Is It Bad to File for Bankruptcy at a Young Age?
There is a common misconception that only middle-aged and older adults file for bankruptcy. Indeed, many middle-aged and older adults file for bankruptcy. However, even young adults also file for bankruptcy. High credit card debt and student debt are just two factors contributing to young people declaring bankruptcy. Filing for bankruptcy can be a tough decision at any age, but it can be especially tough for young adults to decide whether to file for bankruptcy. As a young adult who has thought about filing for bankruptcy, you might be wondering if taking this route is a good or bad idea. While there are some downsides, there are also several benefits that come with filing for bankruptcy. Understanding the potential downsides and benefits of bankruptcy can help you make an informed decision.
The Downsides of Filing for Bankruptcy at a Young Age
Bankruptcy can have several adverse effects on a young adult’s life, including the following;
- Credit Score Impact
One of the major downsides of bankruptcy is that it can affect your credit score. Bankruptcy can significantly lower your credit score. However, if you are having financial problems, your credit score is likely already suffering. Bankruptcy can remain on your credit report for up to ten years, depending on the type of bankruptcy you file. This negative mark can impact your ability to obtain loans, credit cards, or favorable interest rates.
- Difficulty Finding Housing
Bankruptcy can make it hard to rent housing as some landlords and lenders often check credit reports and may view a bankruptcy filing as a risk factor.
- Difficulty Finding Employment
Bankruptcy can affect your chances of securing employment in fields where financial responsibility is vital, such as banking and accounting. Some employers in these industries may take a bankruptcy filing to mean you cannot handle money responsibly. However, many employers focus on skills and experience rather than financial history.
The Potential Benefits of Filing for Bankruptcy at a Young Age
There are several reasons why it may be practical to file for bankruptcy at a young age. The following are some of these reasons;
- Immediate Relief from Debt
Bankruptcy can offer immediate relief for young adults who are overwhelmed with debt. Chapter 7 bankruptcy can discharge unsecured debts and free you from the obligation of repaying those debts. On the other hand, Chapter 13 bankruptcy allows you to repay your debts over a period of three to five years.
- Fresh Start
Bankruptcy can offer you the opportunity to start over financially without the burden of overwhelming debt. Bankruptcy can allow you to regain control of your finances. By filing for bankruptcy, you can focus on improving your financial health.
- Financial Education
During the bankruptcy process, individuals are typically required to undergo credit counseling and financial education courses. This can provide essential insights and skills for effectively managing finances. It can help you avoid future financial pitfalls.
- Avoiding Worse Outcomes
Filing for bankruptcy can help prevent worse outcomes, such as lawsuits or judgments.
Filing for bankruptcy at a young age is not necessarily bad. However, it is a major decision. Seeking advice from a bankruptcy attorney can help you make an informed decision.
Contact Our Deerfield Beach Bankruptcy Lawyer
If you are considering filing for bankruptcy as a young adult, contact our Deerfield Beach bankruptcy attorney at the Law Office of Adam I. Skolnik P.A. for legal guidance.
