Most people think about bankruptcy as something that people tend to face later in life, when circumstances become dire because of a job loss, divorce, or other major life event. In reality, young people are not immune to these kinds of struggles, and people in their 20s can and do meet with bankruptcy lawyers to file. If you are in your 20s and feel like you need a financial fresh start, here is what you need to know about filing for bankruptcy.
Things to Consider
Filing for bankruptcy is always a big decision, and it can have even bigger ramifications in your 20s. Keep in mind that bankruptcy stays on your credit report for at least seven years, and because many people in their 20s are facing big purchases, like a first car or a first home, this kind of credit impact can be more detrimental than it is for someone who is older. You will need to carefully weigh the extent of your debt and the consequences of filing with the help of a bankruptcy attorney. Your bankruptcy lawyer will help you consider all of your options and make the right choice about filing.
Choosing a Chapter
Most people in the 20s must file either Chapter 7 or Chapter 13 bankruptcy. Each has advantages and disadvantages. With Chapter 7, your debts will be wiped clean, but the court will determine which if your assets you have to sell to try to pay off as much as you can. With Chapter 13, your debt will be reduced, but you enter into a payment agreement to pay off the remaining balance. Your bankruptcy attorney will help you decide which type is appropriate for your financial situation.
Benefits of Filing
Although bankruptcy is always a serious decision, it can give you a financial fresh start that can benefit you later in life. You can also take this time to develop new financial habits with plenty of time left ahead of you to reap the rewards.
At Cutler & Associates, Ltd., we are here to help people of all ages make important decisions about bankruptcy and starting over financially