Understanding the situation

Before exploring solutions, it’s crucial to understand the full picture:

• Assess total debt: Calculate the total amount owed across all credit cards.
• Review interest rates: Note the interest rates on each card.
• Evaluate income sources: Social Security, pensions, investments, etc.
• Consider assets: Home equity, savings, investments.
• Review expenses: Identify essential and non-essential spending.

Legal considerations

It’s important to note that credit card debt is a legal obligation. Simply stopping payments without taking appropriate actions can lead to:

• Damage to credit scores.
• Potential lawsuits from creditors.
• Wage garnishment (if applicable).
• Seizure of assets (in some cases).

Options for managing credit card debt

However, there are legal ways to address overwhelming debt…

Negotiate with creditors

Contact credit card companies directly and explain the financial hardship you or your loved one is struggling with.

Request:

• Lower interest rates.
• Waived fees.
• Reduced minimum payments.
• Hardship programs.

Debt consolidation

By combining multiple debts into a single new loan with a lower interest rate, you can make repayment more manageable. Options include personal loans or home equity loans (if applicable).

Balance transfer cards

This is a type of credit card that allows you to move existing debt from one or more high-interest credit cards to a new card with a lower interest rate, often offering a 0% introductory APR period to help you pay off the transferred balance more quickly and save on interest charges.

Just be aware of balance transfer fees and have a plan to pay off the balance before the intro period ends.

Bankruptcy

As a last resort, filing for Chapter 7 or Chapter 13 can put an end to debt repayment, but with severe consequences for your credit score for years to come. Be sure to consult with a bankruptcy attorney to understand the implications before committing to this strategy.

Special considerations for the elderly

Here are some of the more common considerations to keep in mind that apply to senior citizens…

• Protected income: Social Security benefits are generally protected from garnishment by credit card companies, and some pension incomes may also be protected.
• Limited assets: If an elderly person has limited assets and income, they may be considered “judgment proof.” This means that even if sued, creditors may not be able to collect.
• Statute of limitations: Debts have a statute of limitations that varies by state. After this period, creditors cannot sue to collect the debt. However, the debt still exists and can impact credit scores.
• Medical debt vs. credit card debt: If medical expenses were charged to credit cards, there may be options for assistance or forgiveness through healthcare providers.
• Power of attorney: If cognitive issues are a concern, a trusted family member with power of attorney may need to manage financial affairs.
• Review insurance and benefits: Check for any life insurance policies with cash value and review Medicare and Medicaid coverage. Explore local senior assistance programs for guidance.
• Be cautious of scams: Be wary of companies promising to erase debt quickly while charging upfront fees for debt relief services. Reputable companies only get paid after the debt has been settled.