Battling debt on a Social Security check

By Steve Bucci, Bankrate.com

Dear Debt Adviser,
I have $7,000 in personal and credit card debts. My only income is $540 from Social Security. My children take care of other expenses. Still, I seem to be able to pay the minimum. What do I do, other than shoot myself?
-- Carol

Dear Carol,
I hear your frustration and the growing number of seniors facing debt issues share your concerns. There is a common misconception out there that seniors have fewer debt issues than the younger population. This is not so. They only have less time and fewer resources to deal with the same problems so many of us face. I'm sure we can work out a much better solution than the alternative you have stated.

The most important thing for you to do immediately, if you have not already done so, is stop adding to your existing debt of $7,000. As you have found, it is hard enough to get out of debt on a fixed income and it is only made more difficult if additional charges are added.

The next thing I would recommend is really difficult and may be embarrassing. Sit down with your children and create a monthly spending plan for yourself. Because your children are helping you meet expenses, I would include them in the planning. If they are not aware of your personal and credit card debt, now is the time to tell them because you are going to need their help. Due to the fact that your monthly income from Social Security does not currently meet your expenses and most likely won't any time soon, it is important for all involved to know how much additional income you require for the short and long term.

Here are some options for dealing with the debt payments:

If you are a homeowner, consider tapping the equity in your house through a reverse mortgage, cash-out refinance mortgage or a home equity loan or line of credit.

Contact your creditor, explain your situation and ask them if they have a hardship program that will allow you to reduce the payment each month.
If your children are financially able, they can pay off the debt now and save the interest charges that would otherwise add to the payoff amount.

Determine how much additional money is available to add to the minimum you are currently paying and make the largest payment you can each month. As little as an additional $10 will make a big difference. You can see the results of adding payments by using Bankrate's "What will it take to pay off my credit card?" calculator.

Since you are making the payments currently, I would not recommend trying settlements or bankruptcy. Those are more desperate measures for more desperate times.

Lastly, I would recommend you explore any unexplored avenues to increase your monthly income. You may have already exhausted all of these avenues, but more and more seniors are finding both a renewed sense of purpose and some extra money in re-employment.

Good luck!

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