How to Find Debt Relief for Seniors

Seniors face unique challenges when it comes to debt. Often, seniors are on a fixed or limited income. For many, managing debt gets tougher as we age. You're not alone. Nearly everyone with serious debt issues is eligible for help. And age is no bar. There are ways to tackle debt at any age and find financial peace of mind. 

Let’s explore the debt relief options available to you. We’ll help you understand how each one works and how to choose the best path forward.  

What Is a Senior Debt Relief Program?

A senior debt relief program helps seniors struggling with unsecured debt—debt not backed by collateral—negotiate with their creditors to get them to accept less than what they owe. You can do this while also receiving government and nonprofit support to help you cover your living costs and at any age.

Understanding Debt Relief for Seniors

Debt relief can encompass all kinds of strategies to manage debt. Those might include bankruptcy or credit counseling. And it can mean debt consolidation, when you use a single lower-interest loan to pay off one or more higher-interest ones. If the strategy gives you relief so you can conquer your debt, you can call it debt relief.

Nowadays, when people talk about debt relief, they increasingly mean debt settlement or debt forgiveness programs. We’ll dig a bit deeper into all these terms. 

Eligibility Criteria for Senior Debt Relief

There aren’t any age barriers to debt relief. Indeed, seniors on Social Security (and with no additional income) can often access programs. 

You’ll likely need some income no matter what form of debt relief you choose. But having income below your area’s median may well be enough for some programs.

The other thing to think about is the size of your debts. If your debt is just a cause of worry, you may be better off choosing a different form of relief from someone close to despair. 

Some programs typically harm your credit score, possibly for seven years or longer. And they may not be easy to complete. So, they’re typically not worth it unless your debt is causing you real distress. Pick the form of debt relief that most closely meets your needs.

Types of Debt Relief Available to Seniors

The approaches to debt include:

• Consolidate your debts to get a more affordable payment, a lower interest rate, or both.

• Work with a credit counselor to get a handle on your budget.

• Get help from family or friends.

• File for bankruptcy protection.

• Settle your debts for less than the full amount you owe, either on your own or by enrolling in a program.

Let’s explore some of these in more detail.

Debt consolidation

This can be a good way forward if you have a good credit score. Debt consolidation can be especially helpful to those who are paying high interest rates on their credit cards and other debt.

The way debt consolidation works is you take out a new loan and use it to repay multiple smaller debts. The new loan should have a lower interest rate than what you’re currently paying or it’s probably not worth doing. 

You could end up making just one monthly payment that’s lower than your current combined debt payments. That likely means improving your cash flow, giving your budget immediate relief.

To get a low interest rate on your new consolidation loan, you’ll need at least a fair credit score and a reliable source of income. If the new rate is too high, you won’t benefit as much from consolidating your debts. 

Credit counseling

An accredited nonprofit credit counselor can provide independent, helpful advice and suggest various possible paths out of debt. 

Credit counselors can help you organize your finances and work with a budget. They could also enroll you in a debt management plan (DMP). In a DMP, the credit counselor may be able to get your creditors to agree to lower your interest rate or waive fees. But you’ll need to agree to stop using credit cards while you’re in the program, and the payment will be designed to fully pay off your debts in three to five years. The payment turns out to be unaffordable for some people.

Bankruptcy

Bankruptcy is a legal process for dealing with debt. You may belong to a generation that views the prospect of bankruptcy with shame. But it shouldn’t be that way. Anyone can find themselves with unmanageable debt. And it often occurs through no fault of their own.

Bankruptcy is a financial decision, not a moral failing. 

In a Chapter 7 bankruptcy, you can walk away from your eligible debts, but you might have to give up some of your assets. In a Chapter 13 bankruptcy, you’ll pay off your eligible debts within three to five years and you don’t have to give up your assets. In both kinds of bankruptcy, creditors have no choice but to participate. 

Chapter 7 is highly successful, but there are income limits. Chapter 13 has no income limit but about half of the cases fail because the payment is too high.

Retirement accounts are generally protected in bankruptcy. If that’s your sole source of income, consult with a bankruptcy attorney to discuss your specific situation and whether declaring bankruptcy might make sense. If it doesn't work for you, consider one of the other types of debt relief listed here.

Debt settlement

Debt settlement for seniors is a possible option if you’re experiencing financial hardship and can’t afford to fully repay your debts. There is no minimum credit score requirement for debt settlement, and you can go at a pace you can afford.

You can negotiate with creditors yourself. If that sounds intimidating, you can work with a professional debt settlement company who will negotiate on your behalf. Be sure you’re talking to a reputable company by checking them out. Check Trustpilot to see what consumers who have used the company think, and look them up on the Better Business Bureau’s website as well.

What is Freedom Debt Relief for seniors?

You’ll start by having a chat with one of our debt experts to learn how Freedom Debt Relief works. He or she will listen without any judgment, give you a free debt evaluation, and advise you on your options.

If you and your expert agree that debt settlement is your best option, they’ll set up a dedicated account where you can start saving up money to offer your creditors. This account and the money you deposit is yours, and you control it.

Some people choose to stop making payments on their unsecured debts to build up funds faster. Any time you stop paying your bills you will likely suffer credit score damage and could be sued. However, if the creditors know you’re enrolled in a debt settlement program, they may be willing to work with you.

When you have enough money, your debt settlement expert will negotiate the first debt, asking your creditor to accept less than the full amount you owe but consider it payment in full. Once they reach an agreement with your creditor, it’ll be presented for your approval. If you approve it, the debt is paid from your account. The debt settlement company’s fee is paid from the same account. Then, the settlement process starts again for the next debt. 

Why would creditors agree to reduce the money you owe? Because it might be their best chance at recovering any of the debt at all. Delinquencies, defaults, collections, and court cases are expensive. And they may decide that it’s more profitable to accept less than the full amount than to risk the possibility of getting nothing.  

Does it work? Absolutely. So far, Freedom Debt Relief has helped more than 4 million customers settle over $18 billion of debts. And some of those 4 million were seniors seeking debt forgiveness.

How to Choose the Right Debt Relief Program

Often, the debt relief program chooses you rather than the other way around. For example, if your debt is mainly unsecured (credit cards, medical bills, etc.) and you don’t own any assets that could be taken by the court, Chapter 7 bankruptcy may be your best path out of debt. 

If you have good credit and sufficient income but you’re feeling overwhelmed, debt consolidation might be a choice to explore. 

If you intended to repay your debts in full but genuinely can’t, debt settlement (aka debt relief) could help you get rid of your debts and lower the financial stress in your life.  

Before you choose a strategy, make sure you examine the factors that caused the debt in the first place. The last thing you want is to get rid of the debt, only to have it creep back up again. You’ll want a plan for keeping your budget in check after your debts are gone.

How can senior citizens get out of debt? By choosing their best way forward after comparing the options, fees, and their own eligibility for different methods of getting out of debt. The very act of deciding on a path can bring some peace of mind.