Financial Exploitation of Seniors

In decades past, a person could count on working for the same company for decades and retiring with a pension and probably a home that was paid off. Senior citizens could look forward to “golden years” spent fishing or hitting the road in an RV or enjoying time with their grandchildren in relative financial comfort. Even people on fixed incomes could get by because they could look forward to being mostly debt-free once they retired.

But the world doesn’t work the way it used to. In many ways, we’re still learning about and adjusting to all of the ways that the world changed because of the recession that started in 2008. Economic realities for senior citizens were already shifting before the recession, but the recession accelerated and amplified some of the changes that were already taking place. The National Consumer Law Center notes that many seniors are currently being financially exploited by aggressive lending and debt collection practices.

Seniors Feeling the Squeeze

It’s an unfortunate fact that more seniors are feeling financially squeezed these days. Their out-of-pocket medical expenses and housing costs have been on the rise, while a lot of people lost their pensions or retirement funds when the stock market took a nosedive during the recession. Social Security benefits have been more or less stagnant. Seniors on Social Security received no cost-of-living increases to their benefits in 2009 or 2010, and have seen very modest increases of less than 2 percent per year since 2012.

One of the outcomes of rising costs and reduced incomes for seniors is that many seniors are experiencing mounting credit card debt. Even before the recession, the average credit card debt for people ages 65 to 69 had risen by 217 percent from the ‘90s to the 2000s. According to AARP, seniors now have more credit card debt overall than younger people, with those ages 50 and up carrying an average combined balance of $8,278 in credit card debt as of 2012. That was about $2,000 more on average than people under 50.

Seniors also saw the greatest increases in mortgage debt during the recession, and are increasingly struggling with the burden of student loan debt from going back to school later in life or co-signing student loans for younger relatives, according to the National Consumer Law Center.

How Debt Affects Seniors

With increasing debt loads also comes an increase in the rate of serious nonpayment and bankruptcy filings among seniors. Collection agencies have become more aggressive about debt collection in recent years, including for medical debts that these days will result in lawsuits and garnishments when in the past the same kinds of debts may have been written off.

Seniors are finding they’re being contacted by debt buyers attempting to collect on debts that may be years, or even decades, old. Their Social Security checks are being garnished — and for many seniors any loss of their limited incomes can be devastating. An estimated 1 in 5 seniors spends 40 percent of their income on debt repayment, which often doesn’t leave enough to pay for food, utilities, and the significant medical and prescription drug costs many seniors face.

Given that many seniors live on fixed incomes with no real expectation that they’ll be able to increase their earnings, it can be next to impossible for a senior to dig himself or herself out from debt that accrues late in life.

Need Consumer Protection?

However, the situation for seniors facing overwhelming debt isn’t without hope. There are many laws that protect consumers from abusive debt collection practices. An experienced Ohio consumer law attorney can help seniors put a stop to harassment by debt collectors, and negotiate payment plans to make debt payments more manageable for people living on limited or fixed incomes.

If you’re a senior experiencing harassing or abusive debt collection techniques, Ohio consumer law attorney Jeremy Heck can discuss your situation and explain your options. Call Luftman, Heck & Associates for a free consultation today at (888) 726-3181.