A fascinating article in U.S. News & World Report called “The New Parent Trap”, bears out some of the parent/adult children situations I’ve been dealing with in my Indiana bankruptcy law offices. The article quotes Stephanie Coontz, director of research for the Council on Contemporary Families:”As a historian, I can tell you no older generation in history has ever spent so many resources on grown kids.” Coontz explains that families unable to offer cash to grown children often provide non-monetary help, such as babysitting the grandchildren or allowing the adult children to move in with them.

I touched on this very topic in my earlier blog, “Some Dads And Moms Driven Into Debt Helping Sons And Daughters“, pointing out that an alarming number of elderly people are sinking into debt helping children who have lost jobs, gotten divorced, or who’ve been stricken with high-cost medical illness not covered by insurance. Bankruptcy rates have actually increased faster among seniors than among any other group in our country. What I’ve found, though, is that seniors are the most reluctant to seek help for financial problems.

Many, many different questions about the intertwined finances of parents and adult children are posed to me every day. Very frequently, there is no documentation of money “lent” by parents to children or, in the reverse, of expenses children paid for their parents. With less than perfect documentation, it’s complicated to include these debts in the bankruptcy petition, because the law will probably consider agreements made between family members as not legally binding. Another complicating factor is that, once a bankruptcy is filed by an adult child, the child cannot decide to repay the parents ahead of other creditors – the court will decide the priority of debt repayment.

Adult children who live with their parents are often concerned that if they file bankruptcy, that might endanger their parents. Perhaps the car is in the parents’ name, but the child is driving it; the credit card might be in the child’s name, with the parents helping make payments. In short, matters are intertwined and complex. In such family situations I have my work cut out for me, because the Statement of Financial Affairs for the bankruptcy petition must be complete – and correct.

Stephanie Coontz remarks in the U.S. News article that depending on retired parents can create family tensions. As one adult daughter who relies on her mother’s help put it, “I’m extremely thankful, but…..it’s a hard pill to swallow.”