Senior Citizen's Guide digital books
Senior Citizen's Guide to Chicago

Seniors and Disabled Living on SSI and Drowning in Debt

Supplemental Security Income (SSI) is the federal income maintenance program that provides a monthly income to meet the basic needs for food, clothing and shelter for people with significant and long-term disabilities who have virtually no assets. Approximately 4.4 million people with disabilities between the ages of 18-64 rely on SSI payments to pay for these necessities, including housing.

In 2010, the federal SSI program provided a single disabled adult with a monthly income of $674. In addition to the federal payment, 21 states provided an additional state SSI supplement to individuals with disabilities living independently in the community, raising the national average SSI monthly payment to $703, or $8,436 per year.

In this tough economy, millions of seniors and disabled individuals are drowning in credit card and other debts they cannot pay. Many years ago, these people would struggle to pay these debts because their state usury statute, which averaged six percent, regulated the interest rates on the credit cards. In 1970, the credit card industry was able to convince every state to repeal the usury statute for credit cards, which now allows these companies to charge 29 percent interest on their cards. This is loan shark interest!

It’s worth noting that careless spending does not always cause credit card debt for these individuals. Many seniors and disabled people rely on credit cards to pay for the astronomical cost of prescription medication and health care in general. Others use credit cards to pay for car and home repairs and other major expenses that they just don’t have the cash on-hand for. They must rely on credit cards for their basic living expenses.

There has been no government bailout for the seniors or disabled who can’t pay their credit card and other unsecured debts, but the government bailout for banks allows them to charge 29 percent interest and extra fees to these individuals. Many of these seniors and disabled people receive social security benefits, SSI and other fixed government allowances as their only source of income. Some may own a home, but it does not generate income to help pay for food or medicine. They fear if they stop paying, a creditor will put them in jail and take their income.

The Fair Debt Collection Practices Act (FDCPA) is a statute written to protect consumers from abusive collection tactics. There are many ways that the FDCPA can be violated. The time of day that a creditor can call or whether or not they can contact relatives regarding a debt all factor in to possible violations. Many creditors will try to collect their money by any means necessary; unfortunately for them, they could be breaking the law.

Further, these debtors are being harassed not only by their original creditors, but by third-party debt buyers, as well. Some major shifts have taken place over the course of the past decade. Debt collection is not an industry of original creditors collecting debts, but debt buyers who have paid $.03 to $.05 on the dollar for the original debt. Debt buying is a $215 billion industry, and some of the companies buying these debts have been known to harass and abuse the debtors in order to collect even though the debtor is collection-proof (meaning the only source of income is government-protected and therefore untouchable by creditors). Often, these collectors try to intimidate widows and widowers into paying the debts of their deceased spouses.

In this new era of collections, it is imperative that our seniors and disabled citizens know their rights.

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