Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com.
Dear To Her Credit,
My husband is 79, and I am almost 77. For 59 years, he handled all our finances. I never worked outside the home. I only spent money if he said we could. I trusted him.
Now, he had a stroke a few years ago and other heart issues and is totally disabled. I have health issues, also. It was extremely hard to learn how to pay the bills and understand what he was doing, but I have struggled along and even have a budget.
We have everything under control except one creditor. We can't afford the interest rate, as it is high. All the other creditors have lowered their rates, but this one just won't. We have called them and was told to send what we can, so after we worked and got it to what we can send, they are fining us for late fees although we did send them what we could.
We can't sleep and are getting very tired and worn out, trying to find ways to manage. We have to pay for all maintenance for our home as we are not around family. Do you have any suggestions for us? -- Luella
Dear Luella,
I'm very impressed that you have not only taken over the money management, but you've made a budget. If only more people did that!
Now to find a way out from under that high-interest debt. When worrying about bills interferes with your sleep, it's not good for your health. And the balance will get bigger -- much bigger -- if your creditor is slapping late fees on and then applying high interest rates to the whole thing.
Unfortunately, you can't make them lower the rate (although you can ask again in a couple of months). And if you pay less than the minimum amount, they can charge late fees. The best ways to get rid of this debt are to pay it, transfer it or negotiate it.
Pay it. If you can take money from a whole life insurance policy or savings, consider doing so. Maybe you can sell an extra car or RV, or take a reverse mortgage on your house. Be sure to look at your total financial picture before making these decisions.
Negotiate it. Creditors often negotiate debt because they would rather get some of their money than none. It's not easy to negotiate your debt, but it might be the best solution this time.
As a very, very last resort, you can probably have the debt discharged in bankruptcy. I hate to mention bankruptcy, because for most people, bankruptcy is demoralizing, difficult and time-consuming. And it takes money to file for bankruptcy -- money that could have gone toward paying off bills! However, at this stage of your life you have limited options for getting out from under crushing debt loads on your own. If you owe more than, say, $50,000, and you have limited income, bankruptcy may help you.
Each of these choices will have different impacts on your pocketbook and on your credit report. That makes now a good time seek help from a nonprofit credit counseling agency. Many people think credit counseling is for people who can't stop spending or don't know how make a budget. You've already taken control of your finances -- you just need someone to help you make good decisions regarding this debt, so you can concentrate your energies on taking care of yourself and your husband in this difficult time.
Sally Herigstad answers questions about credit every week for CreditCards.com. Herigstad is a certified public accountant, author and speaker. She also writes regularly for MSN Money, Interest.com, Bankrate.com and RedPlum.com, and has been a guest on Martha Stewart radio and other programs. You can read more about personal finance and download free budgeting worksheets at her website: www.sallyherigstad.com
To Her Credit answers a question about a debt or credit issue from a CreditCards.com reader each week.
Send your question to Sally.
Published: May 14, 2010
Three most recent To Her Credit stories:
Should one spouse take on full debt load? – A married couple with joint card debt wants to transfer the balance to a lower rate card. Should the better credit score spouse take on the burden alone? ...
Can you use dad's credit card when he's ill? – An adult child is taking care of her dying father and wonders about the legality of using his plastic to pay for bills and medical expenses ...
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