Key Tips for Managing and Resolving Your Children’s Debt Issues

Becoming a parent is one of the most fulfilling things you can do, and there is absolutely nothing that can compare with watching your own grow, learn and mould themselves into a beautiful person. Those equal-parts magical and stressful first few years are well-rewarded, and stay with you for life – even as your little one becomes not-so-little.

But parenthood doesn’t stop here; being a mum or dad is a lifetime appointment, as you help your adult children with everything from first jobs to first loves and, of course, finances. Financial literacy is not an easily-learned subject, and it’s easy for even the smartest of cookies to find themselves in a spot of bother (particularly where expensive institutions like university are involved). If your adult child has come to you for advice about a sticky financial situation, what can you do to help them out?

Understand the Root Cause of the Debt
Firstly, you need to get as much information from your child as possible about their situation. This can be tough if emotions are high, as they are wont to be during someone’s first brush with debt – but sitting them down and going calmly through everything should help you get the lay of the land. Is it an overdue student overdraft, brought on by a few nights out too many? Or is it payday loans, used to stretch out meagre part-time wages and cover essentials?

Address the Debt
The reason for getting a comprehensive picture of the situation, as opposed to getting a basic idea of how much money your child is short, is that different debt sources can have different short- and long- term consequences – thus requiring different approaches to reconciling them.

Where there are multiple instances of debt, the best option is to consolidate them into one manageable debt. Debt consolidation loans exist specifically for this purpose, and can greatly simplify the repayment process for your kid. Of course, this still needs repaying, just with a little less urgency. This is where financial planning comes in.

Create a Budget and Financial Plan
In order to satisfy any lenders, and in order to futureproof against falling into debt again, your child needs to have a solid grasp of budgeting – and a specific financial plan for the coming months of debt repayment. Sitting down with them and going through their outgoings together can help them identify dangerous spending patterns or ‘leakages’, and come up with their own ideas for paying debt and eventually saving money.

Seek Professional Financial Advice
Of course, some situations are far more dire than others, and far more dire than you as a parent can meaningfully manage. In particularly shocking scenarios of debt accrual, such as £10,000+ credit card black holes or large-scale gambling debts, there is no recourse but to involve professionals. Speaking to a debt charity can help you both get some clarity on next steps, including whether or not to apply for Breathing Space to stall creditors.

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