Debt settlement is not just for the younger employed consumer. The elderly can benefit from debt settlement in significant and unique ways as well.
The Unique Position of the Senior in Debt
Senior citizens who have accumulated inordinate amounts of debt are often placed in a position of inability to possibly pay the debt back. They are on fixed incomes from retirement/social security/investment income, and they need such income for the basic necessities of living, as well as medical expenses. Further, an emergency repair or appliance replacement can throw their budgets into a tailspin, and they are faced with taking care of their needs or making monthly payments on debt accumulation. Seniors, however, are in a rather unique negotiating position, because they are more favored by law in debt situations and because a creditor knows that fixed incomes will not normally change. These factors make a creditor more likely and more willing to settle debt for a significantly reduced amount.
What Seniors Should Do
First, a senior who is facing overwhelming debt must analyze assets available. If a homeowner, an elderly person could face loss of that home if the debt is not resolved. The key will be to negotiate lower overall debt and then determine the best way to pay off the negotiated amount.
If the senior citizen is spry enough to face the situation alone, he/she can begin to do the research relative to debt settlement before beginning the negotiation process with creditors. Consumer credit counseling services and senior citizen assistance groups in virtually every state will give such counseling for free and assist the senior in setting up the negotiation process, sometimes completing it as well.
Creditors are acutely aware that senior citizens do not have the potential of increasing monthly income a great deal. This, and the fact that they are elderly, motivates a creditor to negotiate more quickly than in other circumstances. When dealing with the original creditors, seniors should insist upon 50% of the original debt. When dealing with a collection company that has purchased the debt from a creditor, 25% should be the starting negotiating point. If the senior is really not up to the time and effort necessary, the services of a settlement professional can be contracted for a fee.
Once the Negotiation is Complete
Once the senior citizen has negotiated settlement amounts, it will now be the task to determine how to pay the reduced debt off. The elderly homeowner is in a position to consider a reverse mortgage, accessing the equity in his/her home without incurring any additional monthly payments or tax liability. The cash taken out can be used to pay off the settled debt, and any remaining money can be put into an equity line of credit which earns interest.
If the senior citizen is not a homeowner and is living solely on retirement income, the use of debt settlement may actually not be of benefit. Creditors are not likely to sue an individual who has no assets, and, even if a court judgment is rendered, the creditor is then responsible for finding the money, and this money cannot come from retirement or life insurance proceeds.