Growing Debts for Over 55s

 

Getting into debt can happen to anybody. Indeed, for many people, debt is a day to day fact of life, with mortgages, credit card balances and personal loans being common forms of debt. Debt is not, in and of itself, necessarily a bad thing. It becomes a problem, however, if you cannot meet your obligations. This can happen due to your income being lower than your total expenses including bills and debt repayments. The UK is experiencing its harshest economic climate in years with many jobs being cut, wage increases being proportionally lower than the rising inflation rate, wage reductions and the government embarking on its much talked about austerity programme.

 

The squeeze felt by people over 55 often relates to reduced savings, increased mortgage debt, a rise in unsecured debt and the sometimes crippling expense faced by parents looking to pay the costs of university for their children. As the over 55s approach retirement, their ability to deal with their existing debt can be drastically affected by a reduced income. Pension income has fallen in recent years and many retirees are finding that their pension is not sufficient to keep up with the debts they incurred prior to retirement. This can paradoxically lead to over 55s taking out a loan or relying increasingly on their credit cards, which only increases their ultimate debt level.

 

For many over 55 year olds, their home constitutes their single largest investment. Retiring without having paid off the mortgage can become a future debt problem. Accruing debts could eventually lead to the bailiffs coming to your door - a situation not to be wished on anyone. For years, homeowners were told that property prices could only go up. Now that many properties are falling in value following the financial crisis of 2007 - 2009, many who thought their property was safe from devaluation are finding they do not have as much capital as they thought they would have after retirement.

 

Growing debts for the over 55s could potentially be ameliorated by help from the state. Old age pensioners qualify for a number of state benefits. These are means tested, however, and can involve many hours of administration and questioning. Interest rates on saving accounts and ISAs have fallen to record lows in recent years. Those who saved with the expectation of a substantial income through interest may be disappointed and face an uncertain financial future.

 

There are a number of possible debt consolidation programmes that can help you effectively deal with your debts. These programmes and other debt solutions can be explored by contacting the Debt Advice Group. Bankruptcy is the most drastic solution and should only be chosen if other options are not available. Debt solutions involve the listing of your creditors and, at best, negotiating a repayment package that has only a minimal effect on your credit rating.

 

Debt consolidation involves taking out a loan that combines all your current debts into one manageable debt. Debt consolidation is designed to make it easier for you to service your debts, and it also rebuilds your credit rating if you do not miss payments.

 

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