Are Parents Responsible for a Child’s Card Debt

by John Stevenson on October 23, 2011

Many parents find it difficult to deal with the fact that their kids have accumulated thousands of dollars in credit card debt. Should they help out or leave their children face the consequences? It depends. Young people may use their credit cards to survive a layoff, meet school-related expenses, or splurge for awhile. In any case, it is touch for young people to handle their financial situation when most of what they make goes toward paying off their debts. 

Most parents want their children to have it easier than what they have gone through in life. This is how it should be. Shame, anxiety, and insomnia are all associated with debt, and it is understandable that parents want to protect their children. However, your kids should learn some lessons the hard way, and there are some questions to consider before you lend a hand.

Can you really afford it? If you answer ‘no’ to this, you shouldn’t do it. And it is one thing if your children face a medical emergency or live on bread, but credit card debt is certainly not this level of crisis. You should talk to your child too, as to find out if he/ she learnt from their mistakes. If they make an honest effort to pay their debts back and have cut up all credit cards, then you should maybe help. On the other hand, if your child is unwilling to make a budget, has a couple of credit cards in her wallet, and spends money like there is no tomorrow, your child does not deserve your help.

Another question begs an answer here. Are you legally responsible for your child’s credit card debt? And what if your child is a minor? You cannot be held liable for an account balance you didn’t authorize or a balance, which is not in your name. Nor is your spouse liable (if you are married) for any fraud committed to get a credit card or for your child’s credit card debt. If your child is a minor and obtained a credit card, you will be held responsible only if the court decides you were negligent as parent or you were in on this. You surely know that a minor cannot be held to a contract. This looks like an invitation for children and teenagers to get a credit card and charge items they cannot pay for. On the other hand, if the credit card issuer gave your daughter or son a credit card and knew they were a minor, they cannot be held to the card contract.

Even if your child is of legal age, they failed in dealing with debt. There is no easy answer why this happens. For chief executive of Financial Psychology and psychologist Kathleen Gurney, it boils down to self-regulation or the lack of it. Gurney notes that parents should introduce their children to credit cards only after they’ve learnt to spend within limits.

Comments on this entry are closed.

Previous post:

Next post: