Many seniors own their home outright and many have a mortgage that is much less than the full value of the home. If these seniors get in too deep with their credit card debt and are in danger of defaulting, they could have liens placed on their property by the credit card companies/banks. If they live in a state with a homestead exemption, which does not protect the home from judgment creditors, they need to take steps to protect the most important asset they own, mainly their home.
If they are over 62 years old they may qualify for a Reverse Mortgage which will fully protect their home from judgment creditors without having to make monthly payments on their mortgage during their years in the house.
Following are some questions and answers, which should explain why a Reverse Mortgage is an asset protection necessity.
Answers to some questions about how a Reverse Mortgage can assist you in working with Debt Counsel for Seniors and the Disabled.
If I want to determine whether a Reverse Mortgage is right for me, how do I start the process?
ANSWER: You may start the process by letting DCSD know that you would like to start the Reverse Mortgage process. Call 1-800-992-3275 ext 1005 and we will help you determine if a Reverse Mortgage is right for you and how you get started.
How will the Reverse Mortgage protect me from aggressive creditor collection techniques?
ANSWER: The liens on the house offer a significant level of protection and the creditor would likely decide that it is not worth the time and money it would take to be in 3rd position (Behind the bank and HUD not to mention that in many cases it would be 10, 15 or 20 years before they would be able to collect on the debt.)
What about my home? Can a Reverse Mortgage prevent a lien being placed on my home?
ANSWER: No, but it will GREATLY reduce the likelihood. A Reverse Mortgage lien on property usually discourages creditors and here's how: All Reverse Mortgage liens are 150% of the appraised value of the home. EXAMPLE: If you have a $300,000 home, the lien would be $450,000. Most creditors would easily see the futility in paying costs to secure a judgment and then incur costs of placing a judgment lien on the property. A property with a liens that is 150% of the market value is not likely to yield anything for the credit card company and they know it. So, in many instances they write the debt off as uncollectible.
What are some of the other benefits of employing DCSD and obtaining a Reverse Mortgage?
ANSWER: DCSD will protect you from creditors garnishing your income, therefore you do not have to pay these creditors once you are in the program. The Reverse Mortgage company will allow you to convert a sizable portion of your equity to pay off bills, make home repairs, improve your standard of living; increase your monthly income and/or establish a line-of-credit which can be put aside as an emergency fund. With a Reverse Mortgage you need not worry about making a monthly payment to the bank, it simply is a loan secured against the value of the home and is paid off with interest when the home is sold.