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How to manage debts
No senior citizen should spend his or her golden years worried about credit card debt, but an increasing number of seniors are doing that today. For people living on a fixed income, with rising medical costs, escalating debt could lead to financial ruin. There are many debt-management strategies that can help retirees sleep with ease and dig out themselves out of a financial hole.
How to manage debts Step 1 - Reverse mortgages. For retirees struggling with high-interest credit-card debt tapping the equity in their homes is a bad idea. For some, a better option is a reverse mortgage. With reverse mortgages, home equity is transformed into cash, which is received on a monthly basis, in a one-time lump-sum payment or as a credit line to use when needed. The money received through a reverse mortgage doesn\'t need to be paid back, as long as the owner continues to live in the house.
How to manage debts Step 2 - Tapping life insurance. For those who have a permanent life-insurance policy with cash value, one option is to consider taking a cash-surrender loan, which is basically a loan that doesn\'t have to be paid back. The cash value of the policy is essentially a dollar amount the owner would be paid at any known time should he or she cancel the policy. The longer the policy has been in place, the more cash value it\'s built up. The owner can take up to 96 % of it out through a so-called cash-surrender loan. The insurance company will recoup the loan balance plus interest after the owner dies.
How to manage debts Step 3:- Bankruptcy. Filing bankruptcy is never an easy choice, and it can be particularly tough for seniors, but it may be the only option for some.
How to manage debts Step 4 - Tapping savings. Most seniors with debt problems have little in the way of savings. In fact, a report by the Kaiser Family Foundation released in 2005 found that 30 % of Medicare beneficiaries have between $12,900 and $14,355 in "countable assets," which include the value of their pensions, IRAs and cash savings.
How to manage debts >
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