Mary Hunt: Bankruptcy is rarely a good strategy

DEAR MARY: My son owes $25,000 on credit cards and student loans. He wants to file for bankruptcy. Do you think this is a good idea? — Kae, EC blog

DEAR KAE: That's like asking, "Is chemotherapy a good idea?" Well, yes, if we're talking about treatment for a horrible disease that could save the patient's life. But is chemotherapy a good idea to treat the flu or a cold? No, of course not. That would be too severe. Bankruptcy is like that.

There are times when bankruptcy is the only option and cannot be avoided. First, your son needs to understand that student loans cannot be discharged through bankruptcy except in very rare instances that involve total disability, for example. So that leaves the credit cards. Next, he needs to know that he may not qualify to file. Over the years, changes in the law have made it more difficult to quality. Lastly, if he were to qualify, he needs to know that a bankruptcy, like a birth or divorce, remains a public record forever. It can be reported to the credit bureaus for only 10 years, but that doesn't make it go away.

Sadly, for most people bankruptcy doesn't address the issues that got the person into trouble in the first place. I would much rather see your son buckle down, get serious about his debt and create a plan to pay it off.

I would recommend he visit the website for the National Foundation for Credit Counseling at NFCC.org. This highly respected organization offers telephone and online credit counseling, an information-rich FAQ section on their website, plus financial tools and resources.

Taking responsibility to pay his debts no matter what that requires will build character and set your son up for financial success in the future.

DEAR MARY: What's the youngest that you suggest giving kids their own money? — Brenda, New York

DEAR BRENDA: I believe that as soon as a child recognizes that money has value because it buys things, that child can learn age-appropriate ways to manage money and make good decisions with it. That can start as young as age six.

In my new book, "Raising Financially Confident Kids," I suggest that parents need to establish family rules of money management that line up with their values. You'll read in the book about how my husband and I created a financial plan for our kids.

The rules were simple. When they got any money, they had to give away 10 percent and save 10 percent. Then, they could make their own decisions on how to spend the remaining 80 percent. The only catch was that they had a responsibility list of things we, their parents, wouldn't pay for. They learned very early they would have live with the consequences of their spending decisions.

The bottom line is this: The way to raise financially confident kids is to allow them to make their own independent financial decisions while they are still young and living within their parents' safety net.