Too Young to File for Bankruptcy?

Filing for bankruptcy protection is for everyone, at least in theory. Everyone, regardless of age or income level, has the right to file for bankruptcy protection and discharge their eligible debts. Whether everyone should be is another matter. A bankruptcy filing is a negative mark on your credit score, so even if it grants you major relief from the debts you were unable to pay, several years must pass before you will be able to borrow a substantial amount of money again. For example, if you have never owned a house, then a bankruptcy filing will probably move your goal of home ownership farther away instead of bringing it closer. 

Even worse, a bankruptcy filing cannot discharge certain kinds of debts, namely those imposed by a court over which the bankruptcy court has no authority, and people tend to accumulate these kinds of debts earlier in life. If you are under 30, struggling with debt, and wondering whether filing for bankruptcy can be a stepping stone toward reaching your financial goals, contact an Oakland Chapter 7 bankruptcy lawyer.

A Bankruptcy Filing Does Not Make a Good First Impression on Prospective Employers

In a Chapter 13 bankruptcy case, the court facilitates a debt repayment agreement between the applicant and the creditors; after the applicant makes payments for three to five years pursuant to the agreement, the court discharges the remaining balance of the debts. The ideal candidate for a Chapter 13 filing is a homeowner with a salaried job; most people who fit this description are in their mid-30s or older. By contrast, a Chapter 7 case discharges eligible debts immediately, but if you own non-exempt assets, the bankruptcy has the right to sell them to settle your debts. Therefore, the ideal Chapter 7 applicant owns little property. Some Chapter 7 applicants have no employment income at all; retirees and people who are out of the workforce because of disabilities often file for Chapter 7 bankruptcy.

A Chapter 7 bankruptcy filing stays on your credit score for eight years. This makes a bad impression on prospective employers, worse than if you have a lot of debt but are making payments on it, even if the outstanding principal amount barely budges.

Bankruptcy Does Not Help With the Biggest Debts That Young People Face

The debts that tend to wreck your finances early in life are the ones that are difficult, if not impossible, to discharge in bankruptcy. It is easier than it was to discharge student loan debt, but your chances of discharging your student loan debt are greater if it has been following you around for a decade or more. Likewise, having children when you are young can mean being around to see your grandchildren grow up, but it can also mean having to make child support payments on a meager income while you are in your 20s. If you are struggling with debt in your 20s, sometimes patience is the best solution. Keep making the minimum payments on your debts, stay at your job, and if things do not get better, file for bankruptcy in your 30s.

Contact the Law Office of Melanie Tavare About Improving Your Credit Score

A debt relief lawyer can help you if you are in over your head with debt at a young age. Contact the Law Office of Melanie Tavare in Oakland, California, or call (510)255-4646 for a case evaluation.