My Top Three Tips for Seniors

Image courtesy of Tax Credits

Image courtesy of Tax Credits

Dealing with debt is a stressful thing at any age. But juggling bills or worrying about wage garnishment or foreclosure are especially difficult for older adults. Here are three common mistakes that particularly hurt older adults.

1. Don’t drain your retirement accounts to pay bills. Whether you’ve saved $5,000 or $500,000 in your 401 (k)s and IRAs, do not drain those funds to pay down debts like credit cards, medical bills, or car loans. Every state has “exemption” laws, which describe things that creditors cannot take from you. Federal law also gives you “exemptions.” Retirement accounts are fully exempt from creditors, even if they take you to court. When you drain your retirement, you are giving away money you’ll need and that the law protects for you. It is almost never a good idea.

2. Don’t ignore legal papers. If you’ve fallen behind on a debt, you’ll start getting calls and letters right away. Eventually, you may receive papers saying a creditor has filed a lawsuit against you. Don’t ignore them. Often you have as few as 20 days to respond; if you don’t, the creditor may win by default. They can use that judgment to garnish your wages or freeze a bank account. If you get legal papers, read them carefully, note when you received them, and then get advice from an attorney about what you should do.

3. Don’t fall for debt relief scams. There are many businesses that say they’ll consolidate your debts or modify a mortgage. Unfortunately, many of these are scams. Be very skeptical. Often, companies charge high fees and don’t explain where your money is going or that creditors can still sue you while the debt consolidation is going on. If you need help, contact a bankruptcy attorney or a local non-profit to see if they can help.