How Old Do You Have To Be To File For Bankruptcy
Filing Bankruptcy Young
One popular misconception is that most of the people who file for bankruptcy are people of a certain age who have been financially irresponsible for years. That is people who misuse credit cards or people who buy expensive homes, cars and other things they don’t really need with loans that they cannot repay. While it is true that there are people that file for bankruptcy as a result of being financially irresponsible, there are many younger and older people who file for other reasons. For example, a young person may be forced to file for bankruptcy when the young person cannot find a job but still has to repay a student loan debt.
Phenomenon Of Younger People Filing For Bankruptcy
One-third of US adults under 30 years of age are carrying some form of debt according to a 2019 Pew Research Center analysis. A significant number of these adults are college educated and are overwhelmed with credit card debt apart from their student loan debt. Fortunately, people that are 18 years old or older are legally eligible to use bankruptcy to ease their financial burdens. Courts sometimes approve people younger than 18 to file for bankruptcy.
Not Just Any Adult Can File For Bankruptcy
You still have to fulfill certain stipulations and requirements for you to file for bankruptcy even if you are 18 years old or older. For example, for you to be able to file for a Chapter 7 bankruptcy you must have little to no disposable income. If you still have significant disposable income after expenses, then you may only qualify for a Chapter 13 bankruptcy not a Chapter 7. Sometimes the best option is to negotiate your debt down with your creditors instead of filing for bankruptcy.
When Should You File For Bankruptcy?
Just because you are the right age and the chances of your bankruptcy being approved by a court are pretty high, does not mean that you should file for bankruptcy. While bankruptcy can ease you financial burden, you should know that it can also affect your credit for a few years. A bad credit score will prevent you from obtaining a mortgage, getting a loan to buy a car, getting accepted by a landlord and more.
For younger people that file for bankruptcy because of student loans, their credit score would have improved by the time they are in their early 30swhen they are just about to start families. So for them, a bad credit score is a worthy sacrifice for a more debt free future. Talk to an experienced bankruptcy lawyer if you are not sure whether filing for bankruptcy is appropriate in your situation.
Mistakes To Avoid When Filing For Bankruptcy
A number of people wait too long before filing for bankruptcy which only gives creditors enough time to seize their assets or garnish their wages. You can stop your creditor’s collection efforts by filing for bankruptcy. Another mistake is not listing all creditors when filing for bankruptcy. You need to list all creditors including family members you owe money. Do not risk your future by paying your debts using your 401k plans and funds from the IRA to pay creditors.