How to Talk to Your Children about Bankruptcy

: Reese Baker & Associates

  Filed under: Filing bankruptcy

kidsAs the economy continues to struggle, more people are turning to Texas bankruptcy. Many bankrupts have families, so they must explain the definition and consequences of bankruptcy to their children. If you and your spouse have decided to file, here are some things to say and do that will help make the process easier for children to understand.

Explain What Bankruptcy is Not

Most kids have only heard of being bankrupt in Monopoly or from the movies. Younger children in particular often think it means losing everything. Give your children a straightforward definition that focuses on the positive. Say: “Mom and Dad are bankrupt right now, but we will still keep our home. We will be able to feed, clothe, and take care of you.” You can also assure your children that a trustee or bankruptcy attorney will help you pay what debt you can.

Talk about Wants and Needs

If you’re filing Chapter 7, some of your non-essential property will be taken. This can be scary for children, so reassure them that creditors are not after their personal property. However, you must also explain that bankruptcy means downsizing. Differentiate between what is needed – food, clothing, shelter – versus what is wanted, such as new toys, expensive clothes, or video games.

Reiterate the Important Things

Bankruptcy can cause children to focus on what they can’t have or no longer have. Explain to them that Mom and Dad have a responsibility to work on their debts so the family doesn’t have to be bankrupt for long. In the meantime, children have the responsibility to focus on things like family togetherness, love, and kindness. Reiterate that character is far more important than money.