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Are Parents Responsible for their Children's Debt?

By: Lorna Elliott LLB (hons), Barrister - Updated: 18 Jul 2016 |
 
Credit Debt Money Loan Child Parent Pay

Parents often have a tough job bringing up children, but once they reach an age at which they can legally apply for credit, such as store cards and credit cards, this can open up a whole new set of problems. A recent survey has revealed that nearly 70% of parents are worried about their children getting into debt.

Most parents aren’t naïve enough to think that once a child reaches the age at which they become legally entitled to apply for credit that all will automatically be plain sailing. However, it is important to educate your child as to the difficulties they can get into if they obtain too much credit.

Expensive Credit

Although banks have tightened their control over personal loans and mortgages in recent times, it is still relatively easy to get credit and store cards. These are the worst types of debts to get into because of the high interest rates and the fact that you only have to pay off the minimum amount every month. If your child takes this option, they could pay an extortionate amount of interest and it could be several decades before they have paid off the balance.

Who is Responsible for the Debt?

Legally, if your child gets into debt, they are solely responsible for that debt unless you have co-signed the loan or credit agreement. For example, if you give your child an additional credit card on your account, you will both be jointly responsible for that debt. If your child is over the age of 18 and has incurred their own debt, they and they alone will be required to pay it back.

However, in real terms no one wants to see their child with county court judgments, a poor credit history and in the worst cases, facing bankruptcy, so parents are quick to jump to their children’s aid, if they can afford to. This, however, does not solve the problem. It merely demonstrates to the child that they are not capable of dealing with issues in the real world and gives them a fall back position. Consolidation loans can be helpful in these circumstances, but only if your child has retained a sufficient credit rating, and if they have cancelled or cut up their credit cards.

Educating Children on Debt

It is, therefore, very important to ensure that your children are educated as to why credit, especially store and credit cards, are so readily available and why a good credit score is so important. Furthermore, children should be educated as to how to budget, and how to save for things that they want. This can be started early on with pocket money, and encouraged with earning money through chores, paper rounds and, when they’re old enough, a part-time job. If a child has their own bank account, this can also help.

What You Can Do

Given the recent trouble with the ‘I’m worth it’ so ‘buy now, pay later’ generation of the last decade, there is a general move towards teaching school-age children about responsible financial management. However, this is not part of the curriculum in most schools yet, and parents should take a pro-active stance towards introducing a sense of financial responsibility into their children’s lives. As most parents with teenagers know, it’s far easier to teach them when they’re young!

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Share Your Story, Join the Discussion or Seek Advice..
Nicky - Your Question:
My 17 year old son was overpaid by an employer who notified us two months after he left their employ.We have tried to raise a grievance but they won't meet with us or answer any of the points raised as he has now been out of their employment for over 3 months.They are asking for repayment to be made as soon as possible.My son is a full time student with no income, are we liable for this debt?

Our Response:
He should go to Citizens' Advice for help on this. You as parents, should not be liable for his debt if he's 17 and was employed.
LawAndParents - 20-Jul-16 @ 9:51 AM
My 17 year old son was overpaid by an employer who notified us two months after he left their employ. We have tried to raise a grievance but they won't meet with us or answer any of the points raised as he has now been out of their employment for over 3 months. They are asking for repayment to be made as soon as possible. My son is a full time student with no income, are we liable for this debt?
Nicky - 18-Jul-16 @ 6:27 PM
My daughter have 3 years old, she is living with me and we haven't got any help from his father since nearly two years ago, he only see his daughter when he want , this cold be just a couple of hours a week or 2 weeks. All the responsibility of our daughter is mine, I am studding and some times I just need a break but he don't understood that. He is nor working, and he have enough time to see her but he don't. Now I am really tired of that and I would like to know how can I push him to be more responsible with our daughter.
Rosa - 1-Jun-15 @ 3:31 PM
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