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Bootstrapping or bankruptcy: What's best path to debt relief?

Carrying debt has come to be an acceptable way of life for a lot of people. It's even seen by many to be an acceptable burden to carry on into retirement. But the number of aging individuals in Arkansas and the rest of the country who are facing that prospect these days is generating a lot of concern among some credit counseling experts.

They worry that too many older folks, operating under misapprehensions about bankruptcy, opt for bootstrap strategies to pay off their debt over something like Chapter 7 bankruptcy, which could result in them having medical debt and overwhelming credit card debt completely discharged. They fail to explore all the possible options with an experienced attorney to find the route to debt relief that's best for them.

This has come to be of particular concern since the 1990s. That's when looser credit came to be widely available. Many who are now looking retirement square in the face were lured into levels of debt that would never have been tolerated by their parents' generation.

According to the Federal Reserve, the percentage of households headed by individuals 65 to 74 has gone from 50 percent in 1989 top 61 percent in 2010. Those headed by individuals 75 and up have doubled in that time frame to more than 38 percent.

Credit card debt levels for households headed by someone 75 or older have gone from 10 percent in 1989 to nearly 22 percent as of 2010.

While only 21 percent of households headed by someone 65 to 74 had mortgages on their homes in 1989, more than 40 percent of them had mortgages owing in 2010. And for households headed by someone 75 or over went from 7 percent to 24 percent.

The percentage of these households holding student loan debt has also increased, with the median debt owed being somewhere between $12,000 and $15,000.

Payment of debt is laudable. But many credit counselors question whether the bootstrap effort that may be required doesn't represent a price too high. For too many, they say, it creates a tarnish of struggle at a time when the golden years deserve to be enjoyed.

Debt payment, while laudable, sometimes deserves to be weighed in the broader context of how it might affect overall quality of life. To assess all options, seek experienced debt relief counsel.

Source: Money.MSN.com, "Rising debt weighs down seniors," Liz Weston, April 17, 2013

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