Wednesday , February 20 2019
Home / Money / Credit / Is Your Adult Child Leading You To Bankruptcy?

Is Your Adult Child Leading You To Bankruptcy?

Generosity has limits, as many older Americans in financial straits are finding out.

No matter their age, parents continue to feel a responsibility for their children. That’s understandable, especially since the Great Recession has taken a toll and prompted millions in layoffs that have devastated families and forced many from their homes and apartments and into bankruptcy.

But, unfortunately, that economic downturn is taking an unexpected toll as well on many older Americans through no fault of their own except for their continuing generosity. When people in this demographic should be stashing extra money for their retirement or already enjoying their retirement in a home that’s already paid for, a growing number are filing for bankruptcy and losing their homes to foreclosure because they think they’re being good parents or grandparents.

That’s the experience of Los Angeles attorney Leon Bayer, a bankruptcy attorney and author whose practiced law for 34 years. In 2013, he co-authored two books: The New Bankruptcy and The Human Guide To Bankruptcy as well as authoring Foreclosure Survival Guide (

Bayer says 75 percent of the bankruptcy cases he handles for older Americans aren’t of their own doing for mismanaging their finances or unexpected expenses. Instead, he says it’s a result of parents helping their own adult children, some who are approaching 50. In some cases, the parents abandon their children with grandparents, he says.

A lot of times they’re victimized by their adult children who convince them to borrow money against the home and give it to them to start a business, only to lose the money. They get talked into co-signing loans for cars that get repossessed. They get sued and are dismayed that they have to pay for it, not knowing what a co-signer means.

The problem, Bayer says, is the parent uses their credit for children or family member they’ve known their whole life and many of them haven’t been successful or even hold down a job. They help the person out of guilt, and know they’re being victimized before they act, he says.

It’s a hard reality when it comes to losing a house because an adult son or daughter who lives there pays no rent and you’re covering the grocery bills, utility bills and mortgage. They’re not contributing but sponging off you. Why do you do it? It’s mostly psychological. Parents feel they maybe failed their child because they didn’t give their son or daughter the right values or they didn’t mold that person into a working and contributing adult. There are a lot of factors, but guilt plays into it.

Research recently released by UCLA and the Insight Center for Community Economic Development backs up what Bayer has seen in his offices. They reported that hundreds of thousands of adults have returned to the homes of their parents, many who are retired and living on fixed incomes.

The study says 433,000 people aged 65 and older took in nearly 600,000 adult children, only of which 42 percent were employed. That’s putting pressure on the parents to not only house them but to feed them and provide medical care and transportation. That’s costing the parents to spend two-and-a-half times more a year than they would otherwise, the study says.

As for the 25 percent of cases he handles that haven’t involved children moving into homes, Bayer says it’s because many haven’t saved enough for retirement and Social Security isn’t enough to take care of their everyday living expenses.

These older folks rely on credit cards to make up for the shortage in income and that gets them in trouble, Bayer says. Rarely, are those filing for bankruptcy due so for medical bills among those older in his experience, he says.

Bankruptcy is not age sensitive,” Bayer says. “The oldest client I’ve had recently is 98 years old. He’s a wonderful man who’s mentally fit and plays golf once a week. He had $35,000 to $40,000 in credit card debt.

But Bayer says there are advantages to filing for bankruptcy for older Americans, especially when it comes to filing for Chapter 7 protection to wipe out credit card debt without having to make a payment, he says.

The new laws on eligibility compare income to debt and living expenses, and it doesn’t count Social Security in that formula,” Bayer says. “That makes it easier to file for bankruptcy than younger counterparts.

The laws for who gets to keep more of their assets is more generous for older people. In California where he practices, those 65 and older can keep up to $175,000 in equity in their homes compared to $100,000 for others no matter how much debt they owe, Bayer says. For those 55 and older and have less than $20,000 a year in income, they qualify for the $175,000 in equity, he says.

Other states allow people to keep less in equity while California and Texas allowed an unlimited amount.

Many of these people are frustrated with what they’re facing, but a home can’t be used as a piggy bank no matter the reason, Bayer says. They say they can’t bear to leave their homes of more than 30 years but a house payment of $3,000 a month is quite different than the $280 a month payment they made 38 years ago.

No matter how they got into financial trouble, Bayer says many older Americans feel isolated and ashamed and hold off on seeking advice. They may not have to file for bankruptcy, and if they do it alleviates pressure from creditors that they’re dealing with, he says.

They may be getting their pockets picked by adult children, but it doesn’t mean they fall into the pit of needing to file for bankruptcy,” Bayer says. “It’s for those who run out of credit because their children sucked the equity out of the parents home.

Check Also

Reverse Mortgage pros

5 Upsides To An HECM Reverse Mortgage

As you near your golden years, the last thing that you want to have to ...


  1. I love reading through and I believe this website got some genuinely utilitarian stuff on it! .

  2. bing took me here. Cheers!

  3. You got yourself a new follower.

  4. Respect to website author , some wonderful entropy.

  5. Your site has proven useful to me.

  6. Hi, here from yahoo, i enjoyng this, will come back soon.

  7. I like this website its a master peace ! Glad I found this on google .

  8. I was looking at some of your articles on this site and I believe this internet site is really instructive! Keep on posting .

  9. Awesome, this is what I was looking for in bing

  10. Ha, here from google, this is what i was looking for.

  11. Hello, yahoo lead me here, keep up nice work.

  12. I am not rattling great with English but I get hold this really easygoing to read .

  13. Thanks for this post. I definitely agree with what you are saying.

  14. This is a great website, could you be interested in doing an interview about how you created it? If so e-mail me!

  15. I’m extremely impressed with your writing talents as well as with the layout on your weblog. Is that this a paid topic or did you modify it your self? Either way stay up the excellent quality writing, it’s rare to see a nice weblog like this one these days..

  16. Terrific work! This is the type of info that should be shared around the net. Shame on Google for not positioning this post higher! Come on over and visit my website . Thanks =)

  17. Hiya, I am really glad I have found this info. Nowadays bloggers publish just about gossips and internet and this is actually frustrating. A good website with exciting content, that’s what I need. Thank you for keeping this web-site, I’ll be visiting it. Do you do newsletters? Cant find it.

  18. hi!,I love your writing very so much! percentage we be in contact extra approximately your post on AOL? I need an expert in this area to solve my problem. May be that is you! Taking a look ahead to look you.

  19. I am constantly browsing online for ideas that can assist me. Thank you!

  20. Would you be interested in exchanging links?

  21. Thank you, I have recently been looking for info about this topic
    for a long time and yours is the greatest I have found out till now.
    However, what concerning the bottom line? Are you sure
    about the supply?

  22. Magnificent beat ! I would like to apprentice whilst you amend
    your web site, how can i subscribe for a blog site?
    The account helped me a applicable deal. I had been a little bit familiar of this your broadcast
    offered vivid clear idea

Leave a Reply

Your email address will not be published. Required fields are marked *