Ways You Can Help Ease the Burden of Debt on Your Child’s Shoulders
As a parent, you’ve always wanted the best for your child. You’ve watched them grow, learn, and navigate the challenges of life. What happens, however, when they face a challenge that seems insurmountable, like overwhelming debt?
It’s a situation no parent wants to imagine, but in today’s economy, it’s becoming increasingly common. Millennials and Gen Z are facing financial hurdles unlike any generation before them, and the burden of debt can feel crushing. If you’re wondering what to do if your child has debt, you’re not alone.
Read on to explore the financial challenges facing young adults today, the various scenarios that can lead to debt, and most importantly, what you can do to help your child navigate this difficult situation.
For specific legal advice and assistance about your child’s case, contact a debt defense attorney in your area for a free consultation.
Financial Challenges Millennials and Gen Z Face
Millennials and Gen Z are facing a unique set of financial challenges. The cost of living has skyrocketed while wages have remained relatively stagnant. Many young adults are struggling to find well-paying jobs, even with advanced degrees. The gig economy has become increasingly common, leaving many without benefits or job security. Additionally, the cost of education has risen dramatically, leaving many young adults with significant student loan debt before they even enter the workforce. All of these factors can contribute to a perfect storm of financial instability, making it difficult for young adults to get ahead.
Scenarios Where Your Child Could Run Up Debt
There are many scenarios where your adult child could find themselves in debt.
Some of the most common include:
- Credit card debt: It’s easy for young adults to get carried away with credit card spending, especially if they don’t have a solid understanding of how credit works.
- Student loan debt: As mentioned earlier, the cost of education has risen dramatically in recent years. Many young adults are leaving college with significant student loan debt, which can take years (or even decades) to pay off.
- Mortgage debt: If your child has purchased a home, they may be struggling to keep up with mortgage payments, especially if they’ve experienced a job loss or other financial setback.
- Medical debt: An unexpected illness or injury can lead to significant medical bills, even with insurance.
- Identity theft: If a cybercriminal stole your child’s Social Security number or other personal information, they might have run up enormous debts in their name.
Your child can also run up debt through secured and unsecured lines of credit, store credit, rental company credit, and other means.
How Can I Help My Child Handle Credit Card Debt?
If your child is struggling with credit card debt, there are several steps you can suggest they take:
- Create a budget: The first step in tackling credit card debt is to create a budget. Encourage your child to track their income and expenses and look for areas where they can cut back.
- Prioritize payments: If your child has multiple credit cards, they should prioritize paying off the card with the highest interest rate first.
- Consider a balance transfer: If your child has good credit, they may be able to transfer their balance to a card with a lower interest rate.
- Seek help: If your child is feeling overwhelmed, encourage them to seek help from a financial advisor or credit counselor.
You can also suggest your child contact an attorney with experience handling debt issues to explore options for financial relief, especially if your child’s credit card debt has gotten out of hand.
How Can I Help My Child Handle Mortgage Debt?
If your child is struggling with mortgage debt, consider:
- Refinancing: If interest rates have dropped since your child took out their mortgage, they may be able to refinance to a lower rate.
- Loan modification: If your child is having trouble making their mortgage payments, they may be able to work with their lender to modify the terms of their loan.
- Selling the home: If your child is unable to keep up with their mortgage payments, selling the home may be the best option.
Debt defense attorneys have extensive resources available to assist clients who are struggling to make mortgage payments or are facing foreclosure.
What If My Child Is Struggling With Student Loan Debt?
Student loan debt can feel overwhelming, but they can manage it through:
- Income-driven repayment plans: If your child is struggling to pay their student loans, they may qualify for an income-driven repayment plan. This can lower their monthly payments based on their income.
- Loan forgiveness programs: Depending on your child’s career path, they may qualify for loan forgiveness programs, such as Public Service Loan Forgiveness.
- Consolidation: If your child has multiple student loans, they may consolidate them into a single loan with a lower interest rate.
A credit attorney can discuss your options with you and help you navigate the appropriate channels to help your child with their considerable student loan debt.
Should You Help Your Child With Their Debt?
As a parent, you may want to help your child when they’re struggling. However, consider the implications of taking on your child’s debt.
If you cosign a loan or credit card for your child, you’re equally responsible for the debt. If your child cannot make payments, they could damage your credit score and financial stability.
That said, you can support your child without taking on their debt. You can offer financial advice, help them create a budget, and encourage them to seek help from a financial professional or attorney. You can also offer emotional support and encouragement as they navigate this challenging situation.
What About Co-Signer Debt?
As stated, if you’ve co-signed a loan or credit card for your child, you’re equally responsible for the debt. If your child cannot make payments, the lender can come after you for the remaining balance.
If this happens:
- Communicate with your child: Have an honest conversation with your child about their financial situation and work together to create a plan for paying off the debt.
- Consider refinancing: If you have good credit, you may refinance the debt in your own name, removing your child from the obligation.
- Seek legal advice: If you cannot come to an agreement with your child or the lender, seek legal advice.
Speak with an attorney who handles credit and debt cases to learn of your options for dealing with co-signer issues.
How to Resolve Credit Report Issues or Bad Credit
If your child’s debt led to credit report issues or bad credit, they can start rebuilding their credit:
- Check their credit report: Encourage your child to check their credit report regularly for errors or inaccuracies.
- Pay bills on time: Late payments can have a significant negative impact on credit scores. Encourage your child to make all of their payments on time, even if they can only afford the minimum payment.
- Consider a secured credit card: A secured credit card can be a good way for your child to start rebuilding their credit. These cards require a cash deposit, which serves as collateral in case of default.
If you notice errors on your child’s credit report, you have options available to correct the issue. Some credit-reporting issues are more common than people might think, such as OFAC alerts.
If you have issues dealing with an erroneous credit report and can’t get the resolutions you need, contact a debt defense lawyer in your area for advice, assistance, and legal representation, if necessary.
How Can an Attorney Help?
If your child is facing significant debt or legal issues related to their debt, it may be time to seek the help of an attorney. Our credit and debt attorneys have extensive experience helping individuals navigate debt-related legal issues all over the country.
We can help through:
- Debt settlement: An attorney can negotiate with creditors to settle debts for less than the full amount owed.
- Bankruptcy: In some cases, bankruptcy may be the best option for managing overwhelming debt. An attorney can help guide your child through the bankruptcy process and protect their rights and interests.
- Debt defense litigation: If a creditor is suing your child for debt, an attorney can help defend them in court and advocate for them.
Regardless of the credit or debt issues your child is facing, it’s worth contacting an experienced credit defense attorney for a free case evaluation to learn of your child’s rights and options.
Contact Kazerouni Law Group, APC, Today for a Free Initial Consultation
Dealing with debt can be a daunting and overwhelming experience, especially for young adults who are just starting out in their financial lives. As a parent, you may want to help your child navigate this challenging situation.
By understanding the various options available and seeking the help of experienced professionals like the Kazerouni Law Group, APC, you can help your child take control of their debt and start building a brighter financial future.
If your child is struggling with debt, don’t hesitate to reach out to the Kazerouni Law Group, APC. Our experienced comsumer protection attorneys can provide the guidance and support your child needs to navigate this difficult situation and come out stronger on the other side.
Contact us today to request a free consultation and take the first step towards financial freedom for your child.