Family Dealing With Bankruptcy

Debtors who file Chapter 13 bankruptcy are often doing so with young children and teens.  While cutting back on expenses and sticking to your bankruptcy repayment plan can be challenging when you’re not accustomed to sticking to a budget, it can be even more difficult for teens.  Here are a few tips on how parents in Chapter 13 bankruptcy can ease their teen’s transition to a more frugal lifestyle:

  1. Discuss the bankruptcy with your teens.  While many parents find it difficult to discuss financial issues with their children, it is important to discuss your bankruptcy because it will require the cooperation of the entire family.  Let your teens know that you filed bankruptcy, explain what that means and explain that the family must cutback spending and repay debt over the next few years to get a fresh financial start.
  2. Create a family budget that includes “fun money” for teens. Your bankruptcy filing doesn’t mean that your teen has to cut back their fun spending; but it will require that they receive less money over the course of the bankruptcy.  Work with your teen to create a budget and help them decide how they will spend their fun money so that it is used on the things that are most important to them.
  3. Allow your teen to work a part-time job or start a micro-business (i.e. babysitting, mowing lawns, shoveling snow etc.).  Make sure the money earned at their part-time job is kept separate from the family finances during your Chapter 13 bankruptcy.  Also, make sure that you do not use the money they earn to pay bills during your bankruptcy.
  4. Plan for big expenses.  Big teen event such as prom, graduation and senior trips can be expensive.  Work with your teen to create a savings plans so that they won’t miss out on these memorable moments because of the budget constraints of your bankruptcy.