Over 50 and Tackling Debt? Things You Should Consider

July 1st, 2010 by Reed Allmand

The number of Americans over the age of 50 with large amounts of debt and little to no retirement savings is growing. Many debtors over 50 who dreamed of retiring in the next 10 to 15 years found themselves jobless, facing foreclosure and the owners of retirement accounts with declining value when the recession hit.  So how does a debtor over 50 battle this recession so that they can safely journey towards their retirement years?  Let’s take a look at a few wise choices older debtors might consider:

1. Protect your assets and future income from creditors. The old and common advice that debtors should try to pay off their unsecured debts such as credit cards might not work best for debtors in this age group.  The money paid to credit card debt might be best used to invest in a retirement account which cannot be seized by creditors.  And while creditors can sue a debtor of any age, filing bankruptcy will stop any creditor lawsuits against the debtor.
2. Downsize your secured debts if at all possible.  Many debtors reach 50 and find out that they have too much house or too much car. One of the best ways to free up more money for your retirement savings is to downsize those outsized mortgages and car notes.  Consider selling your home or car if necessary.  Also consider filing Chapter 13 bankruptcy or Chapter 7 bankruptcy which may allow you to surrender secured property and discharge the balance of the debt owed.
3. Finally make sure that you have health insurance and that you have enough money in a savings account to cover the deductible and out of pocket expenses.  Medical debt is one of the leading causes of financial troubles for older Americans.  But fortunately, if you have already incurred large amounts of medical debt, you can use bankruptcy to discharge those debts and protect your assets and future income for debt collectors.