Elderly and deeply in debt
self help article
by Steve Bucci

Prosperity and financial wellbeing self help article:

“Dear Debt Adviser, I am 76 years old, use a wheel chair and am unable to work. I am being harassed by collectors.

I tried a Senior Affairs attorney and was told to have consumers write letters for me. They figured my bills, which were incurred while I was working, and Social Security will not cover them.

In fact, I have had to apply for food and help with utilities. My home has an equity loan against it. I am a widow. What do I do? Please help. -- LaVonne “

First off, let me say that you are not alone.

Many seniors are having trouble making ends meet due to the downturn in the stock market, low bond yields and increasing property taxes and medical expenses.

Knowing that does not solve your problems, but it sometimes helps to know that others are enduring similar situations.

It is not legal for bill collectors to harass you on the phone. The Fair Debt Collection Practices Act protects you from abusive collection techniques.

You can get information about what can and can't be done at the Federal Trade Commission's Web site.

You may report any abusive practices to the Federal Trade Commission. In addition, you can request that the collectors not contact you at all and they must comply with your wishes.

You mention that you own your home and that you have a home equity loan. I do not know how much untapped equity you have in your home, but as a homeowner you may have options available to you to raise money using your home.

If you want to remain in your home, one option you may consider is a reverse mortgage. These mortgages allow you to use the equity in your home for additional monthly income.

Depending on the type of mortgage and amount of equity in the property, the lender pays you a monthly amount that is repaid at the end of the loan by the sale of your home when you no longer live there.

Usually, the reverse mortgage must be the only loan on the property. If money is owed on the home, as in your case, the loan must be paid before the reverse mortgage begins or out of the monies from the mortgage.

Reverse mortgages are offered in different programs and packages, so do some research and find out if any of the mortgages would work for you.

Keep in mind that you remain the owner of your home. And as such are responsible for the taxes, maintenance and repairs.

Another option is to sell your home and buy a less expensive home, or rent a less-expensive apartment or move in with a family member. Moving is a difficult decision to make for many seniors and you may not be comfortable doing so.

Talk with a family member, trusted friend or financial adviser and determine if selling your home and moving would be the best solution to raise additional income.

You may consider contacting a reputable, nonprofit credit counseling agency for advice on a household budget, home financing options such as a reverse mortgage and whether you would benefit from a structured debt management program.

These organizations can help you lower interest rates and fees on credit accounts by negotiating with your creditors on your behalf.

To assure you are dealing with an honest organization, see my earlier article on "Choosing a credit counseling organization."

You say that you saw an attorney. If you did not discuss bankruptcy, you should investigate it. Even though you own a home, you may be able to get relief from your unsecured debts and "cram down" or reduce your equity loan indebtedness.

Once again, choose carefully and ask questions before you decide.

Lastly, look for and take advantage of programs specific for seniors such as prescription drug affordability programs, (Pfizer and Johnson & Johnson both have programs), property tax relief programs (Check with your state or county tax assessor) and energy and weatherization assistance (Contact the Department of Energy) to help save on monthly or annual expenses.

I wish you the best, LaVonne. Life is too short to put up with harassment.

My dad is 85 this year, and he is still a formidable force to contend with! Good luck.

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The Debt Adviser, Steve Bucci, is the president of Consumer Credit Counseling Service of Southern New England. Visit CCCS for additional debt advice or visit the website at Bankrate.com to ask a debt question.

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