Young people & debt: What can parents do?

Under what circumstances can adults be held responsible for their children’s financial obligations?

Adults can be responsible for their children’s obligations if they co-sign for them for credit purchases. Rather than co-signing, a parent could help with a cash down payment or by giving the child the money.

What can parents do to teach their children about personal finances?

One of the many ways is to show good spending habits. Let the children see the parents pay bills and save for more expensive items.
Also, help the child budget for that special item such as an mp3 player.
A resource for parents and their children: Assistant U.S. Trustee Mark Neal and I provide a free service in the Baltimore area through an organization called CARE (Credit Abuse Resistance Education). CARE was the brainchild of Judge John Ninfo, a bankruptcy judge in the Western District of New York. CARE has a presence in all 50 states. We go to high schools and colleges to teach about the dangers of credit abuse. The program is tailored to young people and meant to encourage the wise use of credit. For information on CARE, please see its Web site: www.careprogram.us.

Source: Lori Simpson is a partner with Bishop, Daneman & Simpson in Baltimore and a Baltimore Chapter 7 Bankruptcy Trustee. She can be contacted at lsimpson[at 

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