Debt Forgiveness Options For Seniors

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Your senior years are supposed to be a time for relaxing and enjoying the fruits of your life’s labor. For many older Americans, especially those with credit card debt, the reality is different.

The number of older Americans who work in order to supplement their fixed income and pay off debt has grown in recent years.

If you’re a senior who’s struggling with credit cards or other high-interest debt, it can feel like there’s no end in sight. While there’s little help geared specifically toward seniors, there are solutions anyone can explore to help reduce monthly credit card bills or even fully pay off debt during retirement.

Is Credit Card Debt a Problem For Seniors?

In 2019, 82% of households headed by someone 75 or older, had credit card debt.

Credit cards can be a particularly menacing type of debt since the interest rates are often much higher than rates on any other debt. For example, mortgage interest rates were under 7% APR in early 2023 while the average credit card was above  20% APR.

Why do interest rates matter? According to our credit card payoff calculator, someone who pays $100 a month toward a credit card with a $5,000 balance and 20% APR would take 9.1 years to pay off the debt and pay $5,840 in interest charges.

Why Are More Seniors Using Credit Cards?

A number of factors contribute to the rising use of credit cards amongst older Americans.

Record-high inflation has impacted people of all ages, but it can be especially burdensome on those who have fixed income. In 2022, the average Social Security benefit was $1,546.59 a month, or $18,559 a year.  By comparison, the average rent price in 2022 was $1,322.

Another factor that burdens older Americans is healthcare costs that increase with age. The average healthcare cost for a person 65 and over is $7,030 a year.

Like many other Americans, seniors often turn to credit cards in a pinch. While the interest rates may be high, credit card payments are typically lower than loan payments, and unlike loans you can use a credit card an unlimited number of times (and pay it down) as the need arises.

Options for Seniors with Credit Card Debt

There are several good strategies for managing and even paying off credit card debt, regardless of your age. If you need relief from your credit card debt, consider these options:

Debt Management Program

Nonprofit credit counseling agencies offer help for a variety of financial issues, including credit card debt. You can set up an appointment to meet with one of their certified counselors over the phone, and the services are often free.

Your counselor will review your finances and recommend strategies or programs that could help. If they determine you’re eligible to enroll in a debt management program, here’s how you could benefit:

  • Get on a plan to pay off your debt in three to five years.
  • Consolidate multiple credit card payments into one monthly payment.
  • Unlike with debt consolidation companies, all of your monthly payment goes toward your debt.
  • Your creditors may reduce your monthly payments or your interest rates.
  • Your credit scores can improve as you pay down your balances.
  • You receive professional advice and guidance throughout the payoff process.

Contact Your Credit Card Companies

Some credit card companies are willing to help out during hard times, but you have to ask.

Your creditors may have specific programs to help customers who’ve been hit by a natural disaster, lost their job involuntarily, experienced a death in the immediate family or who are facing a medical emergency. Additionally, your creditor may allow you to change your payment due date one or more times.

Just note that if the creditor agrees to let you skip payments, there could be negative consequences. You won’t be charged late fees if your payments are in deferment, but you’ll likely accrue interest charges on your balance during the deferment period, and your credit scores may show that you missed the payments.

Balance Transfer Credit Card

Moving debt from one credit card to the next might feel like a waste of time, but it could give you the help you need. Specifically, if you use a balance transfer credit card.

Balance transfer credit cards have 0% APR on any balance transferred from another account, usually for a period of one year. That means you’ll avoid a year’s worth of interest charges, so you can pay the debt off faster or use the extra funds to pay off other burdensome debts first.

It’s important to note, however, that balance transfer credit cards often charge a fee on the amount you transfer usually 3% of the total balance. So, if you were to transfer $5,000, you’d likely have to pay a $150 transfer fee.

Borrowing From 401(k)

You might be tempted to borrow money from your 401(k) in order to pay off credit cards, but it’s not likely to improve your situation. That’s because 401(k) loans are often very expensive. On top of loan payments, here’s what it could cost you:

  • You may have to pay the full balance if you leave or lose your job.
  • You may have to pay income taxes on the amount you borrow.
  • If you’re under 59.5 years old, you may have to pay an additional 10% tax.
  • You’ll lose out on some of the interest your retirement savings would have accrued.


Many people think of bankruptcy as a bad word. You may equate it with full-blown financial failure or even with moral failure.

While no one wants to go through a bankruptcy, or to deal with the fallout to their credit scores, the truth is that bankruptcy can be a life-changing legal solution for people who really need help. For example, if you don’t have a way to pay off your credit card debt within the next 3-5 years, bankruptcy may be your best or only solution.

If you qualify to file for bankruptcy, you may have these two options to choose from:

  • Chapter 7: Chapter 7 bankruptcy can relieve you of the responsibility to continue paying money toward your debt, including medical bills, credit cards and certain loans. It can also stop creditors from taking any further action to collect money or repossess property from you.
  • Chapter 13: When you file chapter 13 bankruptcy, you’ll be placed on a 3-5 year repayment plan for your debt, with monthly payments based on what the court considers affordable. After the payment plan ends, your remaining balances will be discharged.

How Seniors Can Get Help with Credit Card Debt

For many seniors, living with credit card debt in retirement is a reality they never prepared for. No one tells you exactly how to find the best credit card available, manage interest rates, communicate with creditors when you need help or prevent yourself from falling behind on payments.

Fortunately, you don’t have to become an expert on credit cards in order to get some relief. While there’s no one-size-fits-all solution for credit card debt, and there’s no magical program of debt relief for seniors, there are ways to get professional debt help. A nonprofit, certified credit counselor can review your finances with you, help you explore solutions and recommend the best strategy for putting credit card debt behind you.

About The Author

Sarah Brady

Sarah Brady is a Personal Finance Writer and educator who's been helping people improve their financial wellness since 2013. Sarah writes for Experian, Investopedia and more, and she's been syndicated by Yahoo! News and MSN. She is a workshop facilitator and former consultant for the City of San Francisco's Affordable Home Buyer Programs, as well as a former Certified Housing & Credit Counselor (HUD, NFCC).


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