My Parents Are in So Much Debt: How to Help?

Posted on September 8, 2021 in Debt

Let’s face it: being in debt is a harrowing experience that affects individuals’ lives and that of their family members. Research shows that debt is directly related to increased stress, depression, distress, and aggravation of diseases, such as diabetes. However, remember that if you or your parent are in so much debt, you’re not alone in this.

Research shows about 80% of the American population is caught up in some sort of debt, whether it be credit card debt, medical, student, or otherwise. That’s 8 out of every ten people you come across when walking down the streets.

Are your parents in so much debt or financial trouble and you want to help them but are unsure where to start? If so, then you’ve come to the right place, as our full guide can support you in helping your parents get out of debt.

In this post, you’ll learn how to help parents with debts, how to reduce or eliminate their debt, and what to avoid when helping parents who are in so much debt.



How do I help my parents with their debt?

Discussing money-related topics with your parents is highly emotional. In fact, 21% of millennials say they feel guilty about it, and another 17% believing that it’s weird and can make their parents more ill.

Nevertheless, your parent’s debt is a critical topic that shouldn’t be avoided. Here is how to help parents in financial trouble find debt relief while maintaining a productive and positive conversation.

1. Start a conversation with your parents

The most critical step to helping your parents with debt is to open a communication line. Talk to your parents about debt, be empathetic and honest and show them that you’re concerned about their finances and well-being.

Spare plenty of your time and give attention to the conversation. If possible, put other obligations on hold and concentrate your time and efforts to help solve your parents’ financial problems.

Make sure your parents are open to receiving help and discussing their financial issues. Remember that convincing them to discuss their money challenges may be tricky. It would be best if you led by example, as discussed below.

2. Lead by example

An excellent way to have your parent discuss their financial position is to begin by talking about your own financial situation. If you or your friend worked through debts, tell them the story in a way that inspires them to confront their debt.

You can also tell them the importance of having someone to help them with their financial decisions and burden, especially if they are aging.

3. Get acquainted with your parents’ financial standing

While parents’ debt can be challenging to discuss, addressing it early enough with family members is essential. Explore everything about your parents’ finances, including their expenses, income sources, and liabilities. This should help you come up with an actionable plan.

Identify what they owe and to whom. This may include mortgages, medical bills, credit cards, and other types of loans. Sort out these debts to determine which demands an immediate course of action. For instance, when deciding between settling debt vs paying in full, settling medical bills is more pressing than paying off a mortgage. Once you clearly understand your parents’ loan, create a repayment plan.

4. Listen to their needs

Your top-most priority is to ensure your parents can access necessities like healthcare, food, and a home, while still paying off parents debt.

If your parents can’t cover their expenses, look for means to pay for them. However, since parents value their independence and a sense of pride, they may be reluctant to accept your offer. Be calm and gentle and enquire how you can help in meeting their financial needs.

You may help your elderly parents in debt in the following ways:

  • If they can’t pay their bills and debt at the same time, offer to have them move in with you
  • Caution them about scams that prey on older adults.
  • Help them balance their checkbook by paying some or all of their debts.
  • Get online access to your parent’s credit cards and bank accounts. This helps in tracking spending and making sure that bills are paid on time.
  • Always be there for them! For instance, you can make it clear that you’re always available if they need advice on things such as a reverse mortgage.
  • Offer to help with home repairs, fueling, or any other expense you feel is straining their income, making it hard to repay their debt.

These ‘favors’ may feel reasonable to your parents than offering direct financial assistance. They are the stepping stone for your parents to feel comfortable asking for and accepting your help.

5. Talk to your siblings

Helping your parents alone may be exhausting, especially if their bills and debts are enormous. That’s why it’s always advisable to talk to your siblings if you have some. Collaborating with them to help your parents will make things easy for you. Discuss with them to determine the debts to clear first and how.

Talking To Your Family About Their Debt

6. Help create a plan and a budget

After identifying your parents’ debts, sorting them based on priority, and consulting your siblings, you’ll need to make a plan for paying them off. You’ll have to consider all the options you have at your disposal.

For instance, you’ll assess whether your parents’ income can be used to cover the debt while still covering necessary expenses. If their income isn’t enough, you can advise your parents to look for more sources of income, cut unnecessary spending, or you and your siblings can chip in some funds.

If your parents are financially stable, you may advise them to consider either debt snowball or debt avalanche methods to repay their debt. Debt snowball involves paying the smaller debts first, making it a perfect choice if your parents want a psychological boost to start paying their debt.

On the other hand, Debt avalanche involves paying the costlier debts first and helps avoid hefty interest rates in the long run. Whichever method you chose for your parents, make a budget and repayment plan for all of their debt, and stick to it. If your parents are unable to repay their debts on their own, discuss options for outside assistance. Family support may be the most cost-effective option, but it may also cause conflict in your family, so proceed with caution.

7. Help your parents stick to the plan

After creating a repayment plan and a budget, the next thing you need to do is make sure your parents stick to it. If they are forced to change how they do their things, ensure that the change is necessary and temporal. 

You may help your parents stick to their debt repayment plan by:

  • Ensuring that the plan is realistic
  • Helping them financially so that they don’t add more debt
  • Keeping track of progress and any good news
  • Sticking to the budget
  • Write down the budget and repayment plan
  • Making sure occasional setbacks don’t derail the plan

Now that you know how you can help your parent in debt let’s look at how you can eliminate or reduce the debt.

How do I reduce or eliminate my parents’ debt?

Paying off parents debt can be a long and tiring process, especially if your assets or income is less. However, the following tips can help you finish this endeavor as quickly as possible.

  • Contact the creditor to enquire whether the payments can be lowered to accommodate your parents’ income
  • Assess whether a reverse mortgage is a viable option to supplement their income.
  • If your parents’ cognitive functioning is declining and you have been designated their financial power of attorney (POA), step in to manage their money.
  • Get a free debt relief quote
  • Write to creditors requesting debt forgiveness.
  • Reach out to a credit counseling agency to get assistance for your parents
  • Contact a professional to get a budgeting or repayment plan
  • If there are no assets to settle the debts, bankruptcy can be an option

My parents are in so much debt: what should I not do?

Money is a sensitive subject, which most parents are not always willing to discuss. Especially if they have debts, they may shy off from sharing such information because it’s embarrassing. No matter if it’s 10, 20, 30, or they need to pay off $40,000 in debt, there are ways to deal with the problem.

Approach the topic with empathy and avoid the following:

  • Don’t get upset or angry because of your parents’ debt
  • Don’t give your parents money. Instead, use the money to pay bills or pay the debt for them. It may be hard for them to manage their personal finances effectively.
  • Don’t compromise your financial stability to pay your parents’ debt. This is solving a problem with another.
  • Avoid helping your parents without your spouse’s consent.

Bottom line: Your parents are in so much debt

Even though your parents used to pay their bills and tax returns, advancing age might make it hard for them to continue paying their bills and debts on time. That’s why it’s always advisable to enquire about your parents’ debts as they age.

And while discussing money is not always easy, ignoring the topic can be a disadvantage to the family. Be empathetic to your parents and show them that you care about their well-being.

FAQ’s About When your parents are in so much debt

What to do if your parents are in debt?

If your parents are in debt, you can join the 20% of millennials that help their aging parents today. You can:

  • Talk to them about their financial burden
  • Talk to your siblings
  • Lead by example
  • Listen to their need
  • Help them create a budget or repayment plan and make sure they stick to it
  • Help them cut expenses
  • Help them earn more money and grow their income
  • Consider the option of bankruptcy
  • Write to creditors requesting debt forgiveness

Can I be held responsible for my parent’s debt?

In most cases, you cannot be held responsible for your parent’s debt. You may not be left with much to inherit all the same. However, if you have a joint account on any credit card or loan, you’ll be held responsible for paying off parents debt and the amounts due.

Also, some debt collectors may still be on your neck even after your parents die. In such circumstances, you may have to consult an attorney to help handle the financial mess at hand.

What happens if parents die in debt?

If your parents pass on before settling their debts, you can’t be held responsible for the debt. However, there may not be much to inherit all the same. If you were the designated powers of attorney, your freedom to manage their assets, debts, and other finances would expire upon their death.

However, if you’re the appointed executor of their will, you’ll be responsible for paying off parents’ debt, managing their assets, paying their bills, and distributing personal possessions.  

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