According to the National Council on Aging (NCOA) Survey of Consumer Finances, the percentage of households headed by an adult aged 65 or older with any debt was 60% in 2016, and the median total debt for older adult households with debt was $31,300 in 2016. Many seniors have less income to deal with that debt.
In 2013 according to the AARP Public Policy Institute, in Massachusetts 23 percent of people aged 65 or older relied on Social Security for 90 percent of their income with an average benefit of $1339/mo.
Given their existing debt and reduced income, most senior citizens are more susceptible to the grim financial consequences of a job loss, a medical condition or calamity, a death in the family, a last resort credit card at or over the credit limit, an unpaid student loan (direct or co-signed), or a failed business.
As a result, according to the NCOA, seniors’ medical, mortgage, credit card and utility payments become unmanageable. Food, clothing, medical co-pays, entertainment . . . credit cards absorb these small purchases until their limits are reached. These debts force senior citizens to fight off the stress brought on by their financial uncertainty to make good decisions on what monthly bills to pay and what bills to not pay. When some bills go unpaid, debt collectors start to call. According to the Consumer Finance Protection Bureau, “the distress of being harassed by a debt collector aggravates existing medical conditions and thereby endangers their health.”
This financial uncertainty has more health consequences for seniors. According to NCOA, as a result of money issues an average of 15 percent of aging-network professionals regularly encounter seniors cutting pills, skipping medical appointments, skipping meals, avoiding social engagements, or missing rent or mortgage payments.
The implied threats and/or fears of debt lawsuits are why senior citizens engage with debt collectors and debt relief agencies. But, the reality is that a senior citizen whose only income is Social Security and who does not own a home or other assets is probably collection proof. After a judgment a private creditor cannot seize their bank account (if it contains no more than twice their monthly Social Security payment) or garnish their Social Security income.
Seniors Are Easy Targets for Debt Collectors
Reading through a senior citizen debt discussion forum recently I found many posts from retired people living on a low fixed income with credit card debt they could not afford to pay. Senior citizens on low fixed incomes are more vulnerable to debt collector lies and threats to their financial security.
- Several people with few or no assets and only a monthly Social Security check for income were contemplating bankruptcy for relatively small amounts of credit card debt because they were being hounded by debt collectors.
- One was being chased by a debt collector for credit card debt from 2005, another for debt from 2001. (Both apparently unaware of the protection their states’ statute of limitations on filing debt lawsuits afforded them.)
- Another living on a fixed income of $1600/month was actually paying $250 a month to a debt collector on a settled credit card arrangement until a part-time job was lost.
- A few were being sued for old credit card debt with Social Security as their only source of income.
- There were people being harassed by debt collectors for credit card debt their recently deceased spouse had incurred.
Credit card debt made consumer debt collection and junk debt buying a big business.
When we first acquired a credit card in the seventies, we needed a good credit rating to get one. And, the deal was, if you did not pay this unsecured debt, your credit rating would suffer. Back then, there were not enough debt collectors to chase down delinquent accounts. Besides, banks charged a high interest rate to protect against any losses.
Unfortunately credit cards became very popular. It is unfortunate because as credit card operations grew, the amount of bad consumer debt grew and the opportunities for the debt collection, debt buying and debt relief businesses grew.
According to creditcards.com, today only two to three percent of credit card accounts go into default. The banks plan and budget for those bad debts ahead of time. In addition they are sometimes insured against those inevitable losses.
So any money recouped from consumer credit card bad debt is “found” money.
30 to 50 percent of that money goes to debt collectors and collections attorneys as their payment or commission. Credit card banks frequently sell large blocks of defaulted consumer credit card accounts to junk debt buyers for no more than ten cents for every dollar owed. If a junk debt buyer collects half of that debt, they will make an 80 percent gross profit.
What to do if you have credit card debt you cannot afford to pay?
You need to selectively stop paying that unsecured debt and focus on meeting the expenses of your monthly essentials; food, housing, utilities, medical care, transportation and taxes.
But, what about debt collectors, collection attorneys and an eventual lawsuit?
This is the biggest fear of everyone who owes credit card debt. The truth is banks have a great deal of trouble documenting credit card debt to court standards. Signed contracts for credit card accounts do not exist. An unsigned contract of adhesion will arrive in the mail a few weeks after the first time you use a new credit card; neither you or the bank have signed it. Banks have difficulty accounting for the alleged amount owed. What are all the individual charges, payments, interest additions, fees and penalties that went into the calculation of that alleged amount owed? Are they and how are they all accounted for? Any bank documents presented to the court need to be accompanied with a signed, sworn, notarized affidavit from someone like an employee of the bank with personal knowledge of the account in question. No one has personal knowledge of your account because bank credit card operations are so automated that there are millions of accounts for only hundreds of employees. Last year Chase bank paid over $200 million in penalties for issuing phony affidavits to document consumer credit card debt lawsuits. (You can Google this fact for yourself!)
In addition seniors with few assets and whose Social Security check is their sole source of income are considered collection proof. In other words, if a credit card debt collection attorney gets a judgment against them, the attorney cannot collect any money from them because they need that income to live on. This page on the Consumer Finance Protection Bureau web site explains this in more detail. Use the link in Tip 1 at the bottom of the page to access a sample letter to notice a debt collector or collection attorney that you are collection proof. Here is the link to that letter – http://files.consumerfinance.gov/f/201505_cfpb-sample-letter-to-debt-collector.doc .
The attorney in this video tells you how seniors can claim they are collection proof.
Also, there are consumer rights attorneys who get these half-baked lawsuits dismissed all the time. Credit card debt collection law firms are set up to process summonses and file for default judgments. They do not want to actually go to court and litigate. They want the easy money in default judgments.
You should start fighting for your rights long before a court summons arrives.
Debt collectors and collection attorneys do not make any money if they do not collect any money. In addition, they go after the easy targets, like senior citizens who might lack the will or the energy to fight them off.
The Fair Debt Collection Practices Act exists to protect consumers like you from debt collectors making claims they cannot back up. When a debt collector calls you can tell them you do not discuss your personal financial affairs over the telephone with strangers.
The only power debt collectors have is to tell scary lies about court summonses over the telephone. Because they are not attorneys, they cannot possibly send you a debt summons.
If you receive a collection notice in the mail, you should respond to it by denying and disputing the debt, by demanding the debt collector validate the debt, by instructing the debt collector to cease all collection activity. The Fair Debt Collection Practices Act gives you the right to do all of that.
If a collection attorney sends you a collection notice you should do the same thing. You should not call the number on the notice to work out a reasonable payment plan. A token payment has you admitting to that debt in writing and eliminates the need to legally document why you owe the debt.
Your letters will create legal responsibilities for the debt collectors and collection attorneys you send them to. They will also differentiate you from the many other consumers these entities are trying to collect from, creating the perception that you are going to be hard to collect from and are therefore not worth pursuing to make this week’s collection quota.
You can achieve security and peace of mind by educating yourself about credit card debt.
By reading this you have begun (or are continuing) that process. But you need to read and understand more to be confident that you can achieve the outcome you want to achieve.
I spent many months doing that kind research because I did not know who or what to believe. There is too much false information about credit card debt on the Web. In addition, Debt relief scammers selling debt settlement, debt management, debt consolidation and debt negotiation services drown out valuable sources of information, like me.
My name is Mel Thompson. When I was 55 years old I had $63,000 in credit card debt I could not afford to pay. I was in business for myself, and business was not good. In addition I was recently divorced, paying hefty child support and had recently had heart surgery. I came to realize that the only way I could survive was to stop paying my unsecure credit card debt and to focus on paying my monthly essentials. I did a lot of online reading and research on credit card debt, credit card banks, debt collectors and junk debt buyers. As a result I learned how to defeat the banks, debt collectors, collection attorneys and junk debt buyers; how to stop their harassment; and how to prevent or defeat a credit card debt lawsuit. I am not proud of avoiding $63,000 in credit card debt, but I am proud of learning how to avoid being victimized by the consumer debt business. In addition I am proud of the simple, effective program I have developed based on my research, and I am proud that I have been able to help many other people put their credit card debt behind them without suffering needlessly.
I put everything I learned into a series of ebooks on credit card debt totaling about 100 pages. They include the letter I developed to send to debt collectors and collection attorneys. There is also a lot of supporting information about why my approach works, which I back up with links to original source material in major mainstream publications and websites.
10 Steps to Not Paying Your Unaffordable Credit Card Debt
5 Ways to Defeat Debt Collectors in 90 Days and Prevent Lawsuit
How to Confidently Handle a Credit Card Lawsuit When the Debt Is Yours
These books and the letter have worked well for the many people who have already taken advantage of them. And, I protect everyone with a 60-day, no-questions-asked, money-back guarantee on any money paid.
I am not an attorney and this content is not intended to be legal advice. Anyone with unaffordable credit card debt should find the right local consumer rights attorney because they make most of their money suing debt collectors on behalf of consumers who owe debt. I encourage you to do this because a good consumer rights attorney will confirm what I am telling you.
If you need help now, you can evaluate my program here.
Get control of your happiness and take advantage of my resources. What do you have to lose?