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Credit Card Forgiveness for the Elderly
April 15, 2020

Credit Card Forgiveness for the Elderly

Dealing with expenses can be complicated for people of any age. Managing a budget for seniors can be especially tricky. If unexpected spending takes place, a lot of elderly citizens turn to credit cards in search of temporary solutions. It can often be stressful and creates even more pressure for the person in the case of debt. Here are some practical ways of coping with it.

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Credit Card Forgiveness for the Elderly

Preventive Measures

In the least severe cases, when the amount of debt has not reached a critical point, this is the best time to take action. Here are some things to consider.

Support from Family Members

1Surprisingly, a lot of senior citizens feel shy asking for help from the closest people they have. Frequently, relatives of an older adult are clueless about the severity of his/her financial issues. It often results in a feeling of isolation and despair for the person in a difficult situation.

It is crucial that senior family members feel supported by the people they love. Even if relatives have no financial resources they could offer to help, a simple conversation is enough to improve the situation psychologically. Otherwise, even a small token of monetary aid can make a huge difference.

Another way of supporting an elder in debt is by researching ways of budgeting. As obvious as it may seem to some, managing the cashflow might be tricky to a lot of people. If no one has the resources to give sensible advice, there are plenty of organizations offering qualified support, from financial consultation to debt forgiveness for seniors.

Financial Counseling

2To avoid the credit situation getting worse, it is a great idea to consult with non-profit organizations that specialize in financial counseling and have a team of certified specialists ready to help.

Most likely, the solution at an early stage of a problem will be the creation of a Debt Management Plan. A DMP comes as a substantial relief in a situation when the elderly stop paying credit cards’ bills. A lot of senior citizens give up on their monthly credit card payments when they start to pile up.

A debt management program has no negative impact on credit history. Nevertheless, it will be visible in the report that the person is participating in it. Besides, if the person pays the installments on time, it will improve their FICO score with their positive payment history and reduction of the amount of debt. This action plan leaves the possibility to take out loans for seniors with bad credit in the past.

Severe Financial Issues

There is usually a weighty reason behind every situation in which the elderly stop paying credit cards’ installments. Very often, debts accumulate due to health issues, divorce, or unemployment. It may also come as a result of inflation, as necessities- such as food and housing- become more and more expensive.

For pensioners with a fixed financial income, it may sometimes seem to be a dead-end situation. However, there are ways of dealing with it. Let us take a closer look at some of the options.

Substantial Credit Card Debt

Even though most people prefer to have a strong credit rating, it may happen that they simply cannot afford to keep their credit balance under control. If such unfortunate circumstances occur, it is essential to understand where the neglect of liabilities as a credit card owner can lead.

If a person does not avoid debt by making monthly payments, the collection process starts. The collection procedure usually begins with calls. If no payment follows, the issue will escalate towards a mark in their credit history. Sometimes, in the case of severe debts, even the pension can be at risk of seizure once it is in the bank account.

An adverse credit report is usually significant, regardless of age. Therefore, loans for senior citizens with bad credit may be challenging to acquire. It is one of the reasons why various ways of debt relief for seniors should become a part of their payment plan.  There are several ways for seniors to approach budgeting and receive support when in debt.

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Debt Relief for Seniors

Statistics that the Consumer Financial Protection Bureau collected in 2018 report over 6.88 billion dollars in credit card loans. According to the National Council of Aging, the debt of American households in which family headship belongs to people 65 years of age or older, experiences the highest deterioration throughout the years. In 2016 more than 34.2% of families with senior citizens had credit card debts. These figures may seem disappointing, and yet there are ways to improve them.

Government Debt Relief for Seniors

1A lot of elders suffer from a lack of awareness when it comes to their rights and governmental support. In fact, there are plenty of state programs that could help them recover from a difficult financial situation. In other words, such initiatives typically do not deal with credit debt but instead relieve a part of the load of expenses from retired people. Here are some of them:

Debt Consolidation for Seniors

2In simple words, debt consolidation means taking a loan to pay off some old debts. This way, it becomes easier to track the expenses, as they all fall due in one monthly payment to one creditor. It is an excellent option of debt relief for seniors, as it allows them to lower their debt interest rates and unify the process of paying the installments.

Debt consolidation suits seniors with a good credit score the most, as it makes it easier to acquire a new loan. Nevertheless, loans for senior citizens with bad credit are also possible to get, even though the interest rate might be higher.

Debt Settlement Companies

3Companies, such as DebtQuest USA, provide personal assistance with debt relief for seniors. It becomes possible because the company makes a settlement agreement with the creditor that allows the person in debt to owe less. In other words, the bank agrees to lower the amount of full payment. Such debt settlement typically works only for unsecured debt, such as with a credit card for seniors, for example.

DebtQuest USA offers solutions even for extremely severe cases. This method of debt forgiveness for seniors is highly effective and aims to achieve the client’s financial stability as fast as possible. However, it has some nuances and deserves a detailed explanation.

In a nutshell, when a person decides to make an agreement with a debt settlement company, he stops paying the creditor directly. Instead, he follows a plan with smaller installments that he puts into a savings account. As soon as the customer reaches the required sum of money, the debt settlement company begins the negotiation process with the creditor.

Any citizen can try to perform similar negotiations with the bank himself. However, such a process is usually time-consuming and rather stressful for inexperienced people. It may last for years and not end up being victorious. When it comes to debt settlement, however, it is best to act as fast as possible to limit the amount of damage to one’s credit.

Due to this, relying on a team of professionals completely pays off. At DebtQuest USA, we not only help to reach debt forgiveness for seniors but also provide education on how to manage debt and rebuild positive credit history. It is in our most profound interest for our clients to be financially stable and prosperous.

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4The last resort of debt relief for seniors is filing bankruptcy. However, elders with debts that exceed 50% of their yearly income should strongly consider this path. There are several options available in this case, the most frequently used being these two:

  • Chapter 7. This “liquidation bankruptcy” allows the citizens to get rid of most of their unsecured debts. It is the simplest and quickest bankruptcy option, with impressive debt discharge statistics. Chapter 7 requires a “means test” that checks if the person is qualified for it according to his income statement, financial transactions, and debts. This type of bankruptcy exempts essentials, such as house, car, laptops, etc., from the need to be sold.
  • Chapter 13, or the “Wage Earner’s” bankruptcy is for those seniors who are struggling to pay their debts within a time limit given by their creditor. With this type of bankruptcy, a person has from 3 to 5 years to cover the debts by giving up their disposable earnings. Chapter 13 bankruptcy also allows eliminating unsecured debts.

Credit Score After Debts

The best time to cope with debts is by preventing them. At that point, it is still possible to have little to no effect on the credit score.

However, often a person has no other option but to go into debt. In this case, it is crucial to start managing the debt situation as soon as possible.

When a senior citizen does not fulfill his payment obligations, there is a negative impact on his credit history. In the long run, it makes it difficult to get loans for seniors with bad credit, and it also increases their interest rates.

Many of those seniors whose credit situation has gotten out of hand should strongly consider filing for Chapter 7 bankruptcy. It is, indeed, tempting, as it may cover most or all debts of a citizen. However, its impact on the credit history is dreadful. Filing bankruptcy will stay as a dark chapter in the person’s credit history for up to 10 years.

When it comes to credit card forgiveness for elderly people, the credit score will also suffer- but not half as much as it would in the case of bankruptcy. The information about the debt settlement process will be visible in the credit report for seven years. Its impact on the credibility of the person will lower as time goes.

FICO Score

It is efficient to use the FICO scoring system to assess the credit score of a senior. FICO allows a calculation of the person’s credibility for lenders and banks.

Generally speaking, the credit score shows how likely a citizen is to pay back a loan or credit. It also demonstrates one’s punctuality when it comes to paying installments. A credit score has an impact on the credit limit and the loan interest rates of a person.

Rebuilding the Credit

Credit card forgiveness for elderly people is a way to partly relieve the burden of debts and the stress they cause. However, in most cases, the negative impact of it on the credit score is impossible to avoid. From a future perspective, it means that there will be limited options of loans for senior citizens with bad credit.

However, there is a solution to everything, and it might be just a temporary issue. As long as the senior person follows his payment obligations, the credit history will restore a positive image after some years. It is crucial to take loans or use credit cards responsibly to rebuild a credit score.

Credit Support for Senior Citizens

Even though the credit situation may get out of control, it is important to keep in mind that there are various options of debt relief for seniors.

Getting rid of debts and rebuilding the credit score is challenging, and yet is possible with the help of qualified professionals. At DebtQuest USA, we provide consulting services, debt settlement, and debt consolidation with an individual approach to every case. Get a free quote now, and we will find the right solution!

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