5 Things Struggling Seniors in Debt Need to Know But Don’t

Millions of seniors are in debt, whether through job loss, illness, divorce, or losing a spouse or any other of life's curveballs, while many have little chance to pay back all that they owe despite their good intentions. Eric Olson, founder and executive director of the HELPS nonprofit law firm, wants to give seniors in debt peace of mind. In this video, the attorney explains five things that seniors with debt should know but don't. His advice could help seniors struggling with medical debt, credit card debt, or other issues. He wants to help them keep debt collectors at bay or even make their debts virtually disappear. Stick around, and at the end of the video, he'll also explain how you can reach out to his team for more individualized help at no or little charge. Hey everybody, it's Jeff Hoyt, and once again I have the pleasure of speaking with Eric Olson. Eric is an attorney, formerly a bankruptcy attorney, so he knows a lot on that topic, and we'll be touching on that today. Now, he's the founder and executive director of the HELPS nonprofit law firm that helps seniors with financial problems. Welcome, Eric. Good to be here with you today, Jeff. Well, appreciated. So, I really want to call on your expertise about debt. Interest rates are high now. Lots of people have different kinds of debt. And you told me there are five things that seniors need to know about debt, that seniors in debt really need to know. So, what's the most important thing seniors in debt who are facing crippling bills, what do they need to know that they probably don't know? A lot of them don't realize that they don't have to pay their debt. If they can't afford to pay their debt, they don't have to pay it. And why is that? Well, it's because their Social Security is protected. Since its inception, Social Security is protected. It can't be garnished or taken from seniors. And in 1974, a federal law was passed called ERISA, and that protects seniors' pensions from being garnished or taken from them. Now, almost all pensions are protected under ERISA, but if you have a pension that isn't protected under ERISA, state law will protect that pension. I've been an attorney now for 45 years. I've never seen a senior lose their pension. So, it's protected, and it doesn't need to be used to pay debt they can't afford to pay. So, lawmakers protected this money for seniors for a reason. They understand that when seniors retire or they can't work anymore, they have a limited amount of income, and they need that for their food, for their medicine, for their housing, for their utilities, for their basic needs. And so, lawmakers protect that income for seniors. And if you're a senior and you have debt and you can't afford to pay it, the law provides that you don't have to pay it. And just to be clear, if a senior has half a million dollars in the bank and they can afford to pay their debt, they should and they have to. We're talking about seniors who have debt they can't afford to pay, whether it's credit card or medical bills or what have you. Absolutely. You know, statistically, close to half of seniors have incomes within 200% of the poverty line, and they retire owing more debt than ever before. And so, a lot of seniors that are lower income or poor, they're the ones that have the debt problems, and they're the ones that need to know that they don't have to pay the debt because their income is protected. And you and I have also talked about seniors who are still paying off student loans from forever ago. That's right. New laws have put into effect, and you can get on an income-based repayment plan so you don't need to worry about a student loan. So, you're saying if someone is living pretty much Social Security check to Social Security check, their bank account is protected, that you can't take... And what is the exact figure that is protected by this law? Well, all your Social Security is protected, but if your money is deposited into a bank account, there was a federal rule put into effect in 2012 that protects twice the amount of federal benefits, such as Social Security, deposited in your bank account from garnishment in the event someone sued you and got a judgment. Twice the amount of your federal benefit, for example, Social Security deposited in your checking account, is automatically protected by your bank from garnishment, regardless of the source of funds actually in the account at the time of garnishment. So, if you got $1,500 in Social Security, $3,000 in your bank account is protected automatically from a debt collector taking it from your bank. Now, your bank will protect that. The federal law tells the banks they have to protect it. If you happen to have more than that in there, it's still protected, just not automatically. Some papers would have to be filed to get the excess release. Most people tell me they'd never have more than twice the amount of their Social Security in their bank account at any one time. So, that's an excellent point as well. Now, you mentioned debt collectors. Now, I don't want to tar them all with the same brush here, but I guess a lot of them don't really care about the laws that protect seniors and their job is to get the money from the seniors. So, they're not telling them they're protected, right? It's like, what do you do if their debt collectors are harassing seniors and saying, hey, you owe us this money? If you don't pay a debt and it's going to get turned over for collectors and they can call and they can send demand letters. In a lot of ways, they can make life miserable. Well, in 1978, the year I graduated from law school, Congress passed a law called the Fair Debt Collection Practices Act. And that law provides that if you send a debt collector a letter called a cease and desist letter, that debt collector can no longer call or send demand letters to that person anymore. They have to stop. And if they violate that law, they can be sued and they can pay damages and attorney fees. And so, legitimate debt collectors honor that law. And if they get what's called a cease and desist letter, they're going to stop contacting you. That's what HELPS does. The law also provides if you're represented by an attorney, debt collectors can no longer call or send you demand letters. They have to deal with the attorney. That's what we do. We represent seniors that are lower income or poor, so the seniors have to leave them alone. But people can do it on their own. They can send a cease and desist letter out to the debt collector. And the debt collector legally cannot call them or send demand letters to them anymore. Right. So just to be clear, as a senior, you could send a cease and desist letter and you get a copy of that from HELPS. Or other places on the internet. Yeah. So this law applies to debt collectors, not original creditors. So, you know, a credit card, if you owe money to a credit card company and they haven't turned it over to debt collection, you know, they could still call you on the phone and that would be legal and they could still send you letters. But so the law applies technically to debt collectors. Would you say this is the second most important thing that seniors in debt should know? Yeah. Yeah. They can be they don't have to pay the debt. Their income is protected and they can be protected from collector harassment. So if a debt collector gets a cease and desist letter or if a senior is represented by HELPS at little or no charge, so they're not allowed to send letters or call or harass the senior anymore, that doesn't mean the debt collector is going to go away. They could still go to court and sue the senior for the unpaid debt. Correct? That's right. Doesn't happen that often, but they can do that. I tell people if you have 10 creditors, maybe one and a half out of 10 would ever sue you. But seniors need to understand that their income is protected. It's protected in their bank account. The vast majority of seniors are what's called judgment proof. That means everything they have is protected. Even if someone sued them and got a judgment, they can't do anything to them and they can't take anything from them. Now, someone who sues you, they're going to want to try to keep that information away from you. They don't want you to understand how your income is protected and how your assets are protected. See, states have laws, exemption laws, that protect, for example, equity in a home, equity in a car, equity in other property you have. But even if you have equity in property over and above the exemption in the state where you live, it's not the practice of consumer judgment creditors to ever go after a person's property that doesn't happen to be exempt. They simply don't do it for a lot of different reasons. So if a senior is sued and they owe the debt, they almost never have to go to court. If they get a judgment against them, their income is protected, as I explained, and they're not going to take your assets. They may try to intimidate you into making you think you have to pay, but the vast majority of seniors are judgment-proof and they don't need to worry about losing any property. If they're sued and there's a judgment against them. So if a senior is hit with legal papers that they're being sued for debt, do they have to hire a lawyer? Do they have to show up to court and fight it? If they're guilty, what should they do? Sometimes they think they do, and a lot of them can't afford to do that. What I tell seniors is, you know, if you read the papers carefully, it says if you don't do anything, they're going to get a default judgment. So if you owe the money, you don't have to defend the case. What we do when our clients are sued, we simply send a letter to the attorney explaining their income, our client's income is Social Security and a pension is protected. They can't afford to pay the debt. We understand they're going to get a judgment and to leave them alone. Eventually the client, there may be a judgment against them, but the collector can't do anything to collect the judgment. The client is judgment-proof. They can't take their money and they're not going to take their assets. They don't need to worry. Well, that's very reassuring. So seniors who can't afford to pay debt, their income is protected. They can use a cease and desist letter to get debt collectors to harass them. And even if they are sued, they tend to be judgment-proof. So that's three things. What's the fourth thing that seniors in debt should know? This might be a little surprising. There is just a lot of misinformation out there on this topic and outright false information given to seniors on the Internet and other places about their options and about their rights. There almost seems to be a concerted effort by debt collectors and by credit card companies and people that have debt that someone owes to, to keep this information about seniors and their rights from seniors. They don't want them to know this. They simply, if you get on the Internet and you search, you know, there are a lot of articles that talk about how to pay the debt back, but you rarely find an article that will tell you, by the way, your Social Security is protected, your pension is protected, and you can send a letter to keep the collector from harassing you. Instead, they're encouraged to pay the debt, even if they can't afford to pay the debt. Well, I'm glad we're able to get some good information out there to combat this misinformation. And what's the fifth thing? What's the last thing that seniors who have debts they can't afford to pay should know? This is really important, too. You know, I talk to a lot of seniors, and a lot of them, they feel guilty. You know, they've never not paid a debt in their life, but now they find in their senior years that they have a limited income. Maybe a spouse died. Maybe they've been helping their kids. Maybe they got sick. Maybe a divorce. They lost a job. They're no longer working, not making as much money. And they owe this debt, and they've been struggling to pay it. And maybe they dip into their retirement to pay it when they don't have to do that. And I guess they should understand that they're not alone in this problem, that there's a lot of seniors in the same boat, and they shouldn't feel guilty if they owe debt. They didn't intentionally do this. It's life just happened. Sometimes I'll tell seniors, you know, if you had the money, you would pay it, but you simply don't have to pay it. And you don't have the money, therefore you don't have to pay it. But if you had the money, you would. And you didn't intentionally get in this problem. Life just got you there. So seniors should understand that they're not the only ones that struggle. They've got a lot of companies that have these problems, and they should understand that lawmakers protected your money for a reason because they want you to be able to take care of your basic needs. And you should try not to feel guilty about this because you didn't do it intentionally, and it's life just happened. These creditors charge interest. They've been making money. They've charged a lot of interest. They know that a certain percentage of people that they loan money to will not be able to pay the debt. Therefore, they charge the interest they charge. They're still making record profits. Well, that's five things, and I think it will help a lot of seniors in debt. I really appreciate it. And let me throw a sixth thing in there. If a senior wants to discuss a particular case with you, if they think, oh, this sounds good, but I don't want to lose my house because I owe somebody money, how can they get a hold of your law firm to get some low-cost legal help? We don't turn anyone away that needs our help. They can always call toll-free 855-435-7787 or 855-HELPSUS or HELPSUS. What we do is represent seniors who owe debt to stop collectors from harassing them. We also educate seniors how they can maintain their financial independence. And, yeah, we want seniors to know they're going to be okay. They can always call us. Thank you very much, Eric, for your efforts on behalf of seniors, and for taking the time today. Thanks for having me, Jeff. I really appreciate it. Thank you.