How to Help a Son or Daughter out of Debt

It's natural for a parent to want to reach out and help a child who's in debt. In doing so, make sure you are helping him or her curb any unhealthy spending habits, and be sure to protect yourself.

Difficulty: Moderate

Instructions

Things You'll Need:

• Calculators
• Accounting Services
• Banks
• Credit Counseling Services
• Loans
• Calculators

1. Offer to help your son or daughter out of debt.

2. Make sure he or she wants your assistance.

3. Determine how much money your son or daughter needs to get out of debt.

4. Determine how much money you can afford to loan or give.

5. Decide whether you wish to loan or give the money.

6. Consider giving them something of value that they can sell to raise money.

7. Consider giving them a portion of their inheritance in lieu of a loan.

Tips & Warnings

• Consider paying creditors directly rather than giving money to your child.
• If you loan money, write a promissory note to legitimize the transaction and to have a record for tax purposes.
• If you give them money, keep a copy of your cancelled check. If you give more than $10,000 per year, look into tax implications.
• Take steps to confirm that your child will not go right back into debt once you help him.

Who Can Help Sponsored

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[stone24]

on 5/15/2009 http://www.ehow.com/how_4996383_income-home-energy-assistance-program.html

[cmstubblefield]

on 2/22/2009 This is so true..I just went thru the same steps with my father.. He has helped me pay off my credit card bill, but since then he only gives me a limited dollar amount to teach me how to live within my means!!!!

[ronahshouse]

on 12/30/2008 Wow... will you be my dad? Just kidding... but I think if the parents have the income to help their children they should but it should come with their child having to pay them back. I dont believe in teaching a child to mess up and we will bail you out.

[Cherrie]

on 11/15/2008 I agree that handouts are not the solution. If really needed the promissory note should be written on the basis how the repay will occur. An additional job can be the basis, or selling something and repaying by such and such date. The special circumstances will dictate. Parents remain educators throughout life, a good example works the best.

[vallain]

on 11/15/2008 I agree with Said that it's more important to help them work their way out of the debt. Don't just give them the bailout. They need to learn to work their way through problems.