Fixed income debtors face special challenges when dealing with debt that may have existed before their income shrank significantly. Retired seniors, disabled veterans and other individuals who aren’t likely to experience an income increase in the future may find that repaying debt is next to impossible.

How fixed income debtors resolve their debt issues:

Try to avoid the collections process by contacting your creditors immediately about the change in your circumstances. This should be done in writing and you should provide evidence of your changed circumstances if at all possible. Some creditors may be willing to reduce and/or settle your debt. And some creditors (this is rare) may forgo going after you if they believe that it will be impossible to collect. Creditors completely forgoing the collections process because of your changed financial circumstances is possible, but not very likely.
Understand your rights as a fixed income debtor. Your social security payments and some pension payments are exempt from seizure by creditors even if they sue you. If all of your income comes from exempt sources, contact your bank and let them know that all of the money in your bank account is exempt from seizure by creditors.
Be careful about selling your home if a creditor has placed a lien against your property. Creditors with a lien against your home will have a right to some of the proceeds if the home is sold and if it is sold for more than the mortgage. But remember, no creditor can force you to sell your home.
Consider discharging your debts in bankruptcy. If you’re a fixed income debtor, it is likely that you will qualify for a discharge in Chapter 7 bankruptcy which will prevent creditors from continuing to pursue your for payment.