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Tight economic times increase unsecured debt for many baby boomers

The primary distinction between secured and unsecured debt is that the former is backed by collateral of some sort that a creditor may have ready access to in the event of a payment default. A classic example is a home, car or other physical asset.

An unsecured debt, conversely, is not tied to any tangible object. Examples of such debt are many and diverse, including medical bills owed, utility bills, child support, payday loans, alimony, tax debts and other obligations.

Debtors - especially in these hard times, with high job losses, diminished purchasing power and depleted savings and other investment accounts - are often forced to make hard choices, with many opting to pay a secured debt - most typically a mortgage - rather than an unsecured obligation.

That can of course be a problem, given that a creditor is uniformly focused on payment collection regardless of how a debt is termed.

In the realm of unsecured obligations, credit card debt is an obvious and growing concern for many Americans, with a recent trend showing that baby boomers over 50 are increasingly having a hard time in this debt sphere.

That relatively new and altered truth reverses the standard stereotype that younger Americans - especially those saddled with student loans and having a hard time securing employment - fall most easily into the credit card debt trap.

New York-based policy research group Demos notes that the economic woes of recent years are hitting older Americans especially hard, precisely at the time that they should be focused on retirement and ratcheting up their savings.

Says a financial consultant and author concerning that demographic and members within it who are using cards for what are essentially daily needs and expenditures: "That group of boomers could be in real trouble."

When unsecured debt becomes onerous, with collectors becoming increasingly aggressive in their attempts to collect or even harass, an experienced bankruptcy attorney and law firm can help a debtor in a number of ways. These include interceding with creditors and helping a client work toward reduction or elimination of unsecured payment obligations.

Source: Reuters, "Boomers face credit-card quandary as economic doldrums bite," Chris Taylor, Feb. 19, 2013

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