The struggling economy, unemployment and unexpected life changes have been the cause of financial challenges for many Arizona residents over the past few years. Meanwhile, many college students have struggled with credit card debt that has caused some of them to file for personal bankruptcy, particularly as they have dealt with tuition and diminished job prospects.
Many college students have fallen victim to the allure of multiple credit cards during their four years in school. In fact, 50 percent of students reportedly possess four or more credit cards. Easy access to credit has left many of them struggling with unpaid bills in a weak job market. Add unemployment to the unexpected life changes experienced by some college graduates, and the recipe for financial challenges is complete.
Chapter 7 bankruptcy and Chapter 13 bankruptcy are options available to the college student or graduate looking for ways to eliminate debt or achieve manageable payments. A Chapter 7 bankruptcy allows a person to eliminate debt, but it also requires that the individual’s non-exempt assets be sold and the proceeds used to repay creditors.
For those individuals who do not qualify for Chapter 7 bankruptcy, Chapter 13 bankruptcy can provide manageable payments through a court-approved debt repayment plan. Both types of bankruptcies will at least temporarily delay foreclosure and repossession through an automatic stay issued by the bankruptcy court when the petition is filed.
Unlike a Chapter 7 bankruptcy, a Chapter 13 bankruptcy might allow an eligible consumer to retain assets while providing debt relief. Eligibility guidelines differ for each type of bankruptcy proceedings, and a bankruptcy might not be right for every person. A bankruptcy attorney can assist a consumer who is trying to achieve debt relief by reviewing the bankruptcy options and eligibility guidelines to help him or her decide if it is an appropriate and viable solution.
Source: Huffington Post, “Bankrupt at 23: College grad’s financial ruin and rebound,” Feb. 11, 2013