Why you should avoid bankruptcy at a young age

Why you should avoid bankruptcy at a young age

On Behalf of | Oct 29, 2021 | Bankruptcy |

In the state of Maryland, anyone who is at or over the age of 18 can file for bankruptcy. However, it may not necessarily be in your best interest to do so, and this may be especially true if you are a young person still trying to figure out how to manage money.

The potential pitfalls to filing for bankruptcy

Regardless of your age, there are several reasons why you may not want to seek protection from creditors. For instance, a bankruptcy proceeding may not eliminate all of your debts. Generally speaking, student loans, income tax, and child support payments are considered priority obligations that can’t be discharged in bankruptcy. Even if your debt balances can be eliminated using this method, it’s unlikely that it will address the reason why you accrued them in the first place. Ideally, you’ll at least make an effort to pay down your debts without heading to court.

A bankruptcy could impact your professional future

It’s not uncommon for employers to run a background check on job candidates that includes a review of their credit reports. If you have filed for bankruptcy in the last seven to 10 years, an employer will likely find out about it. Therefore, it may be harder to get a job that requires you to handle money or otherwise manage a company’s finances. You may also have a hard time getting an apartment or driver’s license, which could significantly limit where you can look for work.

Bankruptcy should be considered an option of last resort to get a handle on your debts. If possible, it may be in your best interest to consolidate your debt, sell assets or take other steps to reduce your balances to an amount that you can afford to pay each month.