Although each bankruptcy case is unique, there are many common financial issues. A job loss, divorce or injury can put you in enough distress to declare bankruptcy. However, another common reason for financial turmoil is providing financial assistance to a child.
How can your adult children cause you to have no choice but to file for bankruptcy? What can you do to recover your finances? Here are some helpful insights for dealing with this type of situation.
How children cause debt
If your son or daughter has exceeded the credit limit, he or she might look to you for help covering debts or making new purchases. You probably want to help out because you care about your children and do not want to see them suffer financially. However, according to a piece on CNBC, consistently lending money to children often jeopardizes a parent’s finances. For many, loaning a few hundred bucks here and there turns into signing off on a new mortgage or car loan when a child has no way to repay the debts.
You may feel hurt and surprised if this happens to you, especially if your child is not forthright about his or her inability to pay back the money you have loaned. If you become stuck in this situation, you may discover there are few ways to climb out of this type of debt. It is difficult enough to deal with your own budget issues. But, when the debt belongs to your child and is under your name, the consequences can be devastating.
Bankruptcy might be the only way out
When you are deep in high debts from your child, you may feel like there is no escape. You may find it alarming to think of filing for bankruptcy. However, sometimes it is the best option. Bankruptcy helps people regain their bearings and financial stability, and it can give you relief from the debt you have accumulated by helping out your child.