“My husband had a massive stroke,” Mary explained, “and he died. And all our creditors were calling 14, 15, 16 calls a day and I was having what I thought were seizures, but they were just really bad panic attacks because I was grieving and trying to deal with the creditors at the same time. I didn’t have the money to pay them. I was at my wit's end.”
Lois shared her story, “I was cutting my medicines in half and not telling my husband. We needed that extra money to pay for our old debts. We barely had enough money for food. We knew where to find the cheapest can of beans. I finally broke down and told my husband what I had been doing when he asked why I was always sick.”
Finally Gladys tells, “When my husband passed away, I was only left with his Social Security of $1,100 per month. I contacted a debt settlement company and started paying them $300 per month for our old credit cards. After rent, I only had $200 left for the month. I didn’t know what to do.”
Seniors want to pay their debt. And they often go to extreme measures to keep current. But at some point, some are simply not able. Close to half of Americans over 65 have incomes within 200 percent of the poverty line under supplemental poverty measures and are classified as economically vulnerable according to The Kaiser Family Foundation. One in seven has income under the poverty line. The Federal Consumer Financial Protection Bureau (CFPB) recently reported that debt collection was the top complaint for older Americans. “It is increasingly common for older Americans to carry debts into their retirement years, and consumers living on fixed incomes often struggle to pay off these debts,” said CFPB Director Richard Cordray.
I am the Executive Director of HELPS (Help Eliminate Legal Problems for Seniors and Disabled), a 501(c) nationwide nonprofit law firm assisting lower income and poor seniors and disabled persons. HELPS represents lower income seniors and disabled persons receiving protected income, in order to receive collector communication on an ongoing basis on their behalf. We never turn any senior away that needs our help. However, we could never be large enough to assist all the seniors that need our help.
Because legal help is naturally oriented towards seniors with money, lower income seniors, with little or no money to pay for advice or help, often have difficulty finding answers to their financial questions. Sometimes they call an elder law attorney, often out of desperation and perhaps the first time they have ever called an attorney. Their stories, like those told by Mary, Lois, and Gladys, can be heart rending. After nearly 40 years of practice, I have learned that elder law attorneys want to help seniors, this population that can be most helpless in our society. These issues might be out of the attorney's regular practice area and an attorney might not be comfortable giving advice. While it is tempting to refer these seniors elsewhere, there may no one else who will answer their questions.
Social Security, Pensions, Retirement, VA Benefits, and Disability Income Are Protected from Collection
There is some basic information elder law attorneys can provide these seniors, which can make a huge difference in their lives. There is one law that the vast majority of seniors do not understand: Social Security, pensions, retirement, VA benefits, and disability income are protected from collection under federal law. It cannot be garnished for old debt. It is safe and can’t be taken from them. When I told Mary, Lois, and Gladys this, their entire lives changed. They did not have to pay the old debt they could not afford to pay. They then had money to pay for their food and medicines.
Even when they learn their income is safe, seniors worry about the money in their bank account. They can be told that federal banking regulations automatically protects all monies in an account into which Social Security is deposited, equal to twice the amount of monthly Social Security, no matter the source of the money in that account at the time of a garnishment. The bank must disregard the garnishment. If there is excess money, a claim of exemption can be filed in state court to have that money returned.
Seniors are often correctly told that because their income is protected, they don’t need bankruptcy. Many could not even afford it anyway. Yet if they don't pay old debts, collectors can still call, send demand letters, and make their lives miserable.
Cease and Desist Letter to Collections
There is another very simple piece of advice attorneys can provide to solve this problem. The Federal “Fair Debt Collection Practices Act” provides that when a debtor sends what is called a “cease and desist letter” in writing, a collector must stop all communication by mail or phone. The law can be explained and a template provided to a senior (found on the internet, or at our website www.helpsishere.org). However, even when this law is explained, they may be unable to prepare or send the letter. Many seniors have a very difficult time dealing with collectors on their own. The Act also provides that if a person is represented by an attorney, a collector may no longer communicate with that person, only with the attorney.
Therefore, we encourage attorneys to consider providing seniors who are in need with a “cease and desist letter.” Perhaps attorneys, like HELPS, could send the letter themselves for the senior. Perhaps attorneys could offer to represent the senior in order to receive these communications from collectors on an ongoing basis. When a collector receives the cease and desist letter, it is normally the end of any contact. This is actually a very simple service requiring minimal effort on the attorney’s part. It doesn’t even require an office visit. This service can bring peace back to the lives of poor and lower income seniors.
Debt Solutions
Dealing with the old unsecured debt is the primary financial problem facing lower-income and poor seniors. They sometimes have other common money questions and problems that can seem insurmountable. The solutions actually can be quite simple.
Seniors sometimes find themselves with a mortgage they simply cannot afford. They don’t understand their options. They can be told they don’t have to keep making the payments. If they do not have significant or any equity, they can simply stop payments and let the home go back. They can live in the home during the foreclosure, often for at least a year to a year-and-a-half and sometimes longer. If there is equity in the home, they can sell the home and obtain less expensive housing. Sometimes seniors don’t realize that they can stop the house payment and attempt to sell the home even while it is going through foreclosure.
Debt Settlement Companies
I regularly talk with seniors making payments to a debt settlement company. The internet has spawned an entire generation of for-profit companies that advertise helping people to either settle or pay old debt. I have yet to talk with a senior who was enrolled with a debt consolidation company who were ever told “by the way you don’t need to pay us anything, all your income is protected by law.” Some go into utter poverty to make a payment to a debt consolidation company for old debt they can’t afford and do not need to pay. Seniors can be told to stop the payment. Sometimes these aggressive companies take the money out of a senior’s bank account automatically each month. Because of this, we offer to do a joint call with the senior to tell these companies to stop the withdrawal. Other attorneys can do the same.
Past-Due IRS Taxes
Some seniors who owe income taxes have 15 percent of their Social Security garnished for past-due IRS taxes. Lower income seniors can almost always be placed on uncollectable status by the IRS, something HELPS assists seniors with every day. We regularly talk with seniors who received a 1099c or a notice from the IRS stating they will owe taxes on account of a written off old debt. Insolvent taxpayers can file IRS form 982 and the tax is waived. Again, even if there is a tax, lower income and poor seniors can obtain uncollectable status with the IRS. Attorneys can help or tell seniors to contact the IRS to make inquiry about the process for obtaining uncollectable status. Many attorneys don’t realize that state tax collectors cannot garnish Social Security or pensions. This protected income does not need to be used to pay old state tax debt the senior can’t afford to pay.
Student Loans
Although it is still relatively uncommon, those seniors with student loans in default can have 15 percent of their Social Security incomes garnished to pay the debt. Lower income seniors can almost always qualify under the income contingent repayment plan and pay $0 per month for a student loan. HELPS will email any attorney instruction sheets on either obtaining uncollectable status or IRS income contingent repayment procedures
Payday Loans
I speak regularly throughout the country with seniors who have payday loans. Unfortunately, sometimes seniors are trapped in a web of high interest and payments that never get paid. However, what seniors don’t understand, is that it’s easy to get free from the cycle of payday loans.
It is not a crime to stop paying a payday loan, no matter what anyone says. A payday loan is like any other loan. That means a senior can be told they can stop paying a payday loan. Payday or internet loan companies virtually never file a lawsuit to collect, despite their threats. Why? Because they know the senior’s income is protected, it can’t be garnished. Seniors can be told they will not file a lawsuit no matter what they threaten. And if they did, the senior’s income is safe and protected.
Instead, they rely on aggressive and of the abusive, illegal collection tactics. If it’s a payday loan made over the internet, a senior can expect some illegal collection attempts, perhaps threats of criminal action. There are means seniors can be told, to insulate themselves from any of this harassment. They can be told: 1. Never talk with them on the phone. If you talk, they will manipulate and threaten. Change your number if necessary, block their call, don’t answer a call you don’t recognize and if they ever get through, hang up. If you never talk with them, they can’t harass or intimidate you. 2. Make sure the bank account is safe. If they have a routing number from your checking account, get a different checking account. 3. Block or immediately delete their emails. Otherwise they will overwhelm you with threatening emails you will be tempted to read, containing false and illegal threats.
There is nothing wrong with attorneys also providing common-sense advice. For example, some seniors unnecessarily drain protected retirement to continue paying old debt that will never be paid, emptying their nest egg. It can also be suggested they stop payments for purchases, perhaps an expensive car, they simply can’t afford. Less expensive transportation alternatives are almost always available.
Other Solutions
Many seniors don’t know about the availability of section 8, subsidized housing. These are underutilized Veterans' benefits for lower-income veterans and their spouses. Some seniors worry about difficulty renting, because of poor credit. An attorney can write a “to whom it may concern” letter on his or her letterhead, simply explaining to any “prospective landlord,” that the senior’s income is protected, can’t be garnished, and is all available to pay rent and provide for his needs. Landlords don’t understand that the senior’s income is safe. We have found this often solves concerns for most landlords, who otherwise might be worried about a senior’s poor credit, affecting their ability to pay rent.
Financial hardship can be a heavy burden for seniors to carry, who are often dealing with other problems. I always remember a saying by Plato, “Be kind to everyone, for everyone is fighting a hard battle.” Elder law attorneys willing to answer questions for a few minutes on the phone can be a godsend to poor and lower income seniors. This includes telling a senior not to worry and offering to let them call back if they begin to worry again. This help can be a miracle in the senior’s life.
Elder Law Attorneys Can Help Low-Income Seniors
Most seniors want to pay their debt. Some simply are not able. There is a reason laws protect this income. Society wants seniors to be able to provide for their needs like food, medicine, and housing. If an attorney can’t help a senior who needs this assistance, HELPS Nonprofit Law Firm is always available to help seniors and disabled persons in order to stop collector harassment (www.helpsishere.org). We never turn anyone away. We encourage other attorneys, especially elder law attorneys, who have a special affinity with seniors, to offer this assistance themselves, as they are able. HELPS welcomes questions from attorneys and provides forms in many areas to support their efforts. Together we can help bring peace back to the lives of America’s seniors.