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Filing for Bankruptcy in Your 20s: What You Need to Know

Posted by in Bankruptcy
23
Oct 2020

There was a time when filing for bankruptcy in Toronto seemed like the end of any future financial aspirations. Now, bankruptcy is often an answer to a question of insolvency and opens the doors to a new life filled with new possibilities.

 Filing for bankruptcy in your 20s: What you need to know

As an insolvency and bankruptcy expert in Toronto, Kevin Thatcher & Associates, Ltd., Licensed Insolvency Trustee, works with people of all ages across Ontario. Recently, we have seen an influx of younger clients filing for bankruptcy. To help younger generations navigate the bankruptcy journey, we have created this guide to bankruptcy in your 20’s. Here are the facts.

Bankruptcy is a Big Step that Should be Discussed

Debt is a fact of life for all Canadians. After a certain age, we begin to accumulate debt in many ways. From cell phone plans and credit cards to student lines of credit and car loans, the debt we acquire stays with us everywhere we go until it is paid off.

When you are in a relationship, especially a serious relationship, it is important to try to share information about your partner’s debt and inquire about theirs. Filing for bankruptcy will impact your spouse if you are married, and therefore, it should be a joint decision based on the income you both receive and your combined financial standing.

Bankruptcy is not for everyone and may be avoidable if one spouse can support the other while you consolidate debt, pay down debt, or make settlements with lenders.

Credit Cards Can be Problematic

One of the most common areas of financial concern for young adults is credit cards. Credit cards come with a variety of limits, interest rates, special offers, and annual fees. Depending on your card, you could wind up paying a lot in interest, particularly if you frequently use the card without paying the funds back immediately.

When one credit card begins to build up, the answer is never to acquire a second card. By accumulating credit cards when you cannot meet the demands of a single card, you put yourself in a position where debt is only building faster. If you cannot pay for the credit card you have, it is best to continue making payments on time and speak to your lender about a payment plan until you get things back on track.

In many cases, situations like bankruptcy can be avoided simply by trying to work with your creditor. Rather than ignoring collection calls, be the one to call and ask for options that work for your current financial standing. Your credit card company may not always be able to accommodate you, but most creditors want their money back and are willing to work together in some way to ensure they receive repayment.

Bankruptcy is Not a Get-Out-of-Jail-Free Card

There are a lot of negative connotations associated with bankruptcy, and while it is not the end of the world, it is also not a “get-out-of-jail-free card.” Bankruptcy is a serious process and should not be taken on lightly.

Once you apply for bankruptcy, should you be approved, it will follow you on your credit report for the next 6-7 years. This can prevent you from receiving loans, credit cards, a mortgage, even a student line of credit to finish a degree.

Bankruptcy is a viable method of rebalancing your financial life if it is the right step for you. As an insolvency trustee, we always encourage and assist our customers — no matter their age — in considering all the options available and be sure that bankruptcy is right for them.

You are Not Alone

If bankruptcy is the right move for you in your 20’s, it helps to know you are not alone. Many young men and women are not overly familiar with the world of finance. There are many reasons you can find yourself needing to claim bankruptcy, and we never cast judgement.

As a young Canadian, you must not let the financial burden take over and ruin your life. Rather than looking at bankruptcy as a stain on your life, think of it as one small stepping stone on a very long path. One day you will be finished with the bankruptcy portion of your life and look back happy to be starting fresh.

Do not be afraid to lean on friends, family, and a Licensed Insolvency Trustee for help as you proceed with bankruptcy.

Bankruptcy is Not Forever

It is important to note that while the bankruptcy process is lengthy, it is not forever. We’ve seen bankrupt Torontonians get back on their feet in as little as 9-months, and the mark on your credit score will disappear after 6-7 years. This means that while the road to financial redemption is long, there is always a light at the end of the tunnel.

Working with a Professional Bankruptcy Trustee Helps

Finally, young adults filing for bankruptcy should always consider working with a professional trustee. Bankruptcy in Toronto can be confusing, costly, and does require you to go to court. Having someone on your side who understands the system’s intricacies — and has successfully assisted clients — will relieve some of the stress you feel as a young person claiming bankruptcy.

At Kevin Thatcher & Associates, We work closely with customers from start to finish ensuring you have the tools, information, and support needed to manage your bankruptcy with minimal anxiety. We work with clients of all ages and specialize in Bankruptcy and Consumer Proposals in Toronto, Brampton, Scarborough, Hamilton, Kitchener, Cambridge, Guelph.

For more information about filing for bankruptcy in your 20s, call Kevin Thatcher & Associates at 1-866-719-8547 or contact us here.

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