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FACTS ABOUT DEBT AND SENIORS
The debt collection industry has changed dramatically in the last few years. In the past, most home and car lenders have never hesitated to chase debtors who fall behind on payments. But other consumer lenders, like credit card issuers, traditionally did not tail debtors for more than a few months. As the number of debts in default has ballooned, however, a new breed of collector has evolved, eager to buy up consumer debt that creditors have given up on. Unlike old-fashioned collection agencies that pursue debtors on behalf of a client-company and keep a set percentage of what they can collect, the newer “junk debt” buyers acquire huge portfolios of bad debt at a discount and may keep 100% of whatever they can recover. The result is that the buying and selling of delinquent credit card debt is now a multi-billion dollar industry. Unsurprisingly, the situation with debt and seniors has also changed drastically since the 1980s. For decades, finding an older American mired in debt was the exception, not the rule. Increasingly, however, the elderly find themselves sinking deeper into debt. In fact, debtors 65 and older are now the fastest growing age group filing for bankruptcy; moreover, their debt does not arise from profligate spending, but simply from trying to pay for necessities on a limited income. This debt is fueled in large part by skyrocketing credit card debt. Among the elderly with incomes under $50,000 (70% of seniors), one in five with credit card debt is in hardship – spending more than 40% of their income on their debt payments. Medical expenses also play a significant role in the running up of credit card debt, with may seniors turning to credit cards because they cannot afford to pay for their monthly prescriptions in cash. The good news, however, is that 90% of these indebted seniors depend on Social Security as their major source of income, and that’s bad news for the credit card companies because under federal law Social Security income cannot be garnished. Clients of Debt Counsel for Seniors and the Disabled, however, can rest easy knowing that they are protected from the harassment and illegal collection tactics of creditors and collectors, and that their right to shield their income from creditors is fully exercised. |
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