Understanding family debt

Family debt occurs when an adult family member asks another family member, often a parent, to finance debts on their behalf.


This may be by acting as the guarantor of one or more loans. Remember, guaranteeing a debt comes with serious risk and you should be aware of the consequences before agreeing. As a guarantor, you’re guaranteeing that the loan payments will be made. That means you’re responsible for the debt if the family member is unable or refuses to make the payments.

What to do before agreeing

  • It’s important to obtain legal advice to ensure you are aware of the legal consequences of becoming a guarantor before signing any documents.

  • Do not sign documents you do not understand.

  • Access financial counselling to be sure you will be able to cover the payments if required, without putting yourself into financial distress.

  • Find out if your family member may be able to access low-interest loans with some banks.

  • Decide if the loan is absolutely necessary.

  • Be honest with your family member if you believe you cannot cover the debt or do not wish to proceed.

  • If you think that you or someone you know could be the victim of elder abuse, including financial abuse, contact the Elder Abuse Prevention Unit.

Avoiding family debt

Talk to a financial counsellor
Talk to a financial counsellor to understand the risks involved.
Be aware of the possible financial demands
Ensure you are financially able to maintain the debt if the family member cannot pay.
Look for alternative solutions
Ask the family member to look for other options like a more affordable mortgage or cheaper home, buying items second hand or waiting for sales.
Delay the purchase
Put off buying the item until the family member has the capacity to make the payments themselves.

Additional information


In any legal matter, it’s best to get legal advice from Legal Aid Queensland on 1300 651 188

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