Is It Bad to File Bankruptcy at a Young Age?

There are plenty of reasons why a person might end up considering bankruptcy at a young age. From student loan debt to attempting to get on one’s feet financially, lots of paths can lead to the same point in your journey to independence. If you find yourself facing the choice of whether or not to file bankruptcy in your twenties or even younger, you may hear from older friends and family that you’re just too young to even consider it.  

However, those friends and family likely aren’t legal professionals – and aren’t qualified to give you the kind of helpful advice you need during such a confusing and trying time. To better understand the choice of bankruptcy and how it applies to your situation, it is a good idea to learn more about the overall process. Here’s what you need to know about the ins and outs of filing for bankruptcy in your early years:  

Is There a Minimum Age for Filing for Bankruptcy?

Technically, there is no hard and fast legal minimum age for filing for bankruptcy. Since people have to be at least 14-16 to secure employment, this is generally seen as the absolute minimum, but in most cases, 18 is seen as the accepted minimum age. After all, most lines of credit cannot even be obtained without being 18 years of age in the United States, so it is unlikely that you will accrue debt any younger than age 18.  

Because most college students rack up substantial student loan debt – which can make taking out personal loans for other expenses more likely – younger and younger people are considering bankruptcy every year. This is why it is important for these young adults to understand that there is no minimum age when filing for bankruptcy. If it’s the right choice for your financial situation, it is the right choice regardless of your age! 

What are the Advantages of Filing for Bankruptcy at a Young Age?

Why would someone consider filing for bankruptcy as young as their twenties? There are plenty of reasons, but one of the biggest among these is overwhelming student loan debt. While bankruptcy will not generally relieve student loan debt, it can help free up a person’s finances so that they can better focus on debt repayment such as student loan payments.  

One type of debt that bankruptcy will generally wipe out or help you restructure and reduce is personal loan or credit card debt. Because of the debt often shouldered by people in their early twenties in modern-day America, many of these people end up taking out personal loans and lines of credit. Likewise, because of the relatively-limited earning potential that many of these people have due to career inexperience that comes with age, repaying these loans can be difficult or even impossible.  

Bankruptcy is one solid option for ridding yourself of the life-altering constraints of this type of debt. If trying to keep up with mounting personal loan, medical, or credit card debt is negatively impacting your everyday life, bankruptcy can give you the peace of mind you need to focus on school, work, and improving your situation. For many young people, this is reason enough to consider filing.  

Are There Any Drawbacks to Filing Bankruptcy at a Young Age?

While there are plenty of reasons why a person might justifiably consider bankruptcy at a young age, there are also plenty of drawbacks. Weighing these against the advantages is the best way to determine whether it is the right choice for you. Ultimately, every person’s situation is different and some of these disadvantages may not apply to yours.  

One of the biggest disadvantages of electing to file bankruptcy in your twenties or even younger is that it is a temporary fix. Yes, bankruptcy discharge is a permanent state, but many times, young people who undergo bankruptcy find themselves filing again down the road.  

Why is this? Many experts agree that it’s because bankruptcy can become a crutch for those in serious financial distress – one that prevents young people from learning financial responsibility. While older Americans who file for bankruptcy have often faced extenuating circumstances and struggled for many months or years, young adults who opt for bankruptcy may be more likely to jump into another bankruptcy sooner rather than attempting to rebuild and sustain their finances.  

Likewise, filing for bankruptcy at a very young age can severely limit your financial prospects for many years to come. After a bankruptcy, credit can become harder and more expensive to obtain. As such, a decent vehicle, homme ownership, and more can be severely hampered. This can make getting established in your adult life very difficult, and can lead to fewer job prospects, an inability to move out of the area where you currently reside, and more.  

For young adults, a better option may be working with a debt relief program to reorganize debt and make payments more manageable. This can help you gradually chip away at debt without the potential repercussions of bankruptcy.  

These are all important considerations to keep in mind when considering bankruptcy, but they aren’t the final answer. After all, every situation is different and every person has different needs. If you are struggling with overwhelming debt, bankruptcy may still be the best option – but it is one that should be considered with care and with professional guidance along the way.  

If you or a loved one are considering bankruptcy, don’t go it alone. Regardless of age, the bankruptcy process can be a confusing one. Especially for those considering bankruptcy at a young age, it pays to consult with a legal professional throughout the process.  

For all the help you need with your bankruptcy, contact the knowledgeable professionals at the Van Horn Law Group. We have the experience to help you understand the entire bankruptcy process from start to finish, as well as to make the best choices throughout it. Simplify the process and make it work for your unique situation. Give us a call today to learn more!