have a living estate sale to earn money to pay off your credit card debt.
Final Advice on Credit Card Forgiveness for the Elderly
Lenders do not offer specific credit card forgiveness for the elderly in most cases. However, many are willing to negotiate lower account settlement amounts if you can pay the balance of your account in full.
No matter what method you choose to address your debt, you should know all the terms of the program or loan before you agree. For example, verifying the interest rate the lender offers is essential if you are thinking about a reverse mortgage. A variable rate can eat up the equity you built over decades in a few years. A HELOC may be better than a reverse mortgage if you can afford an affordable mortgage instead of your monthly credit card bills.
Likewise, using the 10/20 rule to pay down your debt is better than doing debt consolidation or filing for bankruptcy. You can also ask your family to help you so you can avoid using assets that you plan to leave to them. For example, your children may be willing to help you pay your monthly mortgage to preserve the equity you have in your home if it helps you to avoid doing a reverse mortgage.
Read the other guides on our site for help with other personal finance topics, like what to do if your 401k is losing money.