When you think about bankruptcy, you probably picture a middle-aged or elderly person who let things get away from them over the course of their lifetime. But there is no requirement that you must reach a certain age in order to file for bankruptcy. As long as you are of legal age in your state, you are likely eligible. But just being old enough to do it does not automatically mean it's a good idea as soon as you accumulate a bit of debt. If you are a young adult considering bankruptcy, here are some tips to remember before you move forward.
A Bankruptcy Pushes the Reset Button, But It Has Long-Term Consequences
People who run up their credit cards sometimes look at bankruptcy as a get-out-of-debt-free card, but this could not be further from the truth. Yes, it may eliminate some or even all of your debt, but the long-term consequences can be dire. A bankruptcy will likely stay on your record for five to seven years or longer, depending on your state. During this time, it will be extremely difficult to do things like get a new credit card, apply for a mortgage, get a new car loan, and so on. If you are going to go this route, make sure you can handle the fallout, which may last for the rest of your 20s or into your 30s.
Bankruptcies May Not Wipe Out Student Loans
One of the most common sources of debt for young people is their student loans. If you feel like a massive chunk of your paycheck is basically being flushed down the drain every month due to a loan payment, you may be looking for a way out. But most bankruptcy courts will tell you that student loans are not dischargeable except in the most dire of circumstances. You may need to prove that the loan is putting an undue hardship on you that is robbing you of even a minimal quality of life. If this sounds like you, be prepared to back it up with a full accounting of your situation.
Don't Move Forward Without an Attorney
As a young adult, you probably don't have a lot of experience with the legal system. You could possibly turn to your parents for help, but they might not exactly be experts either. For best results, you need to reach out to a local bankruptcy attorney before you do anything else. A good lawyer will walk you through the process in your state and take a look at your specific situation for alternative solutions before you file