How To Explain Foreclosure To Your Children Who Are Traumatized By The Situation

Losing a home to foreclosure is a nightmare for adults, but for children it can take an emotional toll that lasts a lifetime. According to RealtyTrac, the number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago, with an anticipated 1-million bank repossessions in 2010.

The overlooked victims of the sub-prime mortgage mess are the more than 2 million children who lost their homes between 2007 and 2009. Economists estimate another 2.5 million to 3.5 million households are at risk in 2010.

The 2-million figure doesn’t even include the children who lost their homes when parents default on rental payments or conventional mortgage loans.

Sadly, many of these children lose more than a home. They lose their schools, peer relationships crumble, and supportive social networks fracture. Some must give away family pets and extracurricular activities. Others suddenly find themselves replacing paid day care. In the most drastic cases, children can wind up living in homeless shelters.

As a result, children can experience behavioral problems, learning deficiencies, health problems resulting from a families’ inability to keep health insurance, and such emotional issues as shame and anxiety.

1. Know That They Already Know

Children can sense when parents are operating on stress overload, but they’re not equipped to understand what’s causing your stress and assume it’s their fault. A child may feel like a burden, assuming you’d be able to keep the house if you didn’t have to feed and clothe them.

2. Be Honest

You don’t want to place undue responsibility on a child’s shoulders, but they have a right to know what is happening and how it will affect them. For example, your child may not realize the family has a fall-back plan, such as living with relatives or friends, until you tell them.

Use simple terms appropriate to your child’s age. If you have several children of wide-ranging ages, you may want to talk to them separately. Even older children may not understand mortgages or sub-prime loans (who does?), but they can understand basic concepts.

Remember to frequently reassure children that you love them and always will love them. Reiterate this is not their fault and you’ll always be there to take care of them.

3. Explain Your Plans

Let them know how you’ve started to take back control. Children feel better knowing parents are doing all they can to keep the family safe. It also helps them to understand theirs is not the only family experiencing these difficulties. Let them know it’s important the entire family pulls together and supports each other to get through this period.

Depending on their ability to understand, you can go into as much detail as you like, or speak in generalities. The important thing is to let the child know that you have a plan and that your plan is very likely to get you through the crisis. It helps to provide some sense of stability and security, such as maintaining bed-time rituals, requiring they complete homework and other patterns of daily life.

Talk about the stability of your job or, if unemployed, how you plan on finding another job. Listen to their input and concerns, but follow up with reassurances, no matter how small.

4. Include Your Child in the Process

After explaining your financial plan, ask for your child’s input to give them some sense of control. Ask how they would cut back on spending. Depending on your situation, this could mean cutting back on toys or eating less expensive food.

5. Answer Their Questions Honestly

If your child has a friend who faces foreclosure or eviction, they’re likely already worried and have many questions. It’s fair to admit when you don’t know the answers, but follow up with reassurance the family will figure it out together.

6. Keep Them Informed

Don’t assume one talk will take care of everything. Follow up with more information as your situation progresses. Continue to reassure them. Explain how people around the world are dealing with similar problems and that the situation is improving (when it does). If you have good news, no matter how small, share that with your child so they have something positive to think about.

7. Discuss Bad News Early

Give your child time to digest bad news before experiencing radical changes. Let them know if they’ll soon have to move, change schools or experience other major upheavals so they can prepare both mentally and physically. As with adults, children need time to say their good-byes and adjust to new experiences.

(Coupon Sherpa is the penny pinching, coupon clipping, deal digging, Himalayan haggling, he-man of bargains. Visit for more shopping advice, insider tips, and coupons.)
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