My son owes $25,000 on credit cards and student loans. He wants to file for bankruptcy. Do you think this is a good idea? Kae, EC blog
That’s like asking, “Is chemotherapy a good idea?” Well, yes, if we’re talking about treatment for a horrible disease that could save the patient’s life. But is chemotherapy a good idea to treat the flu or a cold? No, of course not. That would be too severe. Bankruptcy is like that.
There are times when bankruptcy cannot be avoided—it is the only option. But not always.
First, your son needs to understand that student loans cannot be discharged through bankruptcy except in very rare instances that involve total disability, for example. So that leaves the credit cards. Next, he needs to know that he may not qualify to file. Over the years, changes in the law have made it more difficult to quality. Last, if he were to qualify, he needs to know that a bankruptcy, like a birth or divorce, remains a public record forever. It can be reported to the credit bureaus for only 10 years, but that doesn’t make it go away. Read more