Wednesday, November 24, 2010

More Senior Citizens "Dying with Debt" - USATODAY

Per a recent article in USATODAY, more senior citizens are deciding not to pay off their credit cards - ever. The plan is to die owing the money. This is not a new strategy. I have been advising some clients this strategy for years. The strategy only makes sense because the credit policies of giant creditors don't. To give an 80 year old a large credit line based on a simple FICO score completely ignores a substantial possibility that he or she may not have the incentive or ability to pay off a multi-thousand dollar unsecured credit line before his/her natural life expectancy ends. If this seems harsh, or even unethical, consider what has been the alternative. Many of these same seniors have been talked into disastrous home equity loans, equity stripping loans, that they can't afford, just to pay off credit cards. Clearly, the lesser of two evils is to pay what they can on their credit cards, even if it is the minimum payment or less. If the senior citizen leaves an insolvent estate, then the creditor should have thought about that before granting the credit.

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