Virtually all Maryland parents want to shield their children from harm and will go to great lengths to ensure that they are happy and healthy. What many do not understand, however, is the impact that financial troubles can have on their kids. A recent study suggests that families who carry high levels of unsecured debt also have a higher rate of childhood behavioral problems. For some families, this insight may make it easier to make the decision to file for consumer bankruptcy.

The study included more than 9,000 children aged five through 14. Researchers looked at data collected over a period of 22 years, and examined the financial scenario of each family, as well as the existence of behavioral problems in the children. It is important to note that the study made a distinction between “good” debt, such as mortgages and student loans, and “bad” debt, such as credit card bills or medical debt.  

What was discovered is that children in families that carried an average of $10,000 in unsecured debt displayed socioemotional problems at a rate of .12 standard deviations more than those who came from homes with little to no “bad” debt. Interestingly, in cases where the family had approximately $5,000 in bad debt but saw that debt grow to nearly $10,000, the behavior issues displayed by their kids rose by .5 standard deviation. Researchers are not sure why this pattern exists, but it may be that financial stress weakens the relationship between the parents and has a negative impact on one’s parenting ability. 

This research suggests that kids may be far more aware of financial troubles than many parents suspect. Furthermore, children feel the impact of financial strain within the family, and may act out as a means of trying to cope with that stress. For some Maryland families, this information will come into play when considering whether to pursue consumer bankruptcy.

Source: fool.com, “Here’s How Your Debt Can Harm Your Children’s Happiness”, Maurie Backman, Feb. 21, 2016