Considerations for young adults thinking about bankruptcy
June 27, 2025

June 27, 2025

Some individuals may associate bankruptcy with older adults, but there are instances in which younger people might need to file. People in their 20s may not realize exactly how this decision can impact them. It is imperative that everyone who is young and considering bankruptcy take the time to evaluate the potential effects.


The years of early adulthood are a time when people should be building up their finances. Making good decisions and handling your money wisely can set you on the right path. Unfortunately, some people might not utilize credit in the appropriate manner and the debts may pile up. This can lead to your having to file for bankruptcy.


Long-lasting effects

One of the most pressing impacts for a person who files early in life is that they might limit their employment prospects. Some employers do credit checks before making offers for employment. A bankruptcy filing remains on your credit report for seven to 10 years, so this can mean that potential employers won’t consider you a good candidate. As you can imagine, this may impact your income. People who want a job in academics, law, insurance and finance might be especially affected.

There is also a chance that the mark on your credit report will make it difficult for you to find suitable housing. Many landlords do credit checks now to ensure that their renters are likely going to pay their rent. The alternative to renting, owning a home, might also be out of reach since your credit has a major part in mortgage decisions.


Set your priorities

You need to get your priorities set correctly so that you can avoid making similar mistakes in the future. Learning how to manage your money and starting a savings account can help set your finances in the right direction. Part of being a responsible adult is becoming self-sufficient so that you are able to survive on your own.



If you are using credit as a young adult, remember that you have to pay back what you borrow. A good rule of thumb is to only charge what you are able to repay when you get paid. Filing for bankruptcy can make it more expensive to get credit. You will have to work on getting your credit score up and your options will be very limited. This can make it hard to get back into being able to make major purchases using credit.

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