By Chris Levister --

As retired teachers Bill and Beatrice L. Clay put it: “We had health and medical problems and put the bills on high interest credit cards. Pretty soon, it got the best of us.”

Once known for their thrift, older Americans are piling on debt – filing for bankruptcy in record numbers and dashing retirement dreams like never before. Many like the Clays are forced to live on little more than Social Security thanks to a plummeting stock market and painfully low interest rates that pinch returns on their CDs, bank accounts and stock investments.  Tapped out, many in this new generation of seniors turn to credit cards as a last resort to finance medical emergencies and basic essentials.

“This is not the way we envisioned our golden years,” says Beatrice, 66. After three surgeries in two years, the Clay’s racked up $23,000 in medical bills. Unable to pay them outright, they charged them. Soon, they were treading water.  

There was no place else to turn adds Bill. “Twice we were turned down for a loan. We knew better, but once you get involved in credit card debt, they’ve got you.”

The Clays not only sought help from credit counselors, but they sold their Rancho Cucamonga home in October and bought a less expensive mobile home in Banning.  

Medical emergencies, prescription costs and major home repairs are pushing seniors over the edge according to Malcolm Hurlston, chairman of the Consumer Credit Counseling Service, a debt charity.

“Amongst the people we help, we’ve seen an alarming upswing in the proportion of debts that come from seniors using credit cards. That’s because many retirees have not been able to get personal loans and have turned to credit cards.”

Twenty years ago credit cards were a non issue, says Hurlston. “Today, seniors have an average credit card debt of $8,000. But we also see people with $30,000, $40,000, $50,000. 

Although older Americans account for a small proportion of total personal bankruptcy filings, they are the fastest growing group in bankruptcy. About 82,000 Americans 65 or older filed for bankruptcy in 2001, up 244% from 1991, according to the Harvard Consumer Bankruptcy Project.

Nearly half of the elderly people who end up in bankruptcy say that they filed because of a medical expense, the Harvard study found.

Out-of-pocket health care expenses increased nearly 50% from 1999 to 2001 according to the AARP. The costs are likely to increase as the economy sours and more employers eliminate retiree health benefits, which typically include supplemental drug coverage.

AARP says there is a perception that many older Americans are affluent, 56% of retirees say Social Security was their primary source of income this year up from 42% in 2006, according to an annual survey by the Employee Benefit Research Institute.

At the same time, many managed care companies are cutting prescription coverage from Medigap policies. That forces many elderly Americans to go without medications or pay for them with a credit card. Before you know it, they have a large amount of debt.

When seniors live on fixed income, it’s tough to juggle an unexpected expenditure.

Mildred Mitchell, 70 of Yucaipa, says her problems started when she needed to replace a leaking roof.

With no home owners insurance and the roofing company demanding half down and the rest upon completion, she put the repair on a credit card with an APR interest of 27%.

“It came down to getting the roof fixed or watching it collapse. What choice do you have,” said Mitchell a retired home health nurse. Soon, late fees, interest and penalties caused her credit card balance to balloon to $11,000.

Compounding their debt problems, many like Mitchell and the Clays say they are too embarrassed or too proud to seek help.

“It’s a matter of pride,” says Mitchell.  In the end, debt problems take a huge emotional and financial toll on seniors.  With the economy worsening and retirement assets dwindling experts expect to see a huge increase in the number of seniors falling into credit card abyss.

“They cry and worry, they don’t sleep at night. They live in denial and file bankruptcy as a last resort.” Most of them said financial guru Michelle Singletary don’t know their rights when ‘hounded’ by creditors or bill collectors. “They’re often too intimidated to fight back and end up suffering in silence.”