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Is bankruptcy better? Helping your parents with their money woes

We have all heard of Washington, D.C., parents who bemoan the fact that their adult children simply will not fly the nest. In today's economy, it can be difficult for young adults to achieve financial independence. What happens, though, when the tables are turned, and mom and dad are the relatives who are suffering from financial woes? Experts say that adult children who find themselves supporting their folks should establish concrete boundaries to prevent financial disaster. In some cases, it may be better to allow the older generation to declare bankruptcy instead of continuing to borrow money from their kids.

Financial gurus say that adult children can sometimes feel overwhelmed by their parents' financial problems. In some cases, providing parents with money only prolongs their financial misery. Instead of always providing cash, experts say that adult children may benefit their parents more by offering assistance for social services. Parents who are facing foreclosure may benefit from the assistance of a credit counselor, for example. Social programs also exist to help low-income residents pay for utilities and food.

Experts also say that closing questionable accounts is a wise decision, especially for those who have co-signed on a credit card with a spendthrift parent. Without checks and balances on, well, parental checks and balances, an adult child may face a diminished credit rating or even their own personal bankruptcy filing. Co-signing can be a tricky topic, and it can become even more confusing if your parent ends up filing for Chapter 7 bankruptcy. If you are not comfortable with the situation, remove your parent's name from the account, assume responsibility for payments and close the account as soon as possible.

Adult children who do not know where else to turn may benefit from consulting a bankruptcy attorney in the Washington, D.C., area. These professionals may be able to provide assistance for families who need credit repair or help with personal bankruptcy. Relatives' relationships should not be destroyed because of economic woes.

Source: Fox Business, "When is it Time to 'Cut Off' Your Financially Dependent Parents?" Teri Cettina, Feb. 25, 2014

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