Filing for bankruptcy is a process that can prove to be very stressful, even as the aim of filing for bankruptcy is to provide an individual with the benefits of significant debt relief. While filing for bankruptcy may feel overwhelming, if you’re moving forward with this process, it’s going to be important for you to be honest and transparent with your kids. Even if you’d rather keep your troubles secret, making this effort is generally wise. Doing so can help them understand what’s happening without causing unnecessary fear or anxiety.
This isn’t to say that you should share every detail of your situation with them. Younger children don’t need to know the complex details of your financial situation, but they may notice changes in the household, such as moving or cutting back on spending. For younger kids, a simple explanation like, “We need to spend less money right now, but we’ll be okay,” can be enough.
Older children and teenagers may understand more about money and finances. You can explain the situation in broader terms, such as, “We’re going through some financial difficulties, and filing for bankruptcy will help us manage our money better and pay off debts.” This can help them understand that while the situation is serious, there’s a plan in place to fix it.
Reassurance, honesty and empathy
Children often pick up on the emotions and stress of their parents. It’s important to reassure your kids that while things may change, their basic needs will continue to be met. Let them know that they will still have a home, food and the love and support of their family. Explain that filing for bankruptcy is a way to make sure the family can move forward and build a better future.
Bankruptcy can lead to changes in lifestyle, and it’s important to be honest with your children about these changes. If there will be a move, explain that the family might be living in a new place. If there will be fewer luxuries or cutbacks, such as fewer vacations or new toys, let them know in advance so they can adjust their expectations. Being open about these changes can help children prepare and minimize the shock of any lifestyle adjustments.
Finally, you’ll want to explain to your kids that bankruptcy is a temporary situation designed to help your family recover financially. Let them know that, with time, things will improve, and that your family will work together to get through this challenge. Providing a sense of hope and focusing on the future can help to ease their worries.