How to Help Parents in Debt

Helping your parents with their debt offers challenges you might not expect. Parents don't always want to reveal their financial issues or accept help from their adult children. Not only might they feel shame about their financial mistakes, they might be uncomfortable about receiving direct financial help from you.



If you can overcome their objections, you can help your parents in a number of ways, and not all of them require that you open your own checkbook. Ultimately, you are not legally responsible for your parents' debt, even upon their death, so you needn't fear that their debt will eventually become yours.

Instructions

1

Give direct financial aid. You can give up to $13,000 ($26,000 if you file jointly) to any person each year as of 2010 without incurring the gift tax. This amount changes from year to year, so be sure to check the IRS web site, irs.gov, for the current limit.

2

Invest in their existing assets. For example, if your parents owe a mortgage on their home, you can become part owner, allowing them to refinance their portion and lower their payments. Or you can become part or full owner of a car.

3




An expert can help your parents identify legal ways to reduce debt.

Suggest that your parents get professional budget counseling and, if appropriate, offer to pay. Budget counselors know the consumer credit laws and can identify opportunities to negotiate creditor settlements. They will also know whether your parents might be good candidates for declaring bankruptcy.

4

Help your parents put together a plan to pay off debts and reduce expenses. You can find countless web sites offering budgeting forms and debt calculators for free, and you can also locate excellent low-cost programs that provide this kind of assistance.

5

Clean out the closets and basement. Your parents may have accumulated any number of things they no longer use and can sell, either in consignment shops, flea markets or online. Call an antiques dealer to appraise furniture and other items like record collections your parents might be willing to part with.

6

Find part-time employment for your parents, assuming that they are healthy and willing to work. The Internet has helped to create jobs that didn't even exist five years ago, so there might be work categories your parents have overlooked.

7

Help your parents identify a business that they could run from their home. Multi-level marketing businesses have proliferated over the last twenty years, in areas as diverse as vitamin supplements to kitchen gadgets to cosmetics.

8

Invite your parents to move in with you. This is a drastic step, and your parents will likely resist as long as they are healthy. However, it could be a great temporary move, especially if they can help with children living at home.