Help a Family Member With Debt

How To Help a Family Member With Debt

People get themselves into debt for all sorts of reasons: unexpected medical bills, college tuition, or expensive home maintenance costs. Owing a lot of money can lead to stressful times and it can be just as bad if a family member asks you to help get them out of debt.

If this is a situation you find yourself in there’s a few things you should keep in mind.

The first rule is that, best as you can, try to avoid the temptation to “Monday morning quarterback” the situation by pointing out where he/she spent irresponsibly. Instead, if you can, thank them for trusting you enough to tell you about the problem and giving you a chance to help.

Communication is key, and even if you don’t want to – or can’t – hand over cold, hard cash, finding other ways to help out and keeping the lines of communication open are crucial.

Far too often, people are in denial about how serious their debt problems are, and they won’t admit fault until the bills are stacked too high. By that time, only the wealthiest of us can bail them out. And with today’s credit crunch due to the Coronavirus, all it takes is a job lay-off or medical crisis to pile up an insurmountable debt.

Show That You Care

While you may not be able to cut a check to pay down a family member’s debt, you probably can invest the time to get that person on the right track. Doing a little research and showing that you care enough to help means the world to them and shines a positive light on the situation.

All too often people panic, and when they hear you say, “Sorry, but I can’t afford to lend you money,” they feel hopeless, and that don’t care. But that’s not so! While there’s a lot of merit to the idea that everyone should solve their own problems, a little help along the way can go a looooong way.

Sometimes, all it takes is some words of encouragement and willingness to sit down with your loved one to go over financial options.

I read on another blog that some people who are in badly in debt don’t like to look at their finances, and won’t create a budget. This is because it’s too painful to look at the amount they owe, so estimate their expenses instead of outlining areas where they can save money. Sitting down and coming up with a hard plan to cut expenses is a hugely beneficial thing you can do.

There are also budgeting mobile apps that will help keep them on track to get out of debt.

If the Problem Is More Serious

If it’s something that can’t be solved by some obvious prioritizing, cost cutting, and consolidating, how about suggesting a free, private debt consultation with by calling 1-855-Jet-Debt? Or another possible recommendation is credit counseling from a local non-profit

  • If the issue is chronic over spending, you may want to check out Debtor’s Anonymous (D.A.), which has adapted the 12-step program that has been so effective for alcoholics anonymous. It’s super easy to find local meetings.
  • If the issue is financial infidelity, it’s better that you now know than not. This problem is rampant, and there is help available.
  • If the issue is helping your child with a student loans or credit card bills, think long and hard before you decide whether or not to help out financially. Assuming you can afford to help in the first place! Incurring serious debts early in life can haunt a young person for decades; so getting them on track to solvency is worth considering. For millennials financial freedom mean no more student loans.
  • If the need for more income is the issue, you can brainstorm new or additional employment ideas. A visit to Craigslist is an easy way to get a feel for what local jobs and gigs are available in the area. Consider whether or not to share some tips on starting a small business (such as a landscaping business).

While you may have no intention or ability to invest in such a venture, there’s a lot to be said for taking the next step with a loved one.

For example, you can commit to weekly “sessions” to help pinpoint the best opportunity for bringing in some extra dough. Or you can certainly go along to the first debt-counseling meeting, and if the D.A. meeting is “open,” you can go to that one as well.

If your family member worked doing local jobs, there are new state programs that support premium hourly pay for gig workers (i.e. Postmates, GrubHub).

Have They Called the Helpline Center?

Calling 211 is a free, 24/7 service set up by United Way. They can help provide local resources that to help with all sorts of problems, including financial debt problems – for example, how to pay the rent or the electric bill. Be as clear as you can about the problem.

For family members who live in other parts of the country, you can also visit the 211 website to find out about services close to where your loved one resides. (While most of the U.S. is now covered, unfortunately 211 is not yet operational in every state.)

There are also options for U.S. Veterans.

For example the GI Bill and VA Debt Management Center, offer programs to help service men and women who are over-burdened with debt.

Should You Help a Family Member With Debt?

If you can cut them a check and alleviate their debt without putting your own finances at risk it’s worth considering. For most people though, that’s not an option. However there are a lot of ways to help that won’t cost you a dime. So please, do not even consider lending money that you might need.

Unless you can truly risk not getting paid back, you are best off not lending it.

Everyone I know can share a horror story of families torn apart by money disputes. While you may think that can’t happen in your family, trust me. If it can happen in so many other families, it could happen in your family too.

Assuming you can afford to offer financial help, if a large sum is be involved — say, over $10,000 — it pays to get professional advice. Why? Because the IRS has some confusing rules about “imputed interest,” where you may have to declare interest income on a loan you make to a family member, even if you don’t charge any interest or at a very low rate.


Depending on the amount owed and your financial situation determines whether it’s right or wrong to help a family member who is deep in debt. For some people it’s credit card debt, and for others it can be mortgage payments. If the amount is $10,000 or more you might want to speak with a consultant or attorney – especially if it concerns monthly payments, interest rates, or a repayment plan.

Even if you are unable to help out financially it’s important to remain supportive. Ultimately it’s worth showing a family member that you care enough to help, even if you can’t solve their problem for them. A little love and support through hard times can be a difference maker.

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