Helping an older relative deal with debt

By Michael Lloyd

Many senior citizens -- even those who carefully saved money in their working years -- still struggle to make ends meet, and some turn to credit cards or other borrowing to fill the gap. If you're worried about an older relative who has piled up some debt, you aren't powerless to help.

Normally, debt is something we associate with younger people, Jane Vass, Age UK's head of public policy, said in an emailed response to questions. "But low interest rates on savings, low returns on annuities and rising prices mean many older people have been finding it harder than ever to keep on top of bills and payments."senior-debt

A 2014 study by Age UK found that one in four citizens over age 65 are struggling financially.

Dealing with the problem is just as much about tackling underlying
spending issues as it is negotiating payments. "It's important to let older friends
and relatives who find themselves in debt and may be embarrassed and distressed about it realise it's never too late to tackle money problems and that they are not alone," Vass said.

Get on top of things
It's easy for people of any age to feel overwhelmed by mounting bills. The cognitive impairment that sometimes comes with age can make things worse. You may find that your relative has simply ignored a growing credit card debt problem, allowing unopened bills to pile up. If this is the case, do your best to persuade him to let you help. You may find that it will be relatively easy to rearrange his affairs.

"Important steps to take include encouraging them to open all debt letters so that they have a true picture of their financial situation, [and] working together to decide whether they need a debt adviser or can sort out the situation themselves," Vass said.

Sit down with your relative and work out exactly what he owes. If he has any savings, besides retirement savings, suggest he use it to pay off at least part of the debt. Explain that credit card interest usually negates any savings account interest.

In the absence of savings, and if your elderly relative has managed to maintain a decent credit score despite his financial woes, he may be able to move high-interest debt to a 0% balance transfer card or take out a low-interest consolidation loan. If this is an option, offer to help your relative manage repayments by setting up direct debits and monitoring his accounts. (Your relative can write to creditors to request authorisation for this.)

Contact creditors
If there's no way your loved one can pay off the debt, either by monthly payments or a payment in full, it's time to contact the creditors. If your relative is not up to the task, she should be able to give you authority to speak on her behalf.

Request that the creditor freeze all fees and charges while you negotiate an affordable monthly payment. Many lenders will be sympathetic if you can offer a reasonable contribution each month, but may request an income and expenditure analysis to establish your relative's financial position.

If a lender refuses to accept your offer, seek advice from a free debt charity such as PayPlan, StepChange or Citizens Advice.

Check benefit entitlement
Your elderly relative may be eligible for a range of benefits from the government. The 2014 Age UK research revealed British pensioners were missing out on a combined £5.5 billion in financial help. In many cases, pensioners were unaware that help was available.

However, in some cases, pride is the restricting factor. If your loved one is reluctant to take help, explain that he has paid into the system over his lifetime. Sit down with him and try one of the government's free benefits calculators, which can help people find out what benefits they can get, how to claim them, and how benefits will be affected if the beneficiary takes a job.

You may find your relative can access pension credits, housing benefits or council tax reduction. He may also be entitled to attendance allowance if he needs regular help with a disability or illness.

Cut and lower living costs
Finally, check on your loved one's living costs. According to Age UK, many of the poorest pensioners pay more for services such as gas, electricity, insurance and banking. Even those who aren't among the poorest live on fixed incomes, and paying more than necessary on basic living costs can hit them hard.

For instance, the rising cost of gas and electricity over the past few years has left many pensioners in fuel poverty, forced to choose between eating properly and heating their homes every winter. Many older people overpay for gas and electricity because suppliers are not obliged to automatically move them onto the cheapest tariffs. Consequently, many pensioners remain on some of the most expensive tariffs available.

Simply changing companies or plans could help your relative save hundreds of pounds per year, which she can then put toward outstanding debts. You can help her comparison shop online and readjust plans to be more in line with her available income.

See related: Is it possible to be too old for a new card?, Protect yourself from vishing scams, Child-rearing costs are putting parents over 60 in debt

Published: 10 June 2015