Will my parents find out about my debt arrangements?

For anyone with money worries, it has to be their worst nightmare. They have been hiding their debts, get advice and decide to go bankrupt or enter in a repayment programme with their credit card providers, only for their parents to find out. So what can they do to keep it quiet, and more to the point, should they keep it quiet?

A recent report has confirmed my belief that this is a huge concern for those with unmanageable debts. According to the Post Office, UK residents have debts of £55 billion and nearly a third of people, including children living at home with their parents, hide the true extent of debt from family members.

I have dealt with many clients in their early twenties, still living at home, who owed as much as £80,000 on credit and store cards and, personal loans and overdrafts. Each of these was petrified that their family, in particular their parents, would find out about their debts.

So how will the parents find out? A lot depends on how savvy they are. They may see tell-tale signs such as an increase in post or calls to the person’s mobile or home number. When the parent asks about this all they get back is “oh, wrong number” or “someone trying to sell me something”. The person may be restless and agitated and there is always the chance that they may let something slip into conversation.

Another way of finding out is the knock on the door. You open it to find a debt collector in the form of a bailiff standing there in a formidable manner demanding entry and payment. This usually comes as quite a shock to the parent who wonders “Why didn’t they confide in me? I may have been able to help”. 

As a father of three grown up children, I would like to think that if one of my offspring was to have a problem they could talk to me about it and when and where possible I try to encourage my younger clients to speak to their parents. However, not everyone is comfortable with this and will not want anyone to know, let alone their parents.

There are ways to help keep debts confidential and avoid the sort of situation described here.

One or both of your parents makes an application for credit such as a new mobile phone tariff or a remortgage or a loan to do the house up. They get refused yet they know they have an excellent credit score

Bemused, your parents conduct a credit search on themselves to see what is on their file that made them fail in their credit application.  This is where you may get caught out as your details, the debts and missed payments may well come up on their credit report because you are under the same roof, connected by the address. However, you can prevent this happening.

If there is financial information on your file or your parents file about people in your family with whom there is no financial connection, such as on a joint mortgage, you can write to one of the main credit reference agencies asking them to disassociate yourself from family members. This basically means that your details will not appear on other family members’ credit files. The agency may wish to make some enquiries or checks to make sure that you are not just trying to avoid a bad credit record.

Unless the agency has a good reason to doubt what you tell them, it must stop giving lenders information about the other people that you have mentioned. You need only write to one agency, since disassociation information will be shared between the other main agencies.

If you feel that you cannot tell your parents about your debt problems then at least get some good advice. Check out the Moneywise Debt wizard support pages for advice onon how to move forward and get those debts under control. Once you have entered into some form of repayment programme, such as an Individual Voluntary Arrangement (IVA), debt management plan  or debt relief order, then you may feel more comfortable  speaking to your parents.  Why? Because you can demonstrate that as you got yourself into this mess you have now done something positive to get out of it. They may also appreciate the fact that you have kept their credit file clean, if you did the disassociation. Remember, once you gain control of your debts, you gain control of your life and dispel the fear of other people finding out.


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