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Are Children Responsible for Their Parents’ Debt?
by
JG Wentworth
•
May 1, 2024
•
5 min
What happens if your finances are in great shape but your parents have mounting debt? Are you responsible for paying it off after they pass on? For many individuals, this is a pressing concern. Fortunately, you might be relieved to know that in most cases, children are not legally responsible for any debt their parents incurred during their lifetime. That said, there are some circumstances that could make a child legally liable for their parents’ debt. Let’s explain this in more detail…
First, the good news
The reason why children are typically not responsible for their parents’ debt is because debts are typically considered individual obligations. As such, creditors (usually) cannot hold children accountable for their parents’ financial liabilities. Of course, there are always exceptions…
What are “filial responsibility laws?”
Filial responsibility laws are defined accordingly: “Laws that impose a duty, usually upon adult children, for the support of their impoverished parents or other relatives.” These laws vary widely by state and are rarely enforced, but they underscore the importance of understanding the legal obligations regarding parental debt.
When are adult children responsible?
In certain circumstances, adult children may be held responsible for paying their parents’ debt, although these situations are relatively rare and limited in scope. Here are some circumstances in which children might be held accountable for their parents’ debts:
- Cosigning on loans or credit accounts: If adult children cosign on loans or credit accounts with their parents, they become equally liable for repaying the debt. This is a common scenario for mortgages, car loans, or credit cards where both the parent and child are joint borrowers.
- Power of attorney or legal guardianship: Adult children who hold power of attorney or legal guardianship over their parents’ affairs may be required to use the parents’ assets to satisfy outstanding debts, depending on the terms of the legal arrangement and applicable laws.
- Jointly owned assets: If adult children and their parents jointly own property, such as a home or investment account, creditors may seek to collect on the parents’ debts by placing liens or levying against these assets, potentially impacting the children’s ownership interests.
- Fraudulent Transfers or Conveyances: If parents transfer assets to their adult children with the intent to defraud creditors, those transfers may be deemed fraudulent, and creditors could seek to recover the transferred assets to satisfy outstanding debts.
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Family matters
The circumstances under which adult children can be held responsible for their parents’ debts are generally limited and subject to specific legal requirements. In most cases, children are not automatically liable for their parents’ debts incurred during their lifetime, and creditors cannot hold them accountable unless certain conditions are met, such as those outlined above.
As always, adult children should take steps to protect their own financial well-being, such as maintaining separate accounts, establishing clear financial boundaries, and seeking legal advice when necessary. Ultimately, each family must determine its own approach based on its unique circumstances and values.
If you have a parent, or child, who is struggling with mounting debt, and would like to ensure you won’t be responsible for paying it off, consider introducing them to JG Wentworth’s Debt Relief Program. *
- Single monthly payments
- Average clients resolve debt in as little as 24-60 months
- Average clients save up to 43% on their total amount owed (before program fees)
Speak with a certified debt specialist today to see if we can help your parents resolve their debt so that your entire family can breathe easier.
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The information is provided for educational and informational purposes only. Such information or materials do not constitute and are not intended to provide legal, accounting, or tax advice and should not be relied on in that respect. We suggest that You consult an attorney, accountant, and/or financial advisor to answer any financial or legal questions.
* Program length varies depending on individual situation. Programs are between 24 and 60 months in length. Clients who are able to stay with the program and get all their debt settled realize approximate savings of 51% before our 25% program fee. This is a Debt resolution program provided by JGW Debt Settlement, LLC (“JGW” of “Us”). JGW offers this program in the following states: AL, AK, AZ, AR, CA, CO, FL, ID, IN, IA, KY, LA, MD, MA, MI, MS, MO, MT, NE, NM, NV, NY, NC, OK, PA, SD, TN, TX, UT, VA, DC, and WI. If a consumer residing in CT, GA, HI, IL, KS, ME, NH, NJ, OH, RI, SC and VT contacts Us we may connect them with a law firm that provides debt resolution services in their state. JGW is licensed/registered to provide debt resolution services in states where licensing/registration is required.
Debt resolution program results will vary by individual situation. As such, debt resolution services are not appropriate for everyone. Not all debts are eligible for enrollment. Not all individuals who enroll complete our program for various reasons, including their ability to save sufficient funds. Savings resulting from successful negotiations may result in tax consequences, please consult with a tax professional regarding these consequences. The use of the debt settlement services and the failure to make payments to creditors: (1) Will likely adversely affect your creditworthiness (credit rating/credit score) and make it harder to obtain credit; (2) May result in your being subject to collections or being sued by creditors or debt collectors; and (3) May increase the amount of money you owe due to the accrual of fees and interest by creditors or debt collectors. Failure to pay your monthly bills in a timely manner will result in increased balances and will harm your credit rating. Not all creditors will agree to reduce principal balance, and they may pursue collection, including lawsuits. JGW’s fees are calculated based on a percentage of the debt enrolled in the program. Read and understand the program agreement prior to enrollment.
JG Wentworth does not pay or assume any debts or provide legal, financial, tax advice, or credit repair services. You should consult with independent professionals for such advice or services. Please consult with a bankruptcy attorney for information on bankruptcy.