4 Reasons Seniors Don’t Need to Worry About Debt

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According to the National Council on Aging, over 15 million adults ages 65 and up are economically insecure, with incomes below 200 percent of the federal poverty line ($25,760 per year for a single person in 2021).1 Once retired, they owe more debt than ever before. If you're an older adult struggling with debt, don't stress just yet.

I interviewed Eric Olsen, a bankruptcy attorney and the executive director of nonprofit law firm Help Eliminate Legal Problems for Seniors (HELPS), and we discussed four reasons seniors don't need to worry about debt.

1. Income

Hands counting money

Many seniors receive a pension or some form of retirement income. Federal law protects your income, which includes Social Security. Congress has passed Social Security laws such as SSR 79-4 to protect your income from being garnished — when a creditor takes a chunk of your paycheck or money from your bank to collect a debt.

Pro Tip: We've created a Social Security guide to help you understand what it is, tips for when to start taking it, and how to sign up.

In 1974, the Employee Retirement Income Security Act was established to protect pensions and retirement funds. There are also federal laws that protect veterans' benefits and state laws that protect disability income, IRA benefits, and independent retirement accounts.

2. Bank Account

Person withdrawing money from bank

In 2012, the FDIC passed the Consumer Financial Protection Bureau law, which automatically protects twice the amount of federal benefits (i.e., Social Security and most federal pensions) from garnishment — regardless of what money is in the account — as long as there is less than twice the amount of federal benefit.

Pro Tip: If you're preparing for retirement and trying to get your finances in order, check out our guide to retirement planning.

3. Assets

Man and woman sitting on front porch of house

Your personal assets, such as your car, furniture, and home, are also protected due to exemption laws. These laws also protect against virtually any lawsuits. Most states have a wildcard exemption, which is one of a few exemptions federal and state governments allow in bankruptcy that protects a portion of your personal assets from creditors.

Pro Tip: Check out our financial guide for seniors for tips on managing your finances.

4. Debt Collectors

Stack of credit cards on computer keyboard

You may receive a lot of phone calls, letters, or legal papers from debt collectors, which can be daunting and stressful. There's no need to panic, thanks to the Fair Debt Collection Practices Act that was passed in 1974, which established a set of rules collectors have to follow when trying to collect debt.

Pro Tip: If you're struggling financially, visit our guide to getting out of debt.

Further, the law states that if a debt collector is sent a cease-and-desist letter, in writing, saying you don't want them to contact you anymore, then the debt collector can no longer contact you via telephone or letter. It also says the debt collector can't call or send a demand letter if you’re represented by an attorney.

If you're in debt and can't afford a lawyer, but you need to send a cease-and-desist letter, HELPS is a great resource you can access at no cost. Within 24 hours, the letter is sent out.

Watch our video below to learn more about your rights and the reasons you don't need to worry about debt.

Closing Thoughts

Debt can be scary, especially as you age, but there are precautionary measures you can take. Thanks to laws that have been established throughout the years, you don't have to worry about not being able to pay your debt or having your money taken by a debt collector.

If you're considered a low-income individual, you can use HELPS at no cost. Visit the firm's website or call its toll-free number at 855-HELPS-US.

Written By

Jeff Hoyt

Editor in Chief

Since graduating from Harvard with an honors degree in Statistics, Jeff has been creating content in print, online, and on television. Much of his work has been dedicated to informing seniors on how to live better lives. As Editor-in-Chief of the personal… Learn More About Jeff Hoyt

  1. National Council on Aging. (2022). Get the Facts on Economic Security for Seniors.