Everything You Need To Know About Bankruptcy, Guide For College Students

We’ve noticed that a lot of people are having financial troubles, to the point that they have to file bankruptcy. And then we begin to think, maybe it’s about time that we try to teach college students about bankruptcy. That way, they could avoid the pitfall and be able to be financially sound in the years to come.  

In this post, we will share with you the basic information about bankruptcy. This way, you will be enlightened and be able to exert effort in managing your finances as early as now.  

It Can Hit Your Credit Score Tremendously  

When you file for bankruptcy, your credit score will be negatively affected. If that happens, it would be harder for you to apply for a loan. And if ever you will be granted with one, there will be higher interest rates. This is why most financial experts will recommend bankruptcy as a last resort. They know that this could take a toll on your life for the years to come.  

Bankruptcy Can Stay On Your Credit Report For Years  

Your credit report may reflect bankruptcy for several years. It could even stay there up until 10 years. And there might be a lot of lost opportunities just because of such negative event on your finances. 

Fortunately, there are ways where you could remove your bankruptcy on your credit report. That way, you can still get good credits with decent interest rates.  

Don’t Be Afraid To Negotiate  

The art of negotiation plays a critical role, most especially if you want to improve your finances. If you have creditors running after you, do not hide from them. Instead, face them and ask if you could have a special arrangement when it comes to payments. What matters most is that you try and exert effort to finish all your financial obligations.  

You Need To Seek Legal Advice  

Before you even file for bankruptcy, it is necessary that you talk to a lawyer. This is important so they could walk you through the process, and even share with you the repercussions of your plan.  

Also, you will need to attend a counseling session.   

List All Your Debts  

It is important that you keep track of all your debts. There are two types of debts, the secured and the unsecured.  

When we say secured, this has corresponding collateral. Examples would be your home mortgage or your car. But for the unsecured debts, this includes your credit card and even medical bills.  

Discharging Of Your Debts  

When a court issues a discharge, your collectors and creditors are not allowed to collect from you. They cannot file claims on the money you have loaned from them.  

What the court will do is that they will send a letter to your creditors that your debts are discharged. If your creditors will still run after you, they could face penalties or fine.  

How to Build Good Credit Once Again  

When you file for bankruptcy, this doesn’t mean that it is the end of the world. You can still rebuild your credit after a few years.  

One of the best ways to do that is to get a secured credit card where you also need to make a deposit on the issuing bank.  Use the card properly, and at the same time, pay your dues. This could slowly bring back your good credit.  

Prevention Is Always Better  

We know that this is cliché, but instead of trying to rebuild your credit, you should be able to prevent bankruptcy from happening at the onset. Here are some of the things you have to keep in mind.  

Be responsible with your credit card usage. Yes, it can be exciting to swipe it or to purchase a lot of things online, but that’s one of the biggest mistakes most young people commit nowadays. They think that it’s fine to just live in debt. But in the long run, it would be harder to manage. Simple put, live within your means. If you don’t need to buy a new gadget or a new pair of shoes, then don’t.  

Also, this could be a simple tip but learn how to prepare your meals. If you know how to prepare your food, you can slash your budget big time. 

In a nutshell, be smart and practical. You would soon realize that you don’t need a lot of luxuries to enjoy life. Living simply is way better than living in debt.