Why Older Adults Shouldn’t Worry about Old Debts

If you’re an older adult with outstanding debts and you’re worried about paying them off, or debt collectors are hounding you, just know that you have options. In reality, you might not need to worry about most of your old debts. In this video, our Editor-in-Chief, Jeff Hoyt, interviews Eric Olsen, the founder of a nonprofit organization called HELPS, which helps seniors with their finances and debts. If you’re concerned about your debt, watch the video above or read through the interview transcript below.

Why Seniors Shouldn’t Worry about Old Debts Video Transcript

Jeff Hoyt: Hi, I'm Jeff Hoyt, Editor of SeniorLiving.org. Today I'm speaking with attorney Eric Olsen on an important topic: why seniors don't have to worry about certain types of debt. Eric is an expert in this field as he is the founder of the HELPS Nonprofit law firm, which serves senior citizens and disabled persons struggling with debt. What you're about to learn could save you from a world of worry. As Eric is in Salem, Oregon, and I'm in Los Angeles, we will be conducting the interview online via Zoom.

Jeff Hoyt (via Zoom): Hi, this is Jeff Hoyt, Editor of SeniorLiving.org. Today I'm talking with Eric Olsen. Eric is an attorney and runs the nonprofit law firm HELPS, which helps seniors and their finances. Eric, let's start out just with a simple question. Why is it that seniors don't have to worry about debt like younger people do?

Eric Olsen, Esq.: So this is the problem, Jeff, and it's good to talk with you today. According to the Kaiser Family Foundation, half of seniors over 65, 40 million American seniors, have incomes within 200 percent of the poverty line, and they retire owing more debt than ever before. And one thing we find that seniors don't realize is that federal law protects Social Security. It can't be taken from seniors. Congress has passed laws to protect Social Security so it can't be garnished or taken from seniors. It's available for their needs.

And it's the same with pensions and retirement money. Back in '74, a law was passed called ERISA. What it does is it protects pensions and retirement funds. There are federal laws to protect VA benefits. There are state laws that protect IRA benefits and independent retirement accounts. So, seniors' income is protected by various laws, and if they don't pay their debt, or if they're unable to pay their debt, even if they're sued, it can't be garnished or taken from them. So that's probably one of the most important things that HELPS Nonprofit Law Firm wants seniors to know: that their income is protected by federal law.

Jeff Hoyt: Interesting. And do you think many seniors are aware of this?

Eric Olsen, Esq.: If I had 50 seniors in the room, and I talk to seniors all the time, maybe 47 or 48 out of 50 wouldn't know that. Some might realize that their Social Security might be protected, but then they don't know their pension is protected. But no, the vast, vast majority don't understand this. And no one bothers to tell them that, least of all someone who's trying to collect money from them.

Jeff Hoyt: Is there also legislation that protects their bank accounts?

Eric Olsen, Esq.: Good question. There used to be a problem with seniors getting garnished from their bank accounts, and finally, it was corrected around the end of 2011 or 2012. There is a federal law that instructs banks that twice the amount of federal benefits deposit into a bank account, which includes Social Security. That amount is protected automatically from garnishment, no matter what funds are in there or where they came from.

So a senior doesn't have to worry about anyone taking money out of their bank account unless number one, they'd have to be sued. They would find out about it. They know about it. It just can't come out of the blue. But if they did have a judgment against them and their Social Security goes in their bank account. Let's say their social security is $1,500 a month. So if a judgment creditor garnished the bank account, then the bank looks at the bank account, and they can identify where the money's come from.

They're coded. They know. And this law's been in effect now for quite a few years. And if they see that federal monies went in their Social Security, they multiply that number by two. 1500 times two is 3000 bucks. That sum is protected automatically by the bank. It doesn't… they don't have to… it doesn't matter what monies are in there at the time of the garnishment. You could have sold something on eBay. You could have a little gift or something. It doesn't matter. $3,000, twice the amount of your federal benefits you receive each month, is automatically protected.

Now, if we had 1,000 attorneys in the room, 999 out of 1,000 wouldn't know that law. And frankly, the bank managers don't know that law. People call their bank, but the department within the bank knows that if there's a garnishment. So the vast majority of seniors that I talk with that will say, “Well, Eric, we never have more than twice the amount of our Social Security in that account.” And I say, “Well, you don't need to worry. They can't take your money out of your bank account.”

Now, if they did have more than that, and it came from an exempt source, then that extra money could be held up, but they'd have to file what's called a challenge of garnish or claim of objection. The money would come back because- just because it's over twice the amount doesn't mean that's not still protected or safe money. It is. They just might have to go an extra step, and we help people do that all the time. But generally, they don't need to worry about it because they don't have money more than twice the amount of their federal benefit, their Social Security.

Jeff Hoyt: Great. I'm sure a lot of seniors will be happy to hear about that, but it can still be scary for a senior to get letters from a debt collector or phone calls or even served with legal papers. What can they do to avoid being annoyed by actions like this?

Eric Olsen, Esq.: Well, it is scary, and it is frightening. So there is also a federal law called the Fair Debt Collection Practices Act. And it provides that if a debt collector is sent a letter called a “cease and desist” letter saying that you don't want to have contact from that debt collector anymore, then under federal law, the debt collector can no longer call you on the phone, nor can they send you a demand letter anymore. They have to leave you alone, okay?

And that's where… there's also a law that says if you're represented by an attorney, a debt collector can't call you. They have to communicate… or to communicate with you, they have to communicate with the attorney. And that's where the nonprofit law firm that I started came to be because what HELPS does is we represent seniors that are lower income or poor. And we send cease and desist letters out to persons, the creditors they don't want to hear from. And that way they don't have to hear from them anymore. And the calls and the demand letters stop. They dry up, completely stop. But no, there are means to stop collector harassment. And it's called a cease and desist letter.

Now you asked about should a senior be scared if they're sued? And once again, no, you don't need to be. That's easy for me to say, but it might be difficult for a senior to grasp. They need to understand that even if someone were to sue them and get a judgment, as I've explained, their income is protected. It can't be taken or garnished from them, okay? So they don't need to go to court. The only reason they would go to court is if they want to contest the matter, but if they don't, there's no need to contest it. And if they don't do anything, the creditor would get a judgment, and that's just an order from the court saying that you owe the money. But some of your viewers may have heard the word “judgment-proof.” That means that even though you have a judgment against you, no one can take anything from you.

And so that's the case with the vast majority of seniors is that they're judgment-proof. No one can garnish or take their income.

Jeff Hoyt: Great. So I've been to your website, and on your website, you actually offer a copy of that cease and desist letter that someone could use to send to a debt collector.

Eric Olsen, Esq.: We do. And someone can just type in “cease and desist letter,” and they're all over the internet. They get a copy. That's easy, but for a lot of seniors, that's difficult. One, they can't print it out. They don't want to have to… it's hard for them to deal with that kind of thing. And sometimes you send a cease and desist letter out, and if you send it under your own name, certain creditors might say, well… they ignore it, or they might still try to contact. So it could still be intimidating for seniors to have to deal with debt collectors.

Jeff Hoyt: And so another option is to actually get your firm to represent them. And basically, once they're being represented by an attorney such as yourself, then the debt collectors are prohibited from contacting them directly. Is that correct?

Eric Olsen, Esq.: Yeah, well, that's the theory behind HELPS, and it works. We're growing exponentially, and we're the only non-profit law firm in the nation doing what we do. And we don't turn anyone away. There's a lot of seniors that need this help.

In my prior practice, I filed 50,000 bankruptcies, and seniors would come in, and we'd explain to them, “Well, your income is protected. You really don't need to file bankruptcy.” And a lot of them couldn't even afford to file bankruptcy. But, we worry that when they left the door that night, they're going to get these creditor calls, okay, which is very scary. And even if you told them, “Hey, they can't do anything,” it's not very fun to be hounded by debt collectors. So that's where HELPS comes in.

If there were 10 commandments for a debt collector, the number one commandment would be: if someone's represented by an attorney, I can no longer talk to that person anymore. And if I do, I'm going to get sued. So debt collectors know that if a person is represented by an attorney, they have to leave him alone. So that's kind of the magic of HELPS. What we do is we represent seniors and disabled persons who are receiving protected income, ongoing, literally for the rest of their life, so they never have to deal with debt collectors again.

Part of the problem is, Jeff, is that if you owe a debt, and you stop paying it, and if they get a cease and desist letter, or they can't collect them, what a creditor will do is they'll sell it to someone else. And so sometimes a senior will get a letter six months or a year or a year-and-a-half or two years down the road from someone new. And so this kind of help that we provide needs to be ongoing for seniors because it just… it crops up. There's other problems that occur.

It's not everything we do, but our main function is to stop collector harassment for seniors. We also want to educate seniors on how they can maintain their financial independence. There's a lot of things they can do to preserve their funds and live within their means, so they don't have to worry about things.

Jeff Hoyt: Great. But some seniors may worry about hiring an attorney to represent them. You said some of them couldn't afford to declare bankruptcy. Is it expensive to hire your firm to help?

Eric Olsen, Esq.: Well, we're a 501(c) charity. Probably a quarter of our clients get our services for free and don't pay anything. We don't turn anyone away. And, an average client might pay, well, for example, $20 for 12 months, then $10 a month for the next 36 months, and then after that, it'd be $5 a month or free or waived. But, we don't really worry about the money. We need a little bit to be able to keep the phones on and hire the staff to answer their questions. Money isn't the focus. Our focus is to try to help seniors so that they don't have to deal with debt collectors anymore.

Jeff Hoyt: Great. So if a senior was interested in your services, how would they contact you?

Eric Olsen, Esq.: We're all over the internet. www.helpsishere.org. HELPS stands for Help Eliminate Legal Problems for Seniors: HELPS. And we have a toll free number, (855) HELPS-US. One thing that you got to do is add an S onto HELP. HELPS-US is our toll-free number, and they can call us anytime, and we go over their people's situation. And if they need our help, we just enroll people over the phone. It takes just a few minutes, and we push a button. If they get the emails, we keep them on the phone, and they'll get an email confirming they're a member of our program. And if a creditor calls them within the next couple of minutes, they can give them our phone number, and they're going to start leaving them alone. So our help is available to seniors instantaneously.

Jeff Hoyt: Great. Well, I really appreciate you taking the time, and thank you for all the good work you do.

Eric Olsen, Esq.: You bet, Jeff. Thank you for having us.