Are You Burdened By Credit Card Debt?
If you are a senior or disabled person having trouble paying your credit card debts, you should know that you are not alone.
The following excerpts are from a recent article in the Washington Post, called “Seniors Leaning on Credit Balances Balloon for Older Cardholders – and Health Bills Don't Help,” which should convince you that you are not the only one facing this problem:
Alice Smith thought she would live comfortably and quietly in her Hyattsville retirement community. Instead she's fretfully dodging calls from her creditors.
She owes more than $10,000 to four credit card companies and more than $7,000 to a credit union – in part, she said, because of spending to help her family. She doesn't give exact figures because she is unsure of them; with late fees and higher interest rates, the amount she owes has grown. Her income has not. Through a pension and Social Security from her former job at a National Institutes of Health laboratory, she receives about $2,000 a month. Her rent is $955. She doesn't know how she can ever pay down her debts. So she thinks she just might not.
"I am 80 years old," she said, "and I don't need this headache at my age."
Average credit card debt among low- and middle-income Americans 65 and older carrying a balance for more than three months reached $10,235, up 26 percent from 2005, according to a recently released study by the public policy group Demos. It was the fastest increase of any age group. Soon-to-be retirees are also struggling with debt. It's a surprising reversal of fortune for a generation that had been considered more financially responsible than younger generations. Frequent or frivolous use of credit cards had not been a common trait of older Americans, particularly those 65 and older, because credit was not as easily available in their formative years. Now, even they are finding they have little choice but to borrow money.
The Center for Responsible Lending (CRL) recently issued a report which explains why seniors and disabled people are having difficulty dealing with their credit card debts. The following is an excerpt from this report, which answers the question, “Why?”
“Families with credit card debt are often thought to be shortsighted or ill disciplined, guilty of “living beyond their means.” Of course, societal pressures to consume – to acquire certain goods and to achieve a certain lifestyle – have their place in a discussion of credit card debt. But the survey findings reveal that much of the debt for low- and middle-income households is “safety net” debt. That is, families are going into credit card debt as a way to cope with drops in income or unexpected expenses.
Our findings illustrate that most debt-stressed low- and middle-income consumers are trying to cover unavoidable expenses, not discretionary purchases.
• The most significant predictor of “debt stress” level was whether a household relied on credit cards to cover basic living expenses such as rent, mortgage payments, groceries, utilities or insurance.
• Households dealing with a layoff or major medical expenses were more likely to have a higher relative debt-stress level. These economically vulnerable households were more likely to have higher relative credit card debt because they used their credit cards to cover expenses associated with an illness or necessary medical treatment, as well as basic living expenses.
Complicating matters, many card companies have raised interest rates, fees and minimum payments recently in anticipation of a new law taking effect in this month that will restrict such hikes. Older borrowers have been hit especially hard by such actions, consumer advocates said, because their incomes are fixed and their ability to get a job is limited. "There are just less shock absorbers in a senior citizen's budget," said Cate Williams, vice president of financial literacy for Money Management International, a nonprofit credit counseling agency.
Is there help for seniors and disabled who can’t pay their credit card debts? Yes! It’s Debt Counsel for Seniors and the Disabled (DCSD), a national legal service. Visit DebtCounsel.net or call 1-800-992-3275 ext. 1304.
Debt Counsel for Seniors and the Disabled is a division of Lawyers United for Debt Relief, an attorney-supervised debt management program. Supervising attorney Jerome S. Lamet is a graduate of Chicago’s Northwestern Law School who has been practicing law for almost 50 years. Mr. Lamet’s specialties lie in the areas of bankruptcy and debt relief, trade regulation, advertising and consumer law.