College Students: Decide If Bankruptcy Is Right For You
If you are a college student overwhelmed with credit card debt, bankruptcy may be the right option for you. However, it isn't right for everybody. To determine if bankruptcy is the right option for you, take a look at these bankruptcy facts and how they relate to college students:
1. Bankruptcy stays on your credit report for six years
If you are in your early twenties and you have more debt than you can handle, you can declare bankruptcy now, and all record of it will be off your credit report by the time you are thirty. For that reason, you may want to declare bankruptcy sooner rather than later.
2. You have to wait to discharge student loans
If you opt to declare bankruptcy while you are still in college, you will not be able to discharge your student loans. In order to include student loans with a bankruptcy, at least seven years must have passed since you graduated or quit school. In cases of extreme hardship, student loans can be discharged only five years after leaving school.
If you are eager to get rid of your other debts, you won't be able to get rid of your student loans anytime soon so you may as well declare bankruptcy now. If you have trouble repaying your student loans later, you can apply for reduced payments through a hardship program.
On the other hand, if you are worried about your student loans, you may want to wait until after you graduate. At that time, you can start trying to pay your credit cards and your student loans, but if it proves too difficult, you can declare bankruptcy once you have hit the five- to seven-year mark.
3. Disgruntled creditors may garnish your wages
If you have a debt now that you cannot pay, the creditor may have no recourse to claiming the money from you. However, if you have a job, the creditor can garnish your wages. If you don't want an old creditor to surface and garnish your wages after graduation once you've snagged your dream job, you may want to get rid of those debts now.
4. Student loans are only based on your credit rating if you are over 22
If you are still under the age of 22, you may be able to get student loans without the lender looking at your credit. That won't happen when you are in "the real world" trying to get car loans or mortgages. If you are over the age of 22, you will want to consider more carefully the impact a bankruptcy will have on your potential to get more student loans.