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Should you consider bankruptcy after college?

On Behalf of | Aug 27, 2021 | Bankruptcy

Getting through college can be costly. You may have taken out personal loans, run up credit card debt and had federal aid as well. Many students come out of college owing tens of thousands, if not hundreds of thousands, of dollars to their lenders.

Bankruptcy is one option that you may consider, but it won’t necessarily help you with your school loans. Unless you can prove extreme hardship, it is unlikely that you’ll be able to wipe out federal loans or even many of your private student loans.

What you can take a look at discharging, though, is your credit card debt and any personal loans that you have from your time in school. For example, if you took out a personal loan to cover the cost of supplies for your courses instead of using a student loan, then that personal loan may be dischargeable in bankruptcy. Similarly, any credit card debt you have from your years in school could be dischargeable as well.

Should you consider bankruptcy after college?

It’s worth looking into debt-reduction methods prior to turning to bankruptcy if you’re just graduating from school. While the job market may be difficult to get into, if you believe that you will be able to handle your debt once you find a job, then you may have other options that will be less damaging to your credit. For example, you might be able to defer and consolidate school loans, contact your credit card lender about reducing your payments temporarily or consolidate all of your unsecured debt into a lower payment that makes it easier to afford.

Bankruptcy could be a good solution if you’re working and cannot afford your debt and if your debt is largely unsecured. Bankruptcy usually doesn’t help with student loans, so if you have specific issues with those, then you may want to discuss your concerns with the lender or your attorney to see if there are different debt relief options open to you. For all other unsecured debts, bankruptcy could help eliminate them and help you move forward without as much debt holding you back.