Bankruptcy and its Effects on the Family

Bankruptcy is scary for the entire family. Not only is it scary for parents, but kids don’t understand the ins and outs and bankruptcy sounds truly terrifying. There are many effects of bankruptcy on a family and it is important to pinpoint them and anticipate them so they can be dealt with. Keeping the family together is what is most important and weathering the tough times together. It might be a challenge, but you can get through it!

Assets

Many times during bankruptcy proceedings a family will lose their assets. This includes their home, vehicles, and any other properties they might have. This is difficult for kids to go through because they are losing what is most precious to them. It’s not the actual house or the actual car that’s the problem but rather the familiarity and the memories. It’s important to address this with your kids and let them be sad. Explain that it’s okay to be upset, but that part of life is moving on and making new memories. It won’t be easy, but it’s important to deal with it.

Income

Most families file for bankruptcy when they can’t afford their lifestyle any longer and all their bills are at the breaking point. Paying a lawyer is expensive and paying back as much as possible on debts takes up quite a bit of a family’s income, too. As a result, kids may need to understand that they won’t be shopping for designer clothes or taking the best vacations. That was great while it lasted, but reality is knocking hard at the door. Be honest and upfront yet understanding of the changes in your child’s life.

Overall, bankruptcy is stressful and challenging and quite disruptive. Not only does it stay on one’s credit report for seven years, but it also puts a dent in acquiring credit for homes, cars, and the like during that time frame. It’s not easy to get through a bankruptcy, but families can do it if they work together.


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