March 26, 2010
-
News: Help Your Child Help Himself
Parents have a difficult time deciding how they should handle a situation with a an adult child that is buried in credit card debt and unemployed. With the high unemployment rate in the U.S., many individuals including those with higher education degrees have found themselves at a lost on how to handle the thousands of dollars of credit card debt. As the child reaches out to Mom and Dad, the parents wonder how to help without enabling their child. The answer isn't always easily determined. Questions about how will delinquent credit card, auto loans, and mortgages payments affect your child's credit are always concerning. Before you make any decisions, there is one thing that is universal; don't rush in and pay the debt yourself.
First, sit down with your child for a heart-to-heart talk. No lecturing, no yelling, no negativism. Let your child know your want to help him or her help himself. If the child has not yet done so, advise him/her to make a thorough list of all debt including credit card accounts and all assets. Advise against seeking the help of a debt settlement firm. Your child can take the same action as any such firm. Lawmakers have also warned against seeking out the services of these firms because many make promises that are never kept while charging huge upfront fees. Your child can accomplish a great deal more by contacting their credit card company or lender directly to negotiate lower interests or debt settlements. Most likely, their credit score will be negatively affected; however, in the long run they will benefit.
Contact credit card companies to negotiate lower interest rates first. Whatever you do, do not contact the companies yourself; your child must take the responsibility of calling. It will serve him/her well in the future if they remember what they went through to get back on tract. It can act as a deterrent in the future. When getting ready to settle debt, your child should be prepared to take time to negotiate and renegotiate. Lenders may not settle on the first attempt, but don't give up. Encourage your child to keep calling weekly if need be to make counteroffers to all lenders. Most of all, give your child the high five at each benchmark of accomplishment.