Should I Use Retirement to Pay Son's Debt?

Dear Debt Adviser,

My son is drowning in debt. I'm thinking about using my retirement money to help him, but that will leave me with just the bare necessities. My son has two teenage kids, a home and a wife. He works at least 72 hours a week and still can't get ahead. His home is just about to go into foreclosure. Should I do what I can to prevent him from losing his home?

-- Annie

Dear Annie, No, you should not jeopardize your retirement or your financial cushion to help your son and his family. They need more than what you can give. And that money would only be a temporary fix. It wouldn't deal with the underlying problems that got him into this financial mess.

What your son and his wife really need is to get counseling for their house. Counseling will help them determine if they can afford to stay in their home, if they can qualify for assistance programs and how to avoid foreclosure.

They may learn that they just can't afford to stay in the home based on their income and living expenses. In that case, the counselor will discuss other options such as a short sale or deed in lieu of foreclosure. Your son can find a government-approved counseling agency at the U.S. Department of Housing and Urban Development website.

If they want to stay in that home, your son and his family are going to need to balance their budget and stick to a spending plan. Bankruptcy also may be an option if the debt comes from credit cards, medical bills and other spending that is not a recurring monthly expense.

Should he have enough income to pay his mortgage but not all his debt and his family income qualifies for a Chapter 13 bankruptcy filing, he would be allowed to keep the home. In a Chapter 7 bankruptcy, most of his unsecured debt would go away. But keeping the home would depend on the amount of equity in the home and the allowable exemption for his state. A bankruptcy attorney could help him sort out these options.

Meanwhile, offer your son and his family all the moral support you can. Protect your financial future, and let them work out this situation without your financial assistance.

Good luck!

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.