Sitting at your desk, you look at a pile of bills that you can’t afford to pay. You’re only 20, you have a low-paying job and your debt is overwhelming.
This isn’t unusual, and you’re not alone in this challenging situation. It’s possible for someone as young as 18 to be in deep trouble with debt, just as it’s possible to find someone elderly in the same situation.
If you find that your debt is too great, it may be a good time to look into bankruptcy. Bankruptcy could be an excellent choice at your age, since you have few assets and plenty of time to correct your credit score moving forward.
Filing for bankruptcy at 20: What you should know
At 20, you’re young enough that you have your whole life ahead of you to build wealth. At the same time, you’re old enough that you know that your financial outlook is bleak if you don’t take steps to correct it.
Filing for bankruptcy at any age is going to have an impact on your credit score. You may be limited in terms of taking out loans or accessing funding for the next few years. Usually, Chapter 7 bankruptcy eliminates your debt, but it remains on your credit report for around a decade, leaving you in a tough position if you want to buy a home or take out a large personal loan.
That being said, if your debts are primarily credit cards or you are struggling with personal loans that weren’t secured, bankruptcy will help you clear those debts and give you back your full income to work with. That may be enough to keep your rent current, pay for the necessities and even start saving toward you future.
Should you be worried about filing for bankruptcy young?
No, the process is primarily the same regardless of your age. What people should worry about more is not filing soon enough. There’s no reason to struggle. Bankruptcy is available because the government did want to give people the opportunity to clear their debts and get back on track. That’s something you can take advantage of.