Debt Management Tips for Seniors

Sunday, November 20, 2016 - 00:21

Bankruptcy, Asset Concerns, Money Management

No one wants to spend their golden years struggling with credit-card debt. But, sadly, an increasing number of seniors are doing exactly that. For people living on fixed incomes, escalating debt can lead to financial ruin.

Many of the debt-management options available to younger people — like getting a second job to pay off the debt faster — don't make sense for senior citizens. But that doesn't mean there's nothing they can do about it. Here are some overlooked debt-management strategies that can help retirees dig themselves out of the hole.

  1. Cashing in Life Insurance
    For those lucky enough to have a permanent life-insurance policy with cash value, consider a partial surrender of cash or a policy loan. Each method has advantages and disadvantages and each are subject to a different set of tax consequences depending on the adjusted cost basis of the policy as determined under income tax legislation.

    For those who are cash-strapped, tapping their policies while they're alive can be more valuable than in death. The insurance policy isn't going to do anything except go to your offspring or other beneficiaries. And trust me, they would rather see you happy in your retirement years, than strapped for cash.
  2. Tapping Savings?
    Most seniors with debt problems have little in the way of savings. But for those who do have money stashed away somewhere, it's not advisable to use the funds to pay off credit-card debts.

    Sure, it sounds like a good idea to eliminate 20%-interest debt with money that earns just 4% or so a year. And it may seem especially compelling if the creditors keep calling. But think of it this way, when you’re retired, it’s like you’re crossing a desert, and you only have a couple jugs of water. That’s it. And there is no way to replenish it. So keep the little you have and consider one of the previously suggested options instead.
  3. Bankruptcy
    Filing bankruptcy is never an easy choice, and it can be particularly tough for seniors. Many seniors carry with them a sense of pride and genuinely want to pay back their debt. Another concern is, depending on the individual’s situation, bankruptcy may not solve the problem long term. For seniors, they are usually on a fixed income and have medical bills and other unforeseen bills that may accrue in the future. The debt MAY end up piling up again.

    With that being said, it’s better to look into all of your options than to skip over some because you don’t think it suits you. Many people disregard bankruptcy because of the “stigma” surrounding it, when it actually may be the best option for them. It doesn’t hurt to sit down for a free, no-obligation consultation with a bankruptcy trustee to review your options. You never know what the outcome may be. 

Latest Posts

How To Survive Financially After Losing A Job

Losing a job can happen to anyone at any time. It seems like job insecurity is more of the norm these days than job security. The resulting stress can be tremendous even in circumstances where the layoff was inevitable or occurred for reasons outside of your control.

September 19, 2017

Money Management

Who will know about your bankruptcy?

Many people are concerned about who will know about the financial trouble that they are experiencing. Some people are embarrassed, while others simply aren’t comfortable sharing such information because, let’s face it, it’s really no one’s business but your own.

September 15, 2017


Why should I get a new account at a new bank?

There is nothing worse than having your bank freeze your account, taking money from your account without your permission or having your pay cheque constantly be applied to overdraft.

September 11, 2017

Money Management