Although there are obvious pitfalls involved with interfering in the financial affairs of anyone in your family, if you are sensible about it the financial stability of a complete family as a unit can help a family member caught in debt quite significantly.
Discovering the Problem
Of course it depends on the relationship you have with your family, but it is not that common for people to own up to having money problems, even to people close to them. One of the best ways to spot financial trouble is to see how the relative behaves about spending on things when you are with them.
Don’t make the mistake of trying to force them to pay for things though, just to see if they refuse or are unable, as you may actually make the situation worse. A great indicator of financial problems is a mobile phone that never seems to have any credit, as this is normally a small amount which most people can manage ok.
Once you have established that there is a problem and that your help would be welcome, what can you actually do to help a family member caught in debt? There is the obvious and direct approach of offering them money if you have it, but be aware that this may not mean they are going to be able to pay you back any easier than they could pay the bank, and unpaid debts are never good for family friendships.
Ideally you should help them to improve their situation without paying a cent yourself.
Balance Transfers
If their debts are largely credit card based, then a balance transfer may be just what they need to start getting back on their feet. If their credit rating has been damaged too much for them to get a new card, you may be able to help by acting as a guarantor for a new card. They gain all the benefits and unless they have even more problems, it shouldn’t cost you a thing.
In extreme cases, you may be able to borrow money at a much lower interest rate than they are paying on their debts. Investigate this option as you may be able to save some money, but be sure that they will be able to meet the repayments on any loan in your name, or your own credit rating may suffer.
Spread The Burden
Whichever way you choose to help a family member caught in debt, spreading the burden between several family members is often the best way to tackle family debt problems. Check that you are not going to fall foul of tax law before you start giving any large gifts or loans though, as incurring extra costs at this stage is unlikely to help.
