FACING DEBTS DURING RETIREMENT

Thanh N
21.08.14 01:51 AM Comment(s)

Many people from Maryland invest in retirement plans and save money to live their life peacefully post-retirement. However, credit cards, mortgages and student loan debts may lead to financial challenges during retirement.

According to reports, many people invest in a second home later in life. The Consumer Financial Protection Bureau stated that from 2001 to 2011, there was an 8 percent increase in homeowners above the age of 65 who had mortgage debts. People above the age of 75 during this period had an increase in mortgage debts from 8.4 percent to 21.2 percent.

When faced with mortgages, many people wonder if they can pay off the debts from their retirement funds, but this decision depends on the circumstances and the finances of each person. It is important that every effort be made to pay credit card balances on time. Reports indicate that although people are careful about paying their credit card debt, auto loans have been increasing. Also, student loans, which often transfer to the parents if the student cannot pay, can cause financial troubles as well.

When faced with unmanageable debts during retirement, there are various options available for debt relief. First and foremost, the person should write down the names of the credit cards and other debts the person owns, along with the minimum payment that is due on each debt. The debts with highest interest rates should be cleared, followed by the other debts. The person may also seek debt consolidation and may negotiate with creditors for a lower interest rate. They may also refinance their property for 15 years instead of carrying the loan into retirement.

If debts are very high, a Maryland resident may file for bankruptcy to escape creditor harassment and to get a fresh financial start. The person may choose from various bankruptcy options, including Chapter 7, Chapter 11 and Chapter 13. Filing for bankruptcy will ensure that all collection actions and lawsuits against the person are addressed and rectified.

Source: USA Today, “Debt: The big threat to a happy retirement,” Rodney Brooks, Aug. 12, 2014