Over 65 with Overwhelming Debt? Tips to Become Debt-Free

In a perfect world, the sun always shines, traffic lights are green, and everyone is debt-free by retirement. This is unrealistic for most California residents aged 65 and older. Today’s senior citizen has an average debt of $105,250 if they do not own a home and $152,890 if they do. If you’re 65 or older, overwhelmed with your financial situation, and seeking a way out of debt, here are some tips to help you get started.

Steps to Help California Seniors Get Out of Debt

If you are like many seniors, you live on a fixed or nearly fixed income. When looking at your economic circumstances, addressing the size of your debt can seem impossible. Instead, break it down into smaller parts and deal with each individually.

  • Prioritize debt – Address the high-interest debts first, such as credit cards, personal loans, auto loans, etc. If you can pay even a little more than the minimum toward those bills consistently, you can reduce the interest you pay. This could save thousands of dollars in just a few years.
  • Consider downsizing – Trading a large home for a smaller one can reduce your expenses and potentially free up a significant sum of money to pay off debt.
  • Create a budget – Develop a budget that accounts for all your income and expenses. Whether you write it down or use a spreadsheet, sometimes being able to see everything listed can help identify areas where you can cut back.

Taking the time to break down your finances can enable you to see past the stress of the situation and focus on the facts. This can help you determine the best way forward and avoid scams that promise a quick fix but don’t deliver.

Take Advantage of Senior-Specific Resources

The steps for California residents to get out of debt are like those in other states. However, there are some senior-specific options available that can help you become debt-free.

  • Apply for financial assistance programs – California offers several programs for seniors struggling with debt. These include the Senior Citizens Homeowners and Renters Assistance (SHCRA) program, which provides eligible seniors with a refund for a portion of their property taxes or rent payments, and the Medi-Cal program, which offers low-cost or free health coverage to eligible seniors.
  • Talk to a Professional – Financial advisors and credit counselors have intimate knowledge of the laws and regulations pertaining to financial options for consumers. They can provide support and guidance as you develop a repayment plan. California has several nonprofit organizations offering seniors free or low-cost financial counseling services. These organizations can help seniors develop a budget, create a debt repayment plan, and provide guidance on managing their finances.
  • Explore debt consolidation options – Explore debt consolidation options such as home equity loans or reverse mortgages to consolidate your debts into one monthly payment with a lower interest rate.
  • Seek legal help – If you are facing debt-related legal issues, such as foreclosure or debt collection lawsuits, you can seek legal assistance from a nonprofit legal aid organization or a pro bono attorney.
  • Consider bankruptcy – While bankruptcy should be a last resort, it may be an option if you are 65+, are struggling with debt and have no other options. A bankruptcy lawyer can provide guidance on whether bankruptcy is a viable option.

Depending on your situation, an attorney can negotiate with creditors, stop harassing debt collection calls, stop foreclosure and prevent repossession. Even if bankruptcy is your best option, you do not lose everything. Many assets are exempt, and retirement accounts are fully or partially protected, including, but not limited to:

  • IRAs
  • Traditional Roth IRAs
  • 401(k)s
  • 403(b)s
  • Profit sharing plans
  • Defined benefit plans

The key is to seek help and act as soon as possible. The longer you wait, the more challenging your situation could become.

Should Seniors File Bankruptcy in California

Whether or not you file for bankruptcy in California is a decision you should make after carefully considering your unique circumstances. It is an option to explore after all others have been examined. Some factors that to consider when deciding whether to file for bankruptcy in California include the following:

  • Amount of debt – If your debt is so large you could never realistically pay it off, bankruptcy may be a viable option.
  • Ability to pay – If you cannot make the minimum payments on your debt or are harassed by creditors, bankruptcy may provide relief.
  • Types of debts – If you have unsecured debts, such as credit card debt, medical bills, or personal loans, filing Chapter 7 or Chapter 13 bankruptcy may make sense. However, there might be better choices if the bulk of your debt is secured, such as a mortgage or car loan.
  • Other financial resources – Seniors with significant assets or income may not benefit from bankruptcy, as the bankruptcy code may require you to use those resources to pay the debt down first.
  • Impact on credit – Bankruptcy will have a negative effect on your credit score and could affect your ability to borrow money or get credit in the future.

Skilled Debt Relief Help for California Seniors

As a California senior citizen, you may have several viable options to become debt-free. However, figuring out the best option can take time and effort. Contact the Law Offices of Terrence Fantauzzi at 909-552-1238, today. As experienced debt relief attorney, he can you understand your options, determine whether you qualify for specific programs, and assist you in organizing your finances and identify the best way to help you get out of debt while retaining assets.

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