Financial struggles impact the whole family. Explaining a decision to file for bankruptcy to your kids in a way that’s both honest and reassuring is important. While it may be tempting to shield them from the realities of bankruptcy, children can often sense when something is wrong. By approaching this conversation thoughtfully, you can help them understand the situation without overwhelming them.
The “best” way to explain bankruptcy to your kids will depend on their ability to understand complex topics. For younger children, there’s no need to delve into financial jargon or the legal specifics of bankruptcy. You can simply explain that your family is going through a tough time with money, and that you may need to cut back on spending and/or move to a new home so that things can get better.
For older children and teenagers, it’s appropriate to offer a more detailed explanation. They might have already noticed changes in your family’s financial situation, so it’s important to be honest. Letting your kids know that you’re trying to secure the family a relatively fresh financial start can be a good way to introduce the subject.
Honesty and reassurance
Children often worry about how changes in their family’s financial situation will affect their day-to-day life. It’s important to reassure them that, while things may be difficult now, bankruptcy is a step toward improving your family’s finances. Let them know that you are working on a plan to get things back on track and that the changes being made now are temporary. Emphasize that they are safe and that, as their parent, you are taking steps to ensure that the family’s needs are met.
You’ll want to be honest with your children about these changes, but focus on the positive aspects of the situation, when possible. For example, if the family needs to move, you can highlight the exciting parts of moving to a new place or how it’s an opportunity for a fresh start. By framing the conversation positively, you can help alleviate some of the stress and uncertainty your children may feel about your circumstances.