Difficult Financial Decisions Loom for Many Recent College Graduates; Can Filing Bankruptcy Help?

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With graduation season upon us in a difficult economic climate, Seattle Bankruptcy specialists, Integrity Law Group, offers a basic primer on how bankruptcy may or may not be used to help sort out financial problems for struggling college graduates.

Graduating from college can be a time for hope, signaling the official beginning of one’s financial life. Unfortunately, debt incurred from loans, credit cards and other unforeseen circumstances can leave new graduates facing the harsh economic realities of life. That is why Seattle Bankruptcy attorney, Integrity Law Group, offers a brief list of circumstances that may or may not be helped by filing Chapter 7 or Chapter 13.

Bankruptcy is designed to help people either reset or renegotiate uncontrollable debt, while protecting and preserving some of their assets. With details in bankruptcy law changing frequently, it takes specialists to remain abreast of its intricacies to assist those in a financial bind. Some debts are able to be discharged by filing Chapter 7 and some are not. Chapter 13 is another option for negotiating a payment schedule, but it is crucial to have a basic understanding of some of the limitations for each form.

Student Loans
Student loans are very difficult to get discharged under a Chapter 7 bankruptcy filing. A Seattle bankruptcy lawyer and specialist will be able to provide more detailed information, but to have a student loan discharged it usually takes both a good faith history of repayment, along with a long term reason why repayment will be impossible. These are very difficult conditions to satisfy. Chapter 13 is an option, as long as income levels allow for the possibility of a repayment plan, which usually tries to get the debtor back on track in 3-5 years.

Co-Signed Loans
For many college students, parents or other support elements happily offer to help financially by co-signing when credit is not available due to lack of history. Debts accumulated this way cannot be discharged by filing Chapter 7 since these are actually labeled as debts of the person who co-signed. This is an important distinction.

Court Fines and Tickets
Fines and tickets for college students can often be chalked up to youthful indiscretions, but are also not available for discharge under a Chapter 7 filing. These are not actually considered debts in Washington State, and are instead listed as punishment. This is also the case for fines that stem from incidents involving bodily injury due to the influence of drugs or alcohol.

Credit Cards
Credit card debt can be discharged by bankruptcy and is a major factor for most people filing Chapter 7 or Chapter 13. Unforeseen circumstances, such as a drop in income or miscalculation of assumed future income, can be disastrous for the financial future of recent graduates. Bankruptcy should be a last resort, and never entered into lightly due to its long-term effects. However, once all other possibilities are exhausted, it can be the financial reset that makes all the difference.

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Justin Mishkin
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