Although not common, we are seeing more and more twenty-something’s in need of bankruptcy relief. A concern that is sometimes voiced is whether the client is too young to file bankruptcy. I don’t mean in a legal sense—anyone of legal-adult age may file bankruptcy (in fact, even someone under the legal-adult age can file bankruptcy with a representative) —but in a practical sense the client often feels like they should stick it out and see if they can solve their financial challenges without bankruptcy. They think by filing bankruptcy so young, that they are somehow doubly cursed or won’t be able to have the American Dream of home ownership. Such thinking is folly!
Pure and simple, bankruptcy exists to help those who have more debt than they can ever hope to pay. A common scenario for the twenty-something crowd is a combination of excessive student loans that are going into repayment, poor job prospects after college, and credit card debt that was used to make ends meets.
For younger debtors saddled with student loan debt and credit card debt, bankruptcy may be the only strategy available that will give them a fighting chance to pay their student loans. Student loans cannot be discharged in bankruptcy but for the debtor proving that repaying those loans would cause an undue hardship; however, trying to pay both student loans and credit cards at entry level income is daunting if not impossible. So, bankruptcy can eliminate the credit card debt thereby freeing up money to pay student loans and necessary living expenses.
Bankruptcy is a financial tool, just like any other financial tool. It is designed to solve certain problems or achieve a certain result, just like auto insurance, 529 college savings plan, or even a simple checking account; all those items are simply financial tools. Bankruptcy is a cure for debt and a way to get persons financial life back on track.
Do not rule out bankruptcy because you think you are too young. If you have debt and cannot pay your bills, it doesn’t matter your age; bankruptcy may be the best option.
