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Should Seniors Bother Paying off Debt?

At some point, is one too old to bother paying off a debt?

Consider this Kansas couple saddled with $120,000 in debt on 13 credit cards. Jim Bostick, then 68, and his wife Francine, then 57, feared they’d spend their golden years in the red. Then “Jim was diagnosed with Alzheimer’s and I knew he wouldn’t be able to continue working,” Francine says in this interview with The National Foundation for Credit Counseling. “With the debt that we had there was no way we could pay it. I lay awake at night,” she says.

The couple finally took action. Francine reached out to the non-profit Housing and Credit Counseling Inc. in Topeka, Kan., a member of the national foundation. In addition to her full-time job, she took an evening cleaning job and launched her own Avon business. Despite his condition, Jim, who was a maintenance and custodial supervisor at Kansas State University, worked 30 hours per week to help the couple stick to their household budget and $2,500 a month repayment plan. “It was probably the greatest thing I ever did,” Francine says.

But was it the smartest?

Based on their age, they should have explored filing for bankruptcy, some experts say. “I think the couple did the ethical thing, but it probably was not in their financial best interest to do what they did, especially at their age,” says Wade Westhoff, a financial adviser based in Danville, Calif. Couples facing retirement – especially if they have already paid off their mortgage – have less reason to worry about the impact of a bad credit rating, he says. “They could have wiped the slate clean.”

The Bosticks were offered bankruptcy as one solution, says Marilyn Stanley, COO of the Housing and Credit Counseling Inc., but they chose not take that route. (The organization typically charges a maximum of $45 for counseling services over a six-month period, she says, although it doesn’t turn away people who are unable to pay.) “Bankruptcy is used as a management tool for some people,” Stanley says. “but the Bosnicks felt responsible for their debt.”

Others agree that the Bosticks took the only right course of action. “If people in debt don’t pay it off you and I will have higher fees and interest rates,” says financial adviser David Hefty, CEO of Hefty Wealth Partners in Auburn, Ind. Plus, he says, the Bosticks didn’t have any medical emergency. “Everyone wants nice things,” Francine says; “we used credit cards to get them.”

For their fortitude, the Bosticks were named “Clients of the Year” by the NFCC.


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    • I’m a senior widow and heavily in debt. I sold a lot my things just to make the minimum credit card payments. Then down the road, used the cards to get the car fixed or pay on my property taxes. Sort of a catch 22 situation. At my age, I wasn’t too concerned with ruining my credit when I stopped paying on my mounting credit card bills. I stopped because I ran out of things to sell.

      After a long soul searching, I decided to file bankruptcy. There’s two ways to look at it. I made the debt and should pay it off or “The devil made me do it”.

      Maybe credit card companies had no business enticing me into high spending limits on my cards. After all if I default, they still make out. The have insurance against people who don’t pay.

      Higher interests? If they were more sensible in the first place, they could keep the interest rates lower than loan sharks rates! But they’d rather go after everyone and their family pets….. yes, even family dogs have been issued credit cards along with college students who had no real way of paying off their bills!

      Maybe an ounce of prevention could prevent a ton of debt in the first place. We have become a nation of “instant gratification”. Get all the nice things even if you aren’t as rich as the 8% of our nation’s fat cats. Of course we want it all. All those cool things are flashed in our faces on TV, the internet and print media. Even the credit card companies hog most of the TV commercial air time with the car companies hog the other half…. again more easy financing.

      Who’s fault really is it? Ours or the credit card companies?

      Remember who got the nice juicy bail outs? Corporations like Bank of America, Citi Corp, Chase and a whole lot more. What did they do with the bail out money???? Give it to the insanely already rich to fatten their wallets even more.

      Me? I’m just a peon who’s about to jump from the red into the green so I can pay my normal bills every month and even maybe be able to buy some new clothes every so often!! I’m filing chapter 7!

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  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.