10 Tips to Help Seniors Deal with Debt

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4. Get Advice from a Trusted Debt Counselor

If you find yourself in need of advice, consult with a trusted debt counselor. It’ll help to get a second opinion from a professional, rather than making any rash decision. Additionally, they might be able to tell you about helpful resources that you didn’t know about. With many scams and con-artists advertising all over the internet and calling your home phone, it’s a good idea to talk to a third-party that you can actually trust.

If you think you would benefit from a trustworthy counselor, go to The National Foundation for Credit Counselors. To find someone in your area call (800) 388-2227 or visit their website www.nfcc.org. Instead of keeping yourself up at night with worry, ask for guidance.

5. Avoid Debt-Relief Companies and Home Equity Loans

While Home Equity Loans can seem like a quick fix, you’re more than likely to be left out-of-pocket, or even on the street if things turn sour. Don’t allow temptation to use this loan to pay off your credit cards, it won’t fix the problem, it’ll just turn your biggest asset into more debt. It’s also a bad idea to use a Home Equity Loan for material things, like vacations, cars, and appliances.

Similarly, it pays to avoid debt-relief companies that promise to lower your credit card bills and monthly payments. Many of these ‘quick-fixes’ are actually scams that leave desperate people in even worse financial shape. These scammers will charge high fees and then take your money. There are legitimate services out there though, but they’ll never ask you to pay up-front, so be wary.

6. Bankruptcy?

Maybe you’ve lost all hope of paying off your bills and making repayments. If so, declaring bankruptcy could be the best of a bunch of bad options. By filing for Chapter 7 bankruptcy, any medical or healthcare debts will disappear, while your retirement funds are likely to be safe. If you’ve got a 401(k), 403(b), 457(b) or other plans your money cannot be touched by creditors. The same goes for your Social Security, but you’ll need to hold it in a separate account to stop it being taken.

However, if it’s mortgage, car payments, or student loans that are plaguing you, you’ll need to file for Chapter 13 instead. With this type of bankruptcy, you’ll pay back creditors, including medical providers, over a long time. But, this isn’t a light decision to make, so please talk to a trusted debt counselor to find out the best course of action for you.