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Too Many Student Credit Cards? Considering Bankruptcy?     

When you’re just a student, the prospect of having to file for bankruptcy can be a bit overwhelming. If, though, you’re in over your head with regard to your credit card accounts, this idea is a very real one that you may have to face.

 

Who Should File?

The first thing to consider is what a bankruptcy is. Bankruptcy is the legal process of discharging or reorganizing all of your debt. If you’ve lost your job, and you can no longer afford to pay the bills that you’ve created for yourself, bankruptcy should certainly be considered, but so should debt settlement and credit counseling companies. When you begin to consider filing for bankruptcy, be sure to investigate your state laws regarding the process, as well as the type of bankruptcy you need to file. Chapter 7 bankruptcy literally starts you over. It’s based on the idea of selling your things to cover your debts, but there are certain things (like housing and transportation) that are exempt in most states. Chapter 13 bankruptcy has the court help you with a five year plan to repay all of your debts.

 

Things to Consider

First, all of your debts won’t necessarily be wiped out by your filing. Student loans are exempt from bankruptcy proceedings, and so are any fraudulent debts or child support that you owe.

 

Second, the idea that bankruptcy means you’ll never get credit again is a really poor one. In fact, just a few months after you’ve filed for bankruptcy, you’ll be getting new credit card offers from subprime lenders looking to capitalize on the fact that you can’t get credit elsewhere. While for ten years you may not get credit with decent interest rates, you can still get the credit you need to buy a car or even a house.

 

Finally, you can only file for bankruptcy once every eight years, so the idea that you can charge as much as you want without ever having to pay it off is a myth. Moreover, bankruptcy court judges get very angry when you appear to be abusing the system, and they can deny your petition if you appear to be defrauding the state.

 

How to File

Once you have decided to file, the best first step is to contact a local bankruptcy attorney. Remember, attorney’s fees aren’t cheap, but they may be cheaper than paying off all of your debts. Talk with your attorney about the kinds of debts that will and won’t be discharged in the proceedings, and discuss what bankruptcy will work best for you. Keep in mind that you don’t have to have an attorney to file for bankruptcy, but if you’re a little unsure of yourself, an attorney is a good first step.

 

Filing for bankruptcy is a scary process, and if you’re still a student, it can be a bit overwhelming. Talk with your parents or financial aid offers for other ideas before you finally decide to file.

 

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