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How to help your parents with their debt problems

By Fitz Villafuerte, Brighterlife.com.ph

Comments (4)

I used to believe that my parents did everything right and were incapable of committing mistakes.

However, as I matured and became independent, I started to realize that they are just like anyone else – they can be prone to poor judgment and they can also make wrong decisions in different aspects of their lives, including their finances.

I was reminded of this because a friend recently opened up to me about how his parents are in a deep financial mess due to credit card debts. Both of his parents are now retired and are living off their pension. Their daily needs are covered, but not their health and medical expenses, and these accounted for the huge credit card debts.

At first, his parents tried to keep their financial troubles a secret from him. But after a couple of years, they were left with no other choice but to ask for help from him, their only son.

Are children obliged to pay their parents’ debts?

Here in the Philippines, this kind of dilemma is nothing new. It has become a common issue, owing to our close family ties, wherein the children may feel compelled to shoulder their parents’ debts.

But are you actually required to do this?

The answer is no, according to my lawyer, whom I consulted about the issue. You are not obligated to pay your parents debts, unless you signed an agreement stating so. An example of this is if you and your father co-signed a loan from the bank, or if you agreed to be the guarantor of a loan he applied for.

As for credit card debts, you cannot be held accountable for the debts nor can you be sued by the credit card companies because all the debts are of the debtor only. However, if your parents referred you to the creditor as the one who will pay their debt and you signed an agreement stating this, then you are liable.

Lastly, in the event that your parents pass away and they have unsettled debts, you are also not obliged to pay them; but the creditor has the right to seize any properties that belonged to your parents before their estates get transferred to their heirs.

Caveat: my knowledge about the law is limited and my interpretation of the lawyer’s answers might not exactly be applicable to your situation. Some cases may be more complicated than others and so it’s best to personally consult a lawyer regarding this matter.

That said, you may be relieved to hear that you can’t be held accountable for your parents’ debt in the eyes of the law.

However, as a son or daughter, I feel that we are morally obligated to help them when they are facing a financial crisis. Things might get complicated but the bottomline is, it is not about the money – it’s about love and respect.

What you can do

If your parents are having debt troubles, here’s what you can do to help:

Help yourself first, so you can help them. It’s tough to help your parents if you need financial help yourself. Learn to save, invest, and make smart financial decisions so you won’t have debt troubles of your own.

Reach out to them with respect. Some parents may be too proud to ask their children for help, until it’s too late. If you sense that they’re having financial troubles, make the first move and reach out to them.

When bringing up the matter, be sensitive and don’t make them feel like they’ve failed. Don’t berate them for their mistakes and instead, assure them that you’re there to help make things better and that you still respect and love them.

Take the lead with their finances. You have to assume the leadership position because it’s the most effective setup in this situation. Be objective and assess your parents’ financial situation, then take control of their finances until things get better.

Share your knowledge and teach what you know. Giving your parents money to pay their debts is a nice gesture but it’s not enough. You must also teach them how to properly manage their finances so they won’t have debt troubles again in the future.

Introduce them to ways that they can make or grow money so that they can continue working on their financial freedom. Even if they’re already in their senior years, there are  still things that they can do to achieve this. Share with them inspirational stories of how some notable people, regardless of their age, changed their fates. This will help them realize that it’s still possible to turn their lives around.

Fitz Villafuerte started his journey towards financial freedom 10 years ago and he shares the lessons he’s learned in his blog Ready to Be Rich. He seeks to inspire people in making wise decisions on investments, business, and personal finance.

Ready for a Brighter Life? Talk to an advisor today.

Michelle Smyth (@michelle_smyth) on

Great article Fitz! I had to face this issue with my Dad, and have since helped others who discovered their parents were struggling. I think it’s fair to say that our parents’ generation really isn’t as sensitive to or savvy about the financial realities of today.

Liz on

This article really helps…thanks! =)

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