What To Do When Your Parents Are In Debt Trouble

Updated: January 11, 2023

As a child, most of us believed that our parents are perfect.

But as we grow older and become more independent, we often realize that our parents are just like anyone who would sometimes make bad choices and commit mistakes.

Such is the realization of a friend who confided with me one night about the enormous debt that his parents have.

He was distressed, disappointed, and have gone tired of trying to earn more money so he could pay the debt of his parents – credit card debts, debts from loan sharks, relatives, and even some of their close family friends.

I felt that it was not really my place to ask for details, so I just listened to him express his feelings, and in the end – I tried my best to give him some encouraging words and advice on how he can handle his situation.

Are you in the same shoes as my friend?

I know this is not an uncommon circumstance, especially for Filipinos where family ties are very close.

If you are, then what should you do? You may be asking, are you responsible for your parents’ debts? Should you feel obliged to pay those debts?


I took the liberty to ask a lawyer regarding debt settlement for parents and their children and I learned some very interesting facts.

First, you are NOT responsible for your parents’ debt UNLESS your name is on the account in question, for example – you co-signed with your father in the bank loan he availed.

Second, credit card debts are personal to the debtor, and credit card companies CANNOT go after the children to pay for those debts.

However, there have been cases where parents have referred their children to the creditor to handle their debt. When a child signs relevant contracts such as a promissory note or a debt restructuring agreement, then they will become a co-maker and will then become accountable for the debt.

And third, in cases when the parent dies – the fact that you are NOT responsible to pay the debt still applies BUT the creditor CAN CLAIM from the estate of the debtor (the parent) if there’s any, and this will happen before the parent’s assets are distributed to the children.

I am not a lawyer and this is just how I understood the explanation of the attorney. Please be advised that if you have more questions on legal accountability and other related issues, then please consult a lawyer or a banker.

While it may be a relief for some to know that they are not legally liable for the debt of their parents – it is, however, in my personal belief, the responsibility of a child to help their parents to get out of debt.

And this is where things become more complicated for the situation becomes less about the money and more about love and respect.

Here’s some advice you can take:

Start With Yourself

It will be hard for you to help your parents with their financial worries if you’re in debt trouble yourself. So always start with yourself – be financially smart, save money, learn to invest and control your debt.

Offer Help

Your parents may be too proud to admit to you that they have debt problems. When you know that they are having financial difficulties, take the initiative and offer help. Be sensitive with bringing up the topic and it’s important to make them understand that your respect for them remains despite everything.

Take Control

The reason why I said that you should start with yourself is that consequently, your personal finance will become “family finance”. You will no longer be tracking just your expenses but your parents’ and possibly the whole household. Be strong and focused, be firm, and take control.

Educate and Inspire

Helping your parents to get out of debt is not only about the money. It’s not as simple as taking all their credit card bills and paying them yourself. It’s important to also guide and educate them to become more financially responsible.

Inspire them to pursue wealth and financial freedom. Know that it’s never ever too late to start one’s journey – something that Colonel Sanders believed in and you should too.

This article is part of a collection of legacy articles On Money, Friends and Family. Please visit that section to get more related posts.

Further Reading:
Philippine Fair Debt Collection Practices Act

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Photo credit: horizontal.integration and Stephen Poff


  1. Great advice Fitz!

    Dealing with debts and parents is a tricky situation not only because there’s money involved but more because of the emotional repercussions of watching everything you say so as not to damage your relationship with your parents. When this happens, not only does it become a problem between you and your parents, it could also damage your relationship with your siblings, or even your relatives for that matter.

    I think one thing to keep in mind is to know that you’re there to help out each other. You are a family. Dealing with financial problems or not, you are still a family. You are better off solving the problem together than against each other. At the end of the day, you should still be a family. And that what’s truly matters.

    Just my two cents. 🙂

  2. When I was in College, my parents had to do some borrowings, too. And I also learned that they had a couple of other debts when we were younger. These debts weren’t really put to good use so that was a little disappointing. But the past is the past and we’re all looking for ways now to pay off all those debts.

  3. […] Are your parents in debt? Fitz provides some tips on What to do if your parents are in debt trouble. […]

  4. Sad to admit but I had to abandon aiding my mom from her debt. I’ve tried for the first few years that I started working to help. But in the end, nothing happened. Not only did they become highly dependent, they never really stopped their habit of borrowing. It’s ironic that they have the guts of borrowing money with skyrocketing interest (like daily and weekly) from people they knew when they don’t have a stable source of income. Lest, the attitude and practices are acknowledged and attended to, no money will be good enough to keep them at bay. You may be able to pay their debt today, but tom will there will a new debt that will coming popping up.

    FOr the first few months, I busied myself with saving for my own future. I can’t help others if I can’t even save myself. You can’t give what you do not have as they say

  5. I must say – the child is not your retirement fund/support. I hope most of the parent in the Philippines will realize this. To the kids – please read this. This is extremely helpful.

  6. What do you do if it is just too much, though?

    My parents are literally millions of dollars in debt and have been living out of a motel for the last year. Not sure how they pulled that off, but I’m dreading the phone call saying they are now homeless. What can I do? I can’t compete with the debt, and they have no income. I’m doubtful about social security as well since one hasn’t worked in decades and the other rolled things into LLCs and stuff like that.

    Medicaid housing has long multi year wait lists. What else is feasible? Any advice would be appreciated. Thanks!

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