Mortgage payments lead to high debt in senior citizens

Mortgage payments lead to high debt in senior citizens

The dream that most senior citizens in Arizona may have had when entering retirement was that they would have paid off most of their debt, including their mortgages. They would never have imagined that the reality is that the debt they are holding has increased by 83 percent since 2001-the average debt being $50,000 in 2010. Housing-related debt accounts for most of the debt held by Americans over the age of 65.

The reason that the greatest increase in average mortgage debt was seen in families with a head of household over the age of 60 was not that they bought more homes but rather that they borrowed against their homes right before the credit crisis in 2008. Since they are often without jobs and face high medical bills, increased debt could pose many problems for elderly Arizonians. One way they could deal with overwhelming debt is filing for Chapter 13 or Chapter 7 bankruptcy, wiping out most of their bills and putting an automatic stay on foreclosure proceedings without losing possession of assets.

Since they are less likely to be working and relying on a steady income to cover their bills, this increase in house related debt may also lead to an increase in credit card debt. One third of senior citizens already rely on credit cards to pay basic living expenses and additional expenses may increase their credit card debt.

Filing for bankruptcy may help those in Arizona struggling with these bills. When selecting a bankruptcy plan under which to file, Arizona residents' income and assets are considered. Those with a steady but low income may prefer to file for Chapter 13 bankruptcy, where they make court supervised payments based on their income whereas those without a steady income may chose to file Chapter 7 bankruptcy. Either way, Arizona residents should make the decision that suits them best, based on their individual circumstances.

Source: Hartford Business, "Senior citizens struggle with mounting debt," Tami Luhby, May 28, 2013

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