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BY HANK EZELL
Cox News Service
ATLANTA - More and more elderly Americans are relying on plastic
to pay for their golden years.
People 65 and older have substantially higher credit-card
debt than in prior years, on average, and more of them are declaring
bankruptcy.
''It's hugely embarrassing to most of the elderly
people we talk to,'' said Susan Hunt, regional counseling manager
for Consumer Credit Counseling Service of Greater Atlanta.
They don't feel guilty, she added. ''They've prided
themselves their whole lifetimes on working hard and taking care
of themselves,'' Hunt said.
``Now they are not able to do that anymore, and
they are embarrassed.''
But they need not feel alone. The average credit-card
debt of persons over 65 was $4,041 in 2001, according to a study
from Demos, a public policy group. In 1992, the average was $2,143.
The numbers are adjusted for inflation.
Among those with incomes under $50,000 -- a very
large majority -- one in five families was in ''debt hardship.''
That means they spent more than 40 percent of their income on
debt payments, including mortgages.
In 2001, 82,207 people 65 and older filed for bankruptcy.
That's 244 percent higher than the total for 1991.
A number of factors are involved, but it's basically
a matter of easy credit and hard times.
''There was in the past less use of credit cards
by seniors,'' Hunt said. ``Now there's more. They want to be financially
sound, but don't know how they're going pay for their medicines
if they don't use a credit card this month.''
CCCS clients of all ages are in worse shape than
a year ago, said spokeswoman Gay Watson. Credit-card debts are
bigger, and many have depleted their assets through refinancing
or home equity loans.
For seniors, increasing medical costs are a major
reason but not the only one.
''They may have lost a spouse, and that has significantly
reduced their income,'' Hunt said.
``Then there are increased living expenses. Often
there are questions of home maintenance; things that they can't
do for themselves anymore.''
For many, supporting children or grandchildren
can run up expenses. Sad to say, even divorce and job loss can
play a role.
What can older people do about mounting debts?
CCCS offered these tips:
• Don't be afraid to ask for help, and talk
to your children first. In most cases, they will want to help
you. You can also ask for professional counseling. Go to www.cccsatl.org
or call 1-800-251-2227.
• Set priorities among your bills. Secured
debts come first. When income is limited, always pay your mortgage
first and your car payment second, and don't let your health insurance
lapse. Only when your necessities are covered do you worry about
unsecured debts like credit cards.
• Don't let collectors push you into a bad
decision. If you don't handle collectors well, screen out calls
with an answering machine. Learn your rights under the Fair Debt
Collection Practices Act. You can find details at www.ftc.gov/bcp/conline/pubs/credit/fdc.htm.
• Try to negotiate lower interest rates with
creditors. The better your credit history, the more likely they
will work with you.
A similar move is to ask creditors to accept lower
payments each month. CCCS has found that hospitals and other medical
providers may be willing to go along, Hunt said.
• Don't open additional credit lines or use
''convenience checks'' to pay off debts. This simply shifts your
obligations from one creditor to another.
• Don't cash out the equity in your home without
careful thought. If expenses are already tight, this could put
your home at risk.
A different option is a reverse mortgage, which
can provide substantial income and ensure you keep a place to
live. One drawback is you won't be passing on the property to
heirs -- the bank will get it instead. Go to www.aarp.org/revmort
or call 1-888-687-2277.
• Consider tapping your life insurance. It
may be necessary to cash out value now, rather than saving it
for beneficiaries.
• Last options include bankruptcy and not
paying your bills.
When you die, if you have assets, your creditors
will be paid from your estate. If you have no assets, unsecured
debts will not be passed on to your children.
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