Living on Social Security, On a Pension, and Deep in Debt


Dear Steve,

I am 72 retired on ss and teachers pension. over the last 6-7 years I have slowly built up around 40000 in credit card debt, 20-25 separate accounts between 1000 and 6000 in debt.

Most are between 1000 and 1500. I have been working while retired but my company closed Sept. 2016 and I have continued to work but have not found income anywhere near previous company.

I have remained up to date on all accounts but most have interest rates above 22% and it’s impossible to keep up. I see my situation getting gradually worse plus with those kind of interest rates I am not getting anywhere fast in paying them off tho I have managed to pay off 3 smaller ones in the last 3 years

Should I call the credit card companies myself and try to negotiate better terms since as noted on your site there is so much dishonesty out there. If I call the would the approach that I described above of being honest work best. Should I refer to myself has a hardship case and ask for help under the Dodd Frank act or do you suggest another option. I want to pay what I owe but I need single figure interest rate and lower payments

Thanks ahead for any help you can give me



Dear John,

Well if you retired on Social Security and a teacher pension it does not sound like you are rolling in money.

When someone builds up debt like you have it is an indication of a number of things. The most likely in your situation is you were using credit to help makes ends meet. It sounds as if the charges slowly built to a point where they are no longer sustainable.

When you have 20-25 accounts it become less statistically possible you would reach a sustainable agreement with all the accountholders. So let’s say fifteen accounts agree to a reduced payment plan and ten don’t, that doesn’t really solve anything.

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You said something I often hear, “I want to pay what I owe.” When I lived through my financial problems I said the same thing.

But let’s let the math tell us what reality is versus what we’d like to do.

If I’m right that you’ve been slowly using the cards to make ends meet this means it is doubtful you have much extra cash flowing in each month. If you don’t then there is some risk to entering any repayment plan that leaves you just getting by each month. And what is the advantage of making 18 monthly payments and then falling into an unexpected future hard time only to default later?

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We need to think about your situation in terms of likelihood. How likely is it you could make 60 or more monthly payments and stay current? The reality is it’s not likely if you are limping by each month. One unexpected expense is going to sink you are eliminate most, if not all, the progress you made.

It would be tragic if you’ve been dipping into your retirement to repay this debt. You are going to need all the retirement savings you can protect to safely care for yourself. You don’t want to wind up in the Medicaid nursing home if you can avoid it.

Given your age, the likely possibility you don’t have much in reserve, and the chances of striking a deal with so many creditors I think the logical first option to explore would be a consumer bankruptcy and discharge the debt. Once the debt is legally eliminated there is nothing that prevents you from then reaching any agreement you want to repay your original debt. However, don’t be surprised if some of your creditors refuse the payments.

I sense you are struggling with doing what you think is right for your creditors but you also have to weigh that against doing what is prudent and logical for yourself.

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Please read this and this.

Once you meet with a local bankruptcy attorney, please come back and post an update in the comments below. I’d like to know how things progress.

Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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