“According to Statistics Canada, one in three retirees over 55 – and two in three over 55 who aren’t yet retired – are in debt.” Canadian Living’s Renee Sylvestre-Williams wrote this statement. The following online article headline, posted February 26, 2015, echoed in my head for weeks: “The silent struggle of seniors with debt”, Reuters New York, by Chris Taylor. But why is it a ‘silent struggle’? Today’s generation of retirees were raised in a very different era. Little sayings like ‘Shhh… don’t tell anyone’, ‘Put on a brave face’ and ‘Learn to do without’ did not really work out that well for many seniors who retired and still have debt. Pride and lack of information are the two major reasons for the struggle. I often see this story played out in front of me when a shattered life (and I mean a human who is experiencing all the emotions of shame, confusion, fear) comes to my practice. Often they are “ordered” to consult with me by their doctor, religious leader, psychiatrist, social worker, spouse or other family member. Why? Depression, high blood pressure and all other stress related side effects have overtaken their lives.
A typical story goes something like this: “I don’t want to go bankrupt. My parents would turn in their graves. We have always lived within our means. I don’t really know what happened. My husband got ill, we lost his income and I had to stop working to care for him. An early pension withdrawal almost halved our planned retirement income. The debts just kept piling up. We moved closer to the hospital; our rent went up. We sold the car, thought we could use the bus, but he could not manage. Taxis are expensive. The kids are good but they have families so cannot help out. Bob needed special food and my diabetes supplies are not covered. Bob’s passed away now but the costs don’t go down. I cannot handle this anymore“. “This” is the debt load, collection agency pressures, guilt and trying to handle the household budget for the first time alone. They stopped life insurance payments because they ‘could not afford it’. They had sold their home 10 years ago, moved closer to the kids, funded two weddings and helping their son start a business (that failed). The financial facts: credit cards, store cards and a line of credit–total $30,000. After almost 50 years with the same bank, they refused to consolidate her loans. Assets: none of any value. Income: CPP (plus survivor spouse), OAS and a small work pension for a total of $2,200 a month. Just enough for her to get by as she lives economically. Reality: She cannot make the minimum payments and pay basic essentials of life. Credit collectors are hounding her–one even called her neighbor pretending to look for her. My responsibility: To get this person to be fair to her creditors and herself. In my practice, this generation are the most determined to ‘do the right thing’. It takes time and patience to review the situation and help set the best priorities in the circumstances. The financial side is the easy part! The human side is the toughest. Options: Based on her facts and the laws there are only two options available; consolidation loan: already refused; settlement agreement (repay without interest) but unaffordable at $500 per month. Bankruptcy: She refused. This would have been the least expensive and quickest option, but for this individual the need to ‘do her very best’ overrode that option. Consumer Proposal: So, on her behalf we made a formal offer to all her creditors of $150 per month for 60 months in full and final settlement. The majority of creditors accepted (they would prefer to get some money than none!) and all creditors, even those who voted against, were covered by the deal per Federal law. Protection: Her creditors were instantly obliged by Federal law to deal only with us. They could not call her or sue her. They could not interfere with her bank account. The only people who found out: Her creditors, whom she could not pay anyway; the Federal government (no impact on pensions, rights to GST/HST credits); her doctor when she began to recover from the severe depression this fear about money had caused her.