Ask the Attorney

QUESTION: My husband and I are retired and on social security. We are over our heads in debt with credit cards. The monthly payments are taking all of our money and the balance never seems to go down. We can’t even buy our prescriptions. Is there anything we can do?

ANSWER: Yes there is. This is not that uncommon anymore. Credit card companies issue credit to most anyone now – even retired people on a fixed income. It’s the “dangling carrot.” The people who have limited income and can’t afford to buy a new couch or television are presented with a “pre-approved” credit card which will allow them to buy those things. The problem is that you have to pay it back in monthly installments where almost your entire payment goes to interest.

Beware of the “pay pennies on the dollar” advertisements out there for debt settlement and debt consolidation companies. Those do not work for a whole lot of people, especially those on a fixed or limited income. Basically, they tell you to stop paying your debts and to pay them a monthly payment. After about a year or so they will try to “settle” one or more of your debts. In the meantime, your creditors are calling you for payment, turning you over to collections, and they can even bring a lawsuit against you to garnish your wages or bank account. How can they do this? Because you haven’t made any payments to your creditors in a year! The debt settlement company has no legal means to stop any collection activity against you.

Your only alternative may be bankruptcy. Let me just say this, bankruptcy is not a dirty word anymore. It is a legally recognized and viable option for a lot of people. It is a process through the Federal court system for persons who cannot afford to pay their debts. No one should have to forego buying prescriptions and food because they cannot pay their credit cards bills. It will stop all collection activity including wage garnishments, bank garnishments, repossessions, foreclosures, etc., and those phone calls. It may be the fresh start you need so you can get back on track and sleep at night.

Michael B. Walling is an Elder Law & Estate Planning attorney with an advanced Master of Laws degree. He is the managing attorney at The Elder Law Center and the law firm of Michael B. Walling, PLC. He has offices in Battle Creek and Portage, Michigan. Mr. Walling is also a part-time Professor at Western Michigan University.

This column is intended for general information purposes only and should not be considered as legal advice to any particular person.