Is it always a bad idea to file bankruptcy at an early age?

It's only $17,000. If you can't pay off $17,000 then you can't afford to buy a house or a car anyway, as either of them costs more than that. This isn't an argument for any particular course of action, I'm just saying that either way, if you can't pay this off and need to file bankruptcy, you're not really sacrificing anything, as you couldn't buy a house or a car regardless, and if you *can* afford to buy a car,then you can afford to pay off $17,000 instead, and save your credit. Sure, there's a delay there, but it's less than seven years. I ruined my credit when I was young and although I never filed for bankruptcy, I couldn't have qualified to buy a house for seven years anyway because of all the negative stuff on my credit report that took seven years to expire. I now have very good credit. I bought a house when I was 30. What career path are you on? Do you realistically expect to be able to buy a house before 30 anyway? You can always buy a car for cash if you just need transportation. It may be old and basic, but you can get a working car for cheap.

Actually, it sounds like those may actually be student loans. If you're negotiating with schools, they almost certainly are. The fact that they're not federal or weren't used to pay tuition doesn't actually matter. So bankruptcy might not even be an option for you. Generally speaking though, several legal aid clinics with which I'm familiar have a $15k threshold before they'll even start talking to you about bankruptcy. Less than that isn't even worth their time, for two reasons. First, they don't generally have any problem coming up with adequate numbers of clients with far more than that. Second, much less than $15k and the balance of benefits isn't obviously a net positive. Sure, you're out of that debt, but your ability to borrow money for the next seven years is pretty much shot. You can do it, but it's expensive, and getting a mortgage will be pretty tough. You might just be better of paying it off somehow, and if you have any income beyond government benefits or the most modest of pensions, you can probably find a way of doing that. Besides with bills at $500 or less, they're not terribly likely to go after you. The filing fee and attorney costs would be more than they'd get out of you anyway. To get a clear picture about your options and their upsides, you need to sit down with a credit counselor and/or bankruptcy attorney. They'll talk you through the various possibilities here and be able to give you good advice about which option is best for you, in your situation.

Talk to a bankruptcy attorney. They'll talk to you for free, usually -- they know their potential clients are broke -- they'll only charge you if you decide to go ahead with it. If you can discharge those debts, I say go for it. Bankruptcy was the best decision I ever made. It was a huge burden from my shoulders.

I filed bankruptcy in 2003 at the age of 30. I had about $15,000 in student loans, which made a portion of my debt. A few things to consider. It's unclear whether the debt is dischargable, and I'm not an attorney so I won't speculate. Janey47 has it right - consult with a bankruptcy attorney. My initial consultation was $25. The total filing was about $1500 if I recall correctly. My loans split into two groups - I had federal Stafford loans which were not dischargable, and private loans which were dischargable and no longer my legal responsibility. (There was a lot of confusion between these; suffice it to say if you have dischargable and non-dischargable debt with the same creditor, get ready for some Bizarre Crap to happen). You're credit will take a hit. I got credit card offers within 3 months of the discharge - at 29.99% intereset. (You get offers because they know you can't file bankruptcy again for another 10 years). You know what though, you're young. My score was back up to average within about 3 years. 8 years after filing, we re-financed our mortgage and added me as a debtor without impact to the rates. Seriously, talk to an attorney. IF you're not comfortable with him or her, find another. If they agree that it seems like it will help your situation, take it. It's a legal and ethical option available to you. Don't worry about the social group - they don't need to know.

Wait -- this kind of sounds to me like these are unpaid tuition fees and not student loans at all? In which case the solution might well be to go to a credit union and try to get student loans and payment plans so that you can pay this amount over many years, as is the way of student loans. At the very least you need to visit your various schools' financial aid offices and get a very clear accounting of who is owed what.

Honestly, I don't think filing for bankruptcy is a very good idea. First, you aren't sure about what your debt is - a lot of it may be student debt and not dischargeable. Secondly, filing for bankruptcy may not actually get your transcripts released. The school can't send collections after you for the money you owe them, but they CAN refuse to give your transcripts to you/allow you to graduate until you pay the money, bankruptcy or not. What you need to do: - get a copy of your credit report, promissary notes, and all the other paperwork. Figure out how much you owe to who, why, and what kind of debt it is. - negotiate the collection fees. They would prefer to negotiate than get nothing, so feel free to threaten them with mentions of bankruptcy. Similarly, bills from most places are used to dealing with this kind of thing: you get a better deal if you talk to them (payment plans, etc, rather than fees.) - refinance/consolidate everything that isn't a student loan, especially to an option that allows deferment while a student. At some point in the future, if you're still struggling, after you've got the paperwork and tried negotiating, then is when you think about bankruptcy. Do the intermediate steps first!

Did any of the lawyers comment on the fact that bankruptcy may not get your transcripts released? Ashlyth, you should probably cite some authority for that proposition. Otherwise (as a general principle) I'm fairly confident it's incorrect, at least absent some further qualification. Generally speaking, if the debt is in fact dischargeable, which is the underlying question, then the school would have no grounds to refuse to release the transcripts once the debt is discharged.

Here are the things you need to figure out: 1 - How much money is owed to other people, for what reasons, and by whom? (It sounds like you might owe some money, your mom might owe some money, etc. Also, the $6,000 collection fee doesn't sound accurate.) 2 - What amount of that money are you responsible for? (Again, if your mom took out a loan in her name, you are not responsible for it.) 3 - What is your income situation? How much money do you have each month after your necessary expenses (food, rent, etc.)? 4 - Can you consolidate all your loans together for simplicity, and perhaps for a better rate? This makes managing your payment much, much easier. 5 - Based on what you would owe each month, can you make that payment with your disposable income? 6 - If not (and even if you are) are you eligible for an income-based reduced monthly payment? It might not feel like it, but you don't have very much debt. The average student loan debt amount is about $26,000 in the US. This is likely a very manageable situation for you, but you need to get all your information sorted out so you know what you're dealing with. That lack of clarity is going to cause more problems than the debt itself.

I had a consultation with a bankruptcy lawyer today; he said the school debt will discharge. But he also didn't know what a promissory note was, so hopefully he's right. I have a second consultation tomorrow because this guy costs $11000 (!). I've been trying to stay with more professional-seeming attorneys but at that cost I might end up going to horribly-designed-gimmicky-CALL NOW guy. I'll update in six months or so when the process is over; unless one of the attorneys tells me the school debt can't be discharged, I'm going to give it a shot.