Questions? Call Us Now!
Start Accepting Credit Cards Today

Sign Up Now!

With No Setup Fees!

High Risk Merchant Account Services

Accept all major credit cards

Regardless of Credit History!

How Being Disabled Hurts Your Credit: What to Know and Where to Find Help

Posted on 12 September, 2017

Disability can be a lifelong condition that shapes your identity from birth, or something that happens in the blink of an eye – an injury or diagnosis that abruptly derails life as you know it. The Centers for Disease Control and Prevention estimates that one in five American adults lives with a disability, making the disabled the single largest minority group in the U.S.

Your disability may be readily apparent to others because you use a wheelchair, wear a prosthetic limb, lost your hair from chemotherapy, carry an oxygen tank, or have the characteristic features of dwarfism or Down Syndrome. Or it may be invisible to the world at large, like chronic pain, dementia, autoimmune disorders, and psychiatric conditions. Many of us will experience disability at some point in our lives, if merely from the process of aging, but that doesn’t make it any easier to manage.

People often don’t realize how common disability is until they experience it firsthand. They also may not appreciate how many barriers the disabled face. In addition to the physical barriers of navigating environments not built for them, and the social barriers of people who stare, look away, are overly solicitous, or make insensitive remarks, there can also be significant economic barriers. It is exceedingly difficult to stay afloat financially with a condition that “substantially limits one or more major life activities,” as defined by the Americans with Disabilities Act.

It is unfair, but the fact is – few things can send you into debt and destroy your credit faster than becoming disabled.

When you’re disabled, physical or medical challenges can significantly limit your earning potential and ability to work. Only 41% of disabled Americans are employed, according to the U.S. Census. At the same time, doctor and hospital bills, medications, assistive devices, therapy, and caregiver costs can pile up on top of ordinary living expenses like housing, utility bills, and transportation.

Despite the prevalence of disability, only 33.1% of U.S. workers have access to private long-term disability insurance, according to the Bureau of Labor Statistics. That leaves many with only Social Security disability benefits to fall back on, and it can take months or even years to qualify and start receiving payments.

Disability in America

In its 2017 Fact Sheet, the Social Security Administration reported the following:

  • Among 20-year-olds today, 1 in 4 will become disabled before reaching retirement age
  • 56 million Americans (1 in 5) currently live with disabilities
  • 38 million Americans (1 in 10) live with severe disabilities
  • Only a small subset of disabled Americans – about 9 million – receive Social Security disability benefits.
  • Social Security disability payments are modest. At the beginning of 2017, Social Security paid an average monthly disability benefit of $1,170. That’s an annual income of $14,040 – just barely above the federal poverty level of $11,880.

How disability affects credit

It is very common for people who are disabled to have low credit scores. FICO scores were introduced by the Fair Isaac Company in 1989 to help lenders predict credit risk. Today they are used by 90% of lenders when deciding whether to approve a loan and how much interest to charge. The scores have evolved over time and there are different versions – for mortgages, credit card decisions, auto lending, and other loans. The exact formulas are secret, but FICO discloses the basic components of its scoring system. They are:

    • Payment history: 35%
    • Amounts owed: 30%
    • Length of credit history: 15%
    • Credit mix: 10%
    • New credit: 10%

The most common way disability damages your credit is from loss of income. When people don’t earn enough to cover their expenses, the amounts they owe rise and they start missing payments. Missed payments and delinquent debts affect your credit score for seven years. If you have to declare bankruptcy, your score is damaged for up to 10 years. Unpaid tax debts can stay on your credit report forever.

This poor credit situation can quickly get worse if you enter into debt to pay for the costs of medical treatment, on top of your existing daily life.

So what can you do about your credit score if you are disabled? The first step is to find out where you stand. Everyone is entitled to one free credit report from each of the three major reporting agencies (Experian, Equifax, TransUnion) every 12 months. Examine it closely and if you find any errors, correct them as soon as possible. A recent Federal Trade Commission study found that 25% of Americans had some kind of error on their credit reports, but most were able to dispute them with an immediate improvement in their scores.

The next step likely finds you asking how do you improve your credit? You need to know your options for managing your debts, and then choose what works best for you to manage your finances.

Financial strategies for coping with temporary disability

If your disability is short-term, you might leverage some options specific to your situation and you might choose to prioritize ‘getting through’ the situation.

  • Be ready to provide thorough written support of your specific disability and medical needs from qualified professionals, and be sure to have their contact information on the documents. Make sure this includes your SSN and proof of age/identity, medical records from all related visits to providers, any laboratory/test results, a list of your current medications and their dosages, support of employment, and a copy of your federal tax return.
  • Check your insurance coverage to see if you have any short-term disability benefits. Some will pay you up to two-thirds of your salary for up to six months, depending on your particular situation.
  • Apply for worker’s compensation, if applicable (i.e. if the injury was obtained on the job and results in absence from work). You might not have short-term disability benefits, but all companies must provide workers’ compensation.
  • Leverage PASS, if applicable. PASS (Plan to Achieve Self-Support) helps you set aside financial resources to meet the needs of particular work goals, so that you can find a job and not have to use SSI/SSDI.
  • Reduce your discretionary spending. Cancel memberships and subscriptions you don’t use, scale back your phone plan, and limit eating out, for starters. It’s very helpful to take stock of your monthly costs and spending, and realistically assess where you can comfortably cut back.
  • Call your creditors and see if they’ll work with you. They might be willing to waive interest and penalties, give you a grace period, or even offer you a more manageable payment schedule. Different types of creditors have different things they can offer you, but do not be hesitant to ask – it’s the only way you can find out your options!
  • Apply for a line of credit if you have no other income and your condition is temporary. Your bank might be a good place to start on this, since you’ll have the most “history” for them to work with. Opening a line of credit will lower your credit score, but is a better alternative than missing payments.
  • Use balance transfers. Minimize the interest you pay long-term on the debt you already have and help any payments you make go farther against your owed balances.
  • If you own a house, you might be able to take out a home equity loan. This can give you a lump sum of the difference between the mortgage you’ve paid off already and the market value of your home. You can then pay this off in installments, keeping you fluid until your life settles down a bit.
  • If you have a 401(k) retirement plan, you might be able to take a hardship withdrawal of up to 50% of the value of your plan, up to a maximum of $50,000. That said, these come with a 10% penalty if you are below the age of 59 ½ years old. Additionally, they are subject to income tax.
  • Look for ways to earn extra income that don’t require physical effort. You might be able to sell unwanted items online, rent a spare bedroom, or even perform internet-based work via sites like Mechanical Turk or AskWonder. A simple web search for these items can yield you the most up-to-date information on what’s out there, but the key thing to remember is that there is always another way to earn income!
  • Build out your skill set. If you can, use your recovery period to learn new skills through online courses or certification programs, and potentially create alternative sources of income for yourself or even start mapping out a path for a raise upon your return to work.
  • Explore legal action. If your disability was caused by an accident or negligence, you might have a case for compensation. Granted, this might take months to actually pay out, getting started on it sooner rather than later is preferable.
  • See also: What is a high risk merchant account

Financial strategies for coping with long-term disability

If your disability is permanent or long-term, you may need to make bigger lifestyle changes.

  • Change your living situation. You might need to change your home in order to accommodate your disability.
    • Downsizing is one option to reduce costs. Additionally, you may be able to sell some of your property – via yard sale, Craigslist, eBay, etc – and acquire some more cash to help you assume control over your finances.
    • Get a roommate or move in with your family. Speak with your roommate and even friends and family in clear terms about what’s acceptable for both parties. Your disability might mean some limitations in what you can do around the house, as well as an increased need for care, but with transparency you can negotiate something that fits both you and your roommate(s)’s needs.
    • HUD Housing Laws are meant to protect you…and your finances. Housing providers must make reasonable accommodations to meet your disability, and protect against your discrimination. As the HUD office notes, there are some opportunities for housing providers to obtain financial assistance to fund these modifications, so this is not your responsibility – nor something that can be used to force you out of a living situation.
    • Income-based housing might be something to look into, as they can even charge rent based on your monthly SSDI payments. Many of these apartments are built to accommodate the disabled, and so you might even find easier accommodations and heightened solidarity from your neighbors.
  • Calculate your weekly/monthly required and variable expenses, and identify what you can cut back on.
    • Set a flat bill with your utility company. This can help make your recurring expenses a fixed amount, which in turn can help you budget better.
    • Ditch your phone service and rely instead on VOIP. If you need a cell phone, consider the most basic plan – which you can use only in case of emergencies.
    • Ditch cable. With online streaming services you can pay for exactly what you watch.
  • Check for disabled discounts. Many companies offer discounts for those facing specific disabilities or diseases on products and services.
    • Check with nonprofits relating to your disability, as they may have the most detailed as well as up-to-date information regarding discounts, financial assistance, support groups, and even pending legislation that relates to your condition. This is particularly helpful if your disability makes you require specific equipment or accomodations.
    • Tax deductions might be available. The IRS provides detailed information for people with disabilities, and it might be a good idea to check with your state’s tax office to see if there are any local breaks that you could leverage.
    • Reduced travel and transportation fares might be available. Long-term travel can help with your quality of life, visiting family, and even seeking medical services from specialists that are far away. Discounted transportation can increase your independence in your daily life.
  • Know your employers’ support options. What benefits do they offer in the face of disability or illness? Some options you might encounter include long-term disability insurance or care benefits, and even life insurance.
    • Are you eligible for a ‘living benefit’? Based on your particular diagnosis, you might be eligible for an advance on the death benefit.
    • Are you eligible for a “viatical settlement”? This financial arrangement allows you to sell some of your life insurance policy at a discount, but it might be enough to help you.
  • Reevaluate career options. You might need to find a new line of work, or even just alternate sources of income.

Tips for debt relief for the disabled

  • Is your debt unsecured? Such debt does not have collateral (e.g. house) that can be seized in the event that you cannot make a payment; common examples include credit card debt, medical bills, and student loans. Your creditor would have to sue you first and win court judgment in their favor, but if you incurred a permanent disability, you might be “judgment-proof.”
    • Be wary of government liensfederal or state – that may be placed if you owe taxes for so long – without addressing them in any way – that they are sent to collections. Aside from potentially seizing your finances, this will also make it very difficult for you to get any loans or credit. Again, your best bet here is to speak with the government agencies involved and negotiate an affordable payment plan.
    • Be wary of landlord liens. Check your lease as well as your state’s laws on the circumstances under and extent to which landlords can seize your personal property.
  • Contact your lenders and learn the terms of your accounts. Be sure to read your contracts. Sometimes, in the case of permanent disability, your debts might be forgiven. Make sure you provide all requested documentation. It’s also a good idea to check in with credit reporting agencies to make sure the debt forgiveness was reported properly.
    • This includes healthcare providers. They might be able to offer you a payment plan or even reduce the fees they charge you. This is particularly true of major educational/research hospitals, which often receive more government support to accommodate such situations.
  • Address government debt first. Part of why this is critical is that while creditors cannot garnish payments like SSDI, the government can, depending on what you owe them – including taxes and child support payments. That said, if you indicate willingness to pay, you are more likely to receive help in making payments. Call the government and discuss whether you have any payment plan options, etc. Be very upfront and realistic about what you can or cannot afford.
  • Apply for credit card hardship support. Many credit card companies now offer programs to help you pay down the debt; they would rather receive some payment from you than none, and so this is advantageous for you both. These programs usually fall into one of two camps.
    • You might get to discuss an interest rate and monthly payment amount that works for what you can afford, which might be particularly helpful in the face of long-term disability.
    • Another option might be to receive a period of deferred payments, which might work well for short-term disability, though you’d have to close your account and not receive any reduction in the final amount owed.
  • Find a credible debt management program. These programs offer reduced interest rates, reduced monthly payments, improved schedule, and waived late fees, all of which they handle negotiating with your debtors directly. Consult the Federal Trade Commission (FTC)’s site for more information on how to identify reputable credit counselors.
  • For federal student loans, look into the total and permanent disability (TPD) relief. This can free you of your obligations on federal student loans and service on TEACH Grants.
    • For private loans, there is less protection. Check the terms of your loans and reach out to your lender directly to understand whether there is any loan forgiveness or alternate payment options to help accommodate your situation.
  • Speak to a bankruptcy attorney. You can likely continue to receive SSDI and SSI payments even while under bankruptcy. It’s good to know all of your options and totally understand the implications of each, particularly as they relate to your specific situation. That said, the process of filing for bankruptcy is time-consuming and long, so many recommend finding other ways to make money as opposed to trying to drop your debts.
  • Check with local state offices to see what kinds of help you can get. Depending on your particular disability, you might be eligible for government assistance.
    • Get help paying for your food. Each state has its own offerings, so be sure to check that list for the most up-to-date information on the help you can receive. Adequate nutrition is essential for proper health, and is therefore perhaps an even more critical issue for the disabled.
    • Get help paying your bills. Local offices can tell you more about the financial assistance programs that are available to help you meet your basic human needs.
    • For Medicare recipients, get help paying for your prescription drugs.
  • Check for unclaimed money. Make sure you refer to a reputable source for information on this (e.g. a “.gov” website), and don’t give out any personal information.
  • Keep track of all of your income. Given the potentially complex situations that your disability might place you in – receiving benefits, missing work, etc. – make sure you document all of your income and spending. Save all of your receipts. You want to make sure you maximize all of your possible deductions, while also making sure to pay income tax appropriately. Some disability payments might be subject to income tax, and so you want to make sure you stay on top of this to avoid getting in trouble.
  • Apply for discounts on healthcare coverage. The Healthcare Marketplace offers an application for disability-based coverage, as well as plenty of information on the different insurance plans available.

How to help a disabled family member with credit problems

If a family member or loved one is disabled and facing credit problems, there are ways you can help them. That said, all parties should be careful about how much risk they take on, and definitely need to remain alert regarding their commitments and their options.

  • Do you live in a community property state? There are currently 9 community property states in the US: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In these states, spouses are equally liable for debts acquired during their marriage.
  • Co-sign credit cards and loans carefully. Discuss with your loved one whether the liability makes sense for you to take on. The brutal truth is that credit card debt does not transfer after death (as long as the account was not co-signed), and so there are situations in which it might be more advantageous to keep your name off legal documents, even if you do help your loved one make payments. That said, you might be able to help win some relief that could make all the difference in your loved one getting back on track.
  • Meet with a credit counselor or attorney. The Department of Justice maintains a state-by-state list of approved credit counselors here, many of whom provide services in languages other than just English.
  • Review their credit report together. Make sure that all debts – and their resolution – are reported properly to the three major credit bureaus.
  • Help them find relevant grants. There are some grants available for individuals (and, in many cases, their families) with certain diseases and/or needs. Many of these are state-specific! Help your loved one identify a reputable source and assemble the necessary application. GrantWatch is one source we found helpful, although we recommend searching for key words relating to your condition(s) and location, in order to find the most up-to-date information.

Disclaimer: This article is intended as suggestions, but is in no way a substitute for consultation with a qualified financial and/or legal professional.

You may also like

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

22 Comments

  1. https://waterfallmagazine.com
    This piece of writing will assist the internet viewers for building up new blog or even a
    weblog from start to end.

  2. I keep listening to the news talk about getting free online grant applications so I have been looking around for the top site to get one. Could you advise me please, where could i find some?

  3. https://wieliczko.eu The free version of the
    photo resizer, Image Resize, will offer you everything you should begin resizing images,
    it even batch resizes images for you.

  4. Hi my friend! I wish to say that this post is amazing, nice written and include approximately all important infos. I’d like to see more posts like this.

  5. Hi there just wanted to give you a brief heads up and let you know a few of the pictures aren’t loading correctly. I’m not sure why but I think its a linking issue. I’ve tried it in two different browsers and both show the same outcome.

  6. You actually make it seem so easy with your presentation but I find this matter to be actually something that I think I would never understand. It seems too complicated and very broad for me. I am looking forward for your next post, I will try to get the hang of it!

  7. magnificent put up, very informative. I wonder why the other experts of this sector don’t notice this. You should continue your writing. I’m confident, you have a great readers’ base already!

  8. Excellent post however , I was wondering if you could write a litte more on this topic? I’d be very grateful if you could elaborate a little bit further. Cheers!

  9. Somebody necessarily assist to make severely posts I’d state. This is the very first time I frequented your website page and so far? I surprised with the research you made to make this particular publish incredible. Magnificent process!

  10. What’s up?

    I found this article very interesting…please read!

    Do you remember the blockbuster hit film The Matrix that was released in 1999? You may not know this, but it has deep spiritual implications concerning the times we are living in and Bible prophecy.

    It tells a story of how these “agents” are trying to turn us into machines. We are closer then ever before for this to become a reality when they cause us to receive an implantable microchip in our body during a time when physical money will be no more.

    You may have seen on NBC news concerning the implantable RFID microchip that some people are getting put in their hand to make purchases, but did you know this microchip matches perfectly with prophecy in the Bible?

    “He (the false prophet who deceives many by his miracles) causes all, both small and great, rich and poor, free and slave, to receive a mark on their right hand or on their foreheads, and that no one may buy or sell except one who has the mark or the name of the beast, or the number of his name…

    You also may have heard of the legendary number “666” that people have been speculating for possibly thousands of years on what it actually means. This article shares something I haven’t seen before, and I don’t think there could be any better explanation for what it means to calculate 666. This is no hoax. Very fascinating stuff!

    …Here is wisdom. Let him who has understanding calculate the number of the beast, for it is the number of a man: His number is 666″ (Revelation 13:16-18 NKJV).

    To see all the details showing why the Bible foretold of all these things, check out this article!

    Article: https://biblewoke.com/rfid-mark-of-the-beast-666-revealed

    GOD is sending out His end time warning:

    “Then a third angel followed them, saying with a loud voice, ‘If anyone worships the beast and his image, and receives his mark on his forehead or on his hand, he himself shall also drink of the wine of the wrath of God, which is poured out full strength into the cup of His indignation. He shall be tormented with fire and brimstone in the presence of the holy angels and in the presence of the Lamb. And the smoke of their torment ascends forever and ever; and they have no rest day or night, who worship the beast and his image, and whoever receives the mark of his name'” (Revelation 14:9-11).

    In the Islamic religion they have man called the Mahdi who is known as their messiah of whom they are waiting to take the stage. There are many testimonies from people online who believe this man will be Barack Obama who is to be the biblical Antichrist based off dreams they have received. I myself have had strange dreams about him like no other person. So much so that I decided to share this information.

    He came on stage claiming to be a Christian with no affiliation to the Muslim faith…

    “In our lives, Michelle and I have been strengthened by our Christian faith. But there have been times where my faith has been questioned — by people who don’t know me — or they’ve said that I adhere to a different religion, as if that were somehow a bad thing,” – Barack Obama

    …but was later revealed by his own family members that he indeed is a devout Muslim.

    So what’s in the name? The meaning of someones name can say a lot about a person. God throughout history has given names to people that have a specific meaning tied to their lives. How about the name Barack Obama? Let us take a look at what may be hiding beneath the surface…

    “And He (Jesus) said to them (His disciples), ‘I saw Satan fall like lightning from heaven'” (Luke 10:18).

    In the Hebrew language we can uncover the meaning behind the name Barack Obama.

    Barack, also transliterated as Baraq, in Hebrew is: lightning

    baraq – Biblical definition:

    From Strongs H1299; lightning; by analogy a gleam; concretely a flashing sword: – bright, glitter (-ing, sword), lightning. (Strongs Hebrew word H1300 baraq baw-rawk’)

    Barak ‘O’bamah, The use of bamah is used to refer to the “heights” of Heaven.

    bamah – Biblical definition:

    From an unused root (meaning to be high); an elevation: – height, high place, wave. (Strongs Hebrew word H1116 bamah baw-maw’)

    The day following the election of Barack Obama (11/04/08), the winning pick 3 lotto numbers in Illinois (Obama’s home state) for 11/5/08 were 666.

    Obama was a U.S. senator for Illinois, and his zip code was 60606.

    Seek Jesus while He may be found…repent, confess and forsake your sins and trust in the savior! Jesus says we must be born again by His Holy Spirit to enter the kingdom of God…God bless!

  11. I would like to thank you for the efforts you have put in writing this web site. I am hoping the same high-grade website post from you in the upcoming also. Actually your creative writing skills has inspired me to get my own web site now. Actually the blogging is spreading its wings quickly. Your write up is a good example of it.

  12. Fausto Fusco

    BEST PROGRAM FOR ADVERTISEMENT!

    XRumer is the best program for advertisement!
    It’s have CAPTCHA recognizer, email verificator, and a lot of other functions…

    This software will help to increase traffic to website to hundreds, thousands times.
    Program have a rich seven year history, which use experience of professionals in search engine optimization.
    Appreciate and use a truly unique and powerful XRumer program, can both professionals and beginners.
    MORE INFO=> https://bit.ly/2ZsKQsz

  13. Horace Manchee

    BEST PROGRAM FOR ADVERTISEMENT!

    XRumer is the best program for advertisement!
    It’s have CAPTCHA recognizer, email verificator, and a lot of other functions…

    This software will help to increase traffic to website to hundreds, thousands times.
    Program have a rich seven year history, which use experience of professionals in search engine optimization.
    Appreciate and use a truly unique and powerful XRumer program, can both professionals and beginners.
    MORE INFO=> https://bit.ly/2ZsKQsz

  14. Los años de experiencia, unido a la continua formación hacen que se reparen con la mayor eficacia, desde las lavadoras mas antiguas a las lavadoras equipadas con la última tecnología. Nuestros técnicos están especializados en la reparación de frigoríficos BOSCH de todo tipo. Nuestros técnicos están especializados en la reparación de congeladores BOSCH de todo tipo.

  15. En concreto, MECADIS informa a los usuarios del sitio web que sus datos de carácter personal sólo podrán obtenerse para su tratamiento cuando sean adecuados, pertinentes y no excesivos en relación con el ámbito y las finalidades determinadas, explícitas y legítimas para las que se hayan obtenido.

    1. Matthew Schenk

      You gave very informative material. You should make a video with this info, upload it on YouTube and get subscribers from https://soclikes.com/buy-youtube-subscribers . In this way more people will watch the video and know this useful information.

  16. Saved as a favorite, I really like your blog!

  17. erectile vitamins
    erectile organ
    is erectile dysfunction permanent

  18. F*ckin’ tremendous issues here. I’m very satisfied to look your post. Thank you a lot and i’m looking ahead to touch you. Will you kindly drop me a e-mail?

  19. I reckon something truly special in this website.

  20. Some really great info, Gladiola I detected this. I’m not spaming. I’m just saying your website is AWSOME! Thank you so much! Please vist also my website.

High Risk Merchant Account Services

Accept all major credit cards

Regardless of Credit History!