Debt Forgiveness for Seniors: Get the Help You Need

Seniors are living with more debt than ever before. According to a 2019 Congressional Research Service report, households with people aged 65 and older saw their debt increase from 38% in 1989 to 61% in 2016.

Despite this worrisome issue, there aren’t a lot of options for debt forgiveness for older adults. But they generally have a few more options for debt relief than younger Americans. If you’re a senior who is in need of debt assistance, continue reading to explore your options.

Getting Help with Debt as a Senior Citizen

Many senior citizens live on fixed incomes, and Social Security raises tend to be small. Even seniors who stashed away a healthy amount of retirement savings can struggle with debt. And this doesn’t even take into account that older Americans tend to be easy prey for scammers.

While there are a few debt relief options for seniors, there are also a number of strategies you can implement today to chip away at your loans.

Government Programs for Seniors

Eligible seniors could qualify for state-sponsored financial assistance for paying for Medicare premiums, deductibles, co-payments and more. Connect with your state via the Medicare website ( to learn specific requirements.

The Administration on Aging (AoA), backed by the U.S. Department of Health and Human Services, offers support and resources to seniors including:

  • Long-term care assistance
  • Nutrition and wellness advice
  • Health insurance and other medical assistance
  • Legal aid

The AoA can also be a helpful resource for seniors who are being harassed by creditors.

Can Creditors Take Your Social Security?

If you don’t pay your debts, your Social Security benefits are usually safe. But that isn’t always guaranteed. Always talk with an expert before making a decision to skip paying any debts.

For example, the following debts could lead to garnishment of Social Security:

  • Student loans
  • Federal taxes or penalties
  • Child support
  • Spousal support or alimony

In the case of federal tax debt, you can request to have part of your monthly Social Security check withheld until the debt is repaid. Beyond these examples, however, federal law protects Social Security benefits from direct seizure by creditors.

Are My Retirement Accounts Protected from Creditors?

Employer-sponsored retirement accounts are generally protected from creditors under the Employee Retirement Income Security Act (ERISA), though some exceptions exist. Individual retirement accounts (IRAs) and Roth IRAs are not protected from creditors.

Qualified Retirement Accounts

Retirement accounts set up under the Employee Retirement Income Security Act (ERISA) of 1974 are generally protected from seizure by creditors. ERISA covers many employer-sponsored plans, such as

  • 401(k) plans
  • Pension plans
  • Some 403(b) plans

Even if you have millions of dollars in your retirement accounts and owe money or have filed for bankruptcy, creditors cannot access savings in ERISA-qualified plans other than certain exceptions:

  • If you’ve been found guilty of a crime and go to prison, retirement funds can be garnished to compensate the prison for expenses
  • If your creditor is a former spouse
  • If your creditor is the IRS

Nonqualified Retirement Accounts

Individual retirement accounts (IRAs), including Roth IRAs, aren’t protected under ERISA. Bankruptcy is the only exception. The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 protects IRAs up to $1 million, though there are a few exceptions.

Outside of bankruptcy, state laws will determine whether the money in a non-qualified account is protected from creditors.

Avoid 401(k) Loans

Many employers restrict 401(k) loans after retirement, but in some cases the loans are possible. However, because 401(k)s are protected by ERISA, it’s best to avoid this.

Strategies to Deal with Different Types of Debt

Debt comes in many different forms and amounts. For some of the main types seniors face, consider utilizing the following strategies to steadily get yourself out of debt:

Credit Card Debt

The first step to dealing with credit card debt is to try and negotiate with your creditors. At the end of the day, lenders and creditors just want their money, so they can be open to negotiations if it means you’ll repay the debt one way or another. Staying in contact with your lenders about your repayments is essential if you want to avoid your debt getting sent to collections, where they will hound you for payment. While there are federal laws restricting how debt collectors and collection agencies can contact you and forbidding them from threatening you, it’s better to avoid the situation altogether if possible.

Other strategies include paying more than the minimum amount on the debt and trimming your budget so you have more money to allocate toward repayment.

Credit Card Hardship Programs

Some credit card companies will offer some relief in the event of a hardship. COVID-19 relief is the most recent example, but many are willing to work with you if you experience a life-altering event. While there aren’t many specific hardship programs, your credit card company is usually willing to consider a number of factors.

Factors they consider may include:

  • Your current income and ability to pay
  • How much you owe
  • How long you’ve been a customer
  • Your past payment history
  • Whether you’re carrying a balance that’s lower than your credit limit
  • Your current delinquency status
  • Whether you’ve already tried a hardship program in the past.

Life events that may help you qualify for a hardship program include:

  • A pay cut
  • Job loss
  • A medical crisis or long-term illness
  • Divorce or separation
  • Damage due to a natural disaster

Mortgage Debt

If you’re struggling with mortgage debt, there are a few options to try. One strategy is to sell your current house and downsize to a smaller one with lower monthly payments. For seniors, a condo might be a great choice to turn to if mortgage payments are starting to pile up and home maintenance is becoming an added expense.

Seniors 62 and older could also try a reverse mortgage. In a reverse mortgage, a homeowner with considerable equity in their home can borrow against the value of that home and receive monthly payments, a lump sum, or a line of credit. This can allow seniors to put their cash toward debt payments or other important expenses.

Another strategy would be to refinance your mortgage for better loan terms or a lower interest rate. Ultimately, do whatever needs to be done to avoid foreclosure on your home.

Student Loans

Though it may seem unlikely, it’s possible to retire with student loan debt. According to AARP, of the $1.6 trillion in total student debt at the end of 2020, borrowers 50 and older owed about 22% of that amount, or $336.1 billion — more than a five-fold increase from 2004.

It’s possible that seniors could get payments lowered if the debt is a federal or PLUS loan. Income-based repayment plans are likely the best strategies for making manageable monthly payments, something you can easily work out with your loan service provider. Deferment or forbearance may be possible if you qualify. 

Student loan forgiveness and consolidation options are other routes borrowers can explore. One popular forgiveness strategy is through the Public Service Loan Forgiveness Program (PSLF) where borrowers employed by a U.S. government entity can have their balance forgiven after 120 qualifying monthly payments.

Consolidation meanwhile can make it easier to repay your student loans by reducing your monthly payments and/or a lower monthly payment amount. Learn more about student loan forgiveness and consolidation here.

If you’re 65+ and still saddled with student loan debt, watch this to learn more about your options.

Medical Debt

Health care is expensive, but this type of debt has a bit more flexibility. You should take an inventory of your bills to ensure what you owe is accurate. Then contact your provider to set up a monthly payment plan that works for you. Starting in 2022, unpaid medical bills won’t show up on your credit report until it’s a year past due. That should give you time to negotiate with providers, creditors and insurers.

Seniors should also see if they qualify for an income-driven hardship plan. Some hospitals make accommodations for patients with low incomes or high levels of debt. There might be other financial assistance programs in place for you, so be sure to contact your medical care provider.

You could also look into medical cards, especially ones that offer 0% APR for a number of months. If you pay your balance before the introductory rate expires, they can save you a lot of money.

Auto Loan Debt

If you’re struggling with vehicle debt, be sure to steer clear of title loans, a type of predatory loan that can result in you losing your car altogether. Consider trading down to a less expensive car so that payments can be more manageable. Buying used is a great strategy compared to buying new, and can often serve you just as well.

Borrowers should also look at refinancing the vehicle or try negotiating with your lender to bring payments down.

Debt Relief Options for Senior Citizens

If it comes down to it and you need to consider some debt relief options to return to financial stability, consider these avenues:

Debt Consolidation Loans

This is a type of loan where the borrower takes out a separate, larger loan to pay off all their outstanding debt. Not only does this typically result in a lower interest rate, but it can simplify your repayment by grouping all of your debt onto a single loan. This means you’ll only have to worry about one monthly payment instead of a collection of smaller loans.

Home Equity Line of Credit

Home equity loans and home equity lines of credit (HELOCs) are two ways you can borrow against your home. If you own a home, this can be one of the best ways to receive a loan as interest rates will usually be lower than any other type of loan.

The main difference between the two types of home loans is that a home equity loan results in a one-time cash outlay to the borrower. Meanwhile, a HELOC allows you to borrow as much as you want to.

Credit Counseling

Visiting nonprofit credit counselors can help you set up a debt management plan (DMP) specific to your financial scenario. These counselors will create a DMP in agreement with your creditors that rolls multiple loans together into a single debt, typically with a lower interest rate. This way, your debt is much more manageable to repay.

Debt Settlement

If you’re able to work out a debt settlement deal with your creditor, this could be a great debt relief option. This strategy involves offering a lump-sum payment to a creditor in exchange for a portion of your debt being forgiven, sometimes around half of the original loan. So long as you can afford the lump-sum amount, contact your creditor to see if they’re willing to work with you.

Personal Loans

Seniors looking for debt relief can also consider taking out a personal loan from a bank or credit union. Most of these will be unsecured loans with flexible terms and interest rates. Borrowers will need a credit score of at least 600-660 to qualify.

Alternatively, you can explore a secured loan where you put assets down as collateral, but this should be avoided unless it is your only way to get the loan.

Filing for Bankruptcy

Filing bankruptcy can be valuable for retirees because they’ve had more time to invest in their assets and likely won’t need to worry as much about having good credit scores compared to a younger person, particularly because certain retirement accounts will be protected.

There are two main types of bankruptcy, Chapter 7 and Chapter 13, with the differences explained below.

Two Primary Types of Bankruptcy

The main difference between the two revolves around how you repay your debt. Whichever option you choose, your unsecured debts (such as medical and credit card bills) are discharged, meaning you won’t have to pay them.

Chapter 7 Bankruptcy 

Chapter 7 bankruptcy involves surrendering all your non-exempt property to pay off your debt. This process allows debtors to rid themselves of debt quickly, usually in about three-five months. There are eligibility requirements, mainly being that you have to have below-median income for your state, or you have to pass a test to determine whether you can reasonably be expected to pay your debt with your disposable income.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy involves creating a court-mandated repayment plan lasting three-five years to cover the borrowers’ debt. To qualify, you must have a regular income, unsecured debts totaling $419,275 or less, and secured debts totaling $1,257,850 or less. One major advantage to Chapter 13 is that debtors keep their property while they make payments toward their most important assets, like their mortgage or car loan.

When it comes to unsecured debt with Chapter 13, you will still need to continue payments through your repayment plan. However, after the agreed-upon repayment term has ended, the remaining unsecured debt may be discharged. 

Whether you choose Chapter 7 or Chapter 13, as soon as your case is filed, an automatic stay that protects you from creditors will go into effect. This means creditors and debt collectors are required to stop contacting you until your bankruptcy case has been resolved.

Seniors should keep in mind that certain types of debt won’t be wiped out by either bankruptcy route, including:

  • Mortgages
  • Tax debt
  • Child support or alimony
  • Student loans

Watch Out for Scams

Many scammers see senior citizens as easy prey. If you get a text, phone call or email saying that you owe someone money or that an expense was authorized, don’t fall for it. Even if it is from a lender you recognize, look up the lender’s contact information yourself and call directly. If someone offers you “free” money or a “free” roof or air conditioner inspection, hang up. If something sounds too good to be true, it probably is.

If you think you’ve been scammed, contact the Federal Trade Commission (FTC), Consumer Financial Protection Bureau (CFPB) and your state attorney general’s office.

The Bottom Line

Debt forgiveness options for seniors are limited, but there are structures in place that can help ease the burden. Seniors in debt should consider budgeting, utilizing financial assistance programs, and working out a deal with their creditors before turning toward more significant debt relief options like consolidation loans or even bankruptcy. As long as you prioritize the most important debt first and employ several of the strategies mentioned here, you should put yourself back on the road toward financial stability.


What’s the Difference Between Secured and Unsecured Debts?

Secured debts are loans with property (like a house) used as collateral to support the loan. This means if you are unable to pay the loan, the lender could seize the property as a form of payment. Unsecured debts have no collateral attached to them but tend to have higher interest rates.

Do I Need an Attorney for Bankruptcy?

While you technically don’t need to, it is generally advised to work with a bankruptcy attorney when filing for Chapter 7 or Chapter 13 bankruptcy.

Can Social Security Benefits be Garnished?

For the most part, no, they cannot. However, if you have unpaid federal taxes, child support, spousal support, or student loans, your Social Security could be garnished if you have no other forms of income to repay it.

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