When you sent your kid off to college, you trusted that they were well prepared to handle their finances. After all, you spent years teaching them how to save and spend wisely. Now, they have come to you with complete fear since creditors have started calling, and they no longer have enough money to live comfortably. Unfortunately, many young adults wrack up serious debt in their 20s that can impact their future. As you help your kid set things straight, use these strategies to decide if filing for bankruptcy is the best option.
Assess Their Debt to Assets Ratio
The first thing you need to do is sit down with your kid and take a serious look at their overall financial picture. Have them create a list of all of their current debts. It is quite common for a young adult to not have any idea how much they actually owe. Once they have added up their debts, do another calculation of their assets. Remember to calculate any money they have in their accounts along with other property, such as their car. Once you have both figures, check to see if their debt is higher than their assets. If it is, then bankruptcy might be the best option.
Know Their Options
Filing for bankruptcy should always be considered a long-term solution because the effects can last for many years. Yet, choosing the right way to file can minimize the impact upon your child's future. There are two different ways to file for bankruptcy. With a Chapter 7 bankruptcy, a person's assets are liquidated to help pay off debts. Alternatively, your kid could file a Chapter 13 bankruptcy that allows them to keep their property while they pay off debt. This is beneficial if they already own a house or small business that can help them overcome their financial difficulties.
Consult With a Professional
While you may have handled your finances well for many years, it is important to remember that every financial situation is different. Since the way your kid handles their debt affects everything about their future, it is always best to consult with a bankruptcy attorney once it seems like this is the best option. This way, your kid's bankruptcy filing will be handled in the best way possible to fit their future goals.
Helping your kid dig their way out of a financial hole may not be your favorite way to spend the afternoon. Yet, your kid depends upon you to show them how to become financially independent. By focusing on eliminating debt the right way, your kid will be in a better position for meeting their financial goals.
Hello and welcome, I'm Winfred Paulo. I have a passion for civil court cases of all kinds. Some time back, I ended up in the thick of a civil case after a lengthy dispute with my neighbor. The dispute went on for years and ended badly with an incident that landed us both in court. We had to prove our side of the case in an effort to obtain a positive outcome and recoup our losses. Unfortunately, I lost the case due to a lack of evidence. Since then, I've maintain a strong interest in civil cases and their proceedings. I will share information about civil cases on this site to help others understand these proceedings better. I may talk about legal terms, and expected outcomes for each case type. I hope you visit often to learn more. Thanks for stopping by my website.