A recent report by the Consumer Bankruptcy Project revealed that credit cards were one of the leading causes of senior citizens filing bankruptcy. In a survey conducted, two-thirds of seniors filing bankruptcy said that it was credit card interest and fees that drove them to bankruptcy, while only 53 percent of younger debtors in bankruptcy blamed credit cards. Not only that, senior citizens in bankruptcy hold a median credit card debt of $27,213 compared to $15,499 for younger bankruptcy filers. Also, 44.8 percent of senior citizen debtors in bankruptcy had five or more credit cards, compared to 32.4 percent of younger debtors. Why such a heavy reliance on credit cards by senior citizens? One of the reasons cited in the Consumer Bankruptcy Project report was that more seniors are leaning on credit cards to pay daily expenses because their retirement income does not properly align with the real economics of retirement. Medical expenses, mortgage expenses and extended obligations to help adult children can all contribute to forcing senior citizens to lean heavily on credit cards just to survive. But senior citizens exiting bankruptcy really need to avoid credit card use because it can create a vicious cycle of debt that could jeopardize their assets.
Below are a few tips on how seniors can reduce their reliance on credit cards after bankruptcy:
- If your mortgage is too high, then downsize. Mortgage payments after retirement can be extremely burdensome. If you have a mortgage that is expensive then consider selling your home and moving to a smaller/cheaper place after bankruptcy.
- Say no to loans to family and friends. While we all want to help out loved ones, loaning money to family and friends after bankruptcy could jeopardize you financial well-being.
- Maintain a quality health insurance plan so that you can reduce your medical expenses. Medical challenges are a part of growing older; that's why investing in a good quality health insurance plan is just as important as investing in your retirement.