According to USA Today, credit card debt is one of the biggest reasons seniors have financial problems. Generally, seniors with little experience of using credit card have a higher risk of accumulating too much debt due to interest rate charges and late fees. As a senior, you have several options to solve your credit card debt problems.
Credit Counseling
Credit counselors provide personalized advice on your credit card debt problems and help you manage your finances to solve them. Many credit counseling organizations are non-profit, according to the Federal Trade Commission. However, non-profit status does not mean that the services are free or always legitimate. The United States Trustee Program has a list that you can use to find a counselor. According to USA Today, more seniors are looking to credit counselors for help with debt, especially in areas with high proportions of senior residents.
Reverse Mortgage
If you are at least 62 years of age and have fully paid off your mortgage, you may be able to obtain a reverse mortgage to pay off credit card debt. A reverse mortgage converts home equity into cash you can use for any purpose. You don't have to pay anything back to the lender as long as you keep living in your home. However, you have to give up your home to the lender when you pass away, unless your heirs are willing to pay off your debt.
Life Insurance
If you have a permanent life insurance policy that has a cash value, you may be able to take out a cash-surrender loan to pay off your credit card debt. Generally, such an insurance policy allows you to build up cash value that you can take through a cash-surrender loan. You can take up to 96 percent of the value of the policy and don't have to pay it back. Your insurer simply deducts the loan amount from the death benefit when you pass away.
Bankruptcy
According to Reuters, more and more seniors are filing for bankruptcy due to unmanageable credit card debt. Filing bankruptcy may have a negative psychological and emotional impact, but it can reduce your debt burden. There are two common types of bankruptcy. Chapter 7 bankruptcy liquidates assets and may mean giving up your home. A Chapter 13 bankruptcy allows you to keep your home and retirement savings.
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