An elderly couple's options for dealing with debt

To Her Credit columnist Sally Herigstad
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, and also wrote for MSN Money, and, and has guested on Martha Stewart Radio and other programs.

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Question for the expert

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
  Answer for the expert

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.
  • Transfer it. Perhaps you can transfer the balance to a lower rate card or a new low-interest credit card. Watch out for high balance transfer fees.
  • 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.

Take care of your credit.

See related: Compare balance transfer credit cards, 8 steps to picking a credit counselor, Explore all options before declaring bankruptcy, 5 tips for those considering bankruptcy, With credit card bills, don't be late, negotiate, Script to negotiate a better credit card deal

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Updated: 11-24-2017