By Bob Negele
Often overlooked in discussions of financial health, senior citizens face the same problems with consumer debt and mortgage foreclosures as do younger Americans.
However, the common assumption is that seniors are at a much lower risk for financial troubles. Although, upon closer inspection, not only are senior citizens facing financial struggles at high rates, they also encounter unique obstacles when it comes to reducing debt and avoiding foreclosure.
According to the San Jose Mercury News, government and bank programs that provide mortgage relief for consumers often overlook senior citizens. This gap in financial help leaves senior citizens particularly susceptible to plummeting home values.
In fact, the American Association of Retired Persons found that homeowners who are 55 years of age and older account for about 25 percent of home foreclosures each year. In 2010, seniors will account for over a million foreclosures.
The states with the highest rates of home repossession amongst seniors are Michigan, California, Nevada, and Colorado.
When attempting to remedy their mortgage problems, seniors also face some unique limitations. Specifically, loan modification programs often do not assist senior citizens because most seniors do not have earned incomes.
Further, because their options are so limited, seniors are more likely to fall prey to financial predators. These sharks claim to be able to save a senior’s home from foreclosure, but require an initial fee. In the worst cases, these predators may walk away with both the fee and the title to the house.
In a trend that reflects national financial events, the state of Maine has faced a dramatic increase in the number of elderly consumers in debt.
One debt relief agency in the state estimates that the number of seniors in debt has risen by at least 40 percent in the last few years. As the average age in the United States continues to rise, a rapidly aging population will face unique issues with consumer debt.
Particularly, senior citizens often encounter difficult circumstances such as the death of a spouse or an increase in medical expenses. Such incidents pose daunting financial challenges, especially to people with fixed incomes.
Also, unlike younger people, many older Americans cannot respond to financial emergencies by getting a second or third job.
Of course, not every financial challenge is more difficult for senior citizens.
One advantage for seniors tackling debt problems is that their mortgages are often very low, since they’ve typically spent years paying off their home loan. In some cases, seniors may use the equity from their home to reduce debt. But even this move comes with problems, and reverse mortgages have caused distress in many families.
In addition, another option for seniors with debt is to file bankruptcy. While the filing may affect their credit rating, this may not affect a senior the same way it would a younger person and may even allow an older American to save his or her home.