Your Son Has a Car Crash? Good.

Hi Scott,

Our 20-year-old son let his car insurance lapse. Then he had an accident. His car hit two other vehicles. Now both insurers are chasing him for nearly $30,000 (plus he still needs to repair his own car). He's a part-time student working at Woolies with barely any income.  What would you say if this were your son?

Kelly

Hi Kelly,

If it were my son?

I’d ask him, “what’s your plan to fix the mess you’ve created?”

Hint: the correct answer to that question is:

“I’ve gathered up all the paperwork from the insurers, I’ve called the National Debt Helpline on 1 800 007 007, and I’m sitting down with a financial counsellor to work through my options”.

Another hint: don’t make the call for him. Don’t go to the meeting with him. Let him sort it out.

If he sits across from a financial counsellor like me, here’s the likely outcome:

He has no assets, and no capacity to repay the debt. So the insurer will likely waive the debt, or put him on a small payment plan for 12 months, and eventually waive the debt.

Final hint: don’t tell him that. Let him work it out for himself, and live with the ramifications of being a financial five year old.