Your Parents, Their Credit Card Debt

As many of us continue to work hard to pay off debt, whether it’s credit card debt or a second mortgage, there’s one sector of the society that’s struggling quietly. Elderly Americans are accumulating debt as they too are living month to month. Many consumers 65 and older are using high-interest credit cards to pay for the basics of living. Many are paying their rent, utilities and even their food bills with credit card – which means they’re paying interest on a loaf of bread.

You might be surprised to learn that senior citizens 65 and older now make up the the group with the fastest-growing credit card debt. In fact, between 1995 and 2004, the average balance carried by seniors grew from around $1,970 to $4,906. That’s an almost 150% increase. One survey conducted by AARP had some revealing facts: 30 percent of American retirees see their current debt levels as a problem.

Since that report, it’s believed that the number continues to rise. Further complicating matters is the inability of their children to step in and help. It’s not that they don’t want to, but they’re simply not in a position to lend a hand. Not knowing what their legal obligations are is causing more than a few sleepless nights. So what should you do? Here are a few tips to keep in mind as you move forward with easing your parents’ financial burdens.

Who’s Responsible?

Credit card debt does not transfer to another upon death. That said, a credit card company can take steps to liquidate your parent’s estate following their death. In fact, a credit card company can attach a lien against their home. So while you don’t have to worry about your personal finances in terms of being forced to pay outstanding balances, it can greatly reduce the borrowing power for your parents who are still living.

Why Now?

Most people become a bit more frugal the older they get. They’re often forced to be too since it’s becoming increasingly difficult to survive on a pension or social security payment. A few years ago, it might have been the adult kids stepped up to the plate and kept the cabinets filled with groceries or paid a few bills from their own accounts.

The recession made that hard, if not impossible, for many. This meant mom and dad were shouldering more expenses and often, a credit card was the only way to do that. When catastrophic illnesses, such as cancer or a stroke happens, it usually renders an elderly person completely helpless when it comes to making the payments. Even worse is the lengths some medical collectors will go to in order to reconcile outstanding balances.

The Widow or Widower

In most marriages, there’s one spouse who takes the lead for the family finances. If a couple has been together for decades, a surviving widow or widower who wasn’t the primary family bookkeeper might suddenly be thrust into that role. If she doesn’t know how many accounts the couple had, it can become overwhelming for them to pick up the pieces in that context.

Our Secret

The real tragedy is the sacrifices senior citizens make to keep from becoming what they feel is a burden on their children. They often cut corners on monthly medications or begin paying only the minimum due on their credit cards. The stress alone is detrimental to anyone’s health and certainly an elderly person. Typical responses include how they didn’t want to worry anyone else with their problems or that they don’t need help. They might also be embarrassed.

Money has always been a tough conversation topic and in these instances, it can become even more awkward. Still, if things are out of control, it’s important you get ahead of the problem so that you can keep as little as possible from affecting Mom and Dad.

Once you’re able to discern how bad the problem is, there’s a good chance you’ll be dismissed the first few times you raise your concerns. Stay on the lookout for credit card offers that come in the mail, too. This provides the ideal opportunity to bring up your own concerns.

In the most drastic cases, many have no other choice than to take over the finances. Often, adult children will invite Mom and/or Dad to stay with them awhile. This allows them close physical proximity, which is especially important for their health and well-being. You’ll be able to better monitor the situation, too. The key is to not make them feel helpless. The worse feeling is giving up your independence and most elderly people are vehemently opposed to moving elsewhere. The goal is to keep hurt feelings to a minimum.

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