Statistics indicate that many young people under the age of 35 years old, also referred to as millennials are filing for bankruptcy at an alarming rate. According to the Wall Street Journal, in 2016, the savings rates of millennials is as low as negative 2%. In comparison to previous generations, the saving rate among citizens continues to drastically decline.
Millennials Filing For Bankruptcy
Many young people have now considered filing for bankruptcy as an option for redemption from their financial woes. So, how do millennials get themselves at this point?
Young people today are facing massive debts and so many loans that they need to deal with all at once. Student loans, medical bills, car loans and credit card loans are some of the principal causes of young people getting into a state of financial desperation leading to petitioning for bankruptcy. As a result, many young people are moving back home to live with their parents because they are unable to take care of bills or even acquire house leases.
Forbes published shocking statistics of how young people in their prime earning age are drowning in debt. As a result, they are desperately looking for a way out from the long-term debts. Most Millennials opt to file for bankruptcy. What is most scary about these statistics is that a majority of young people are not saving money. Having no money set aside to cater for future unexpected expenses or long-term investments is not a wise thing to do.
2. Millennials Do Not Save
Living without financial savings leaves young people and their families very vulnerable. Car repairs, losing a job or having a medical emergency are things that one may not anticipate. Savings come in to help in such times. When most young people are faced with these challenges currently, they are forced to move back home to live with their parents because they have no other way out.
3. Life In The Fast Lane
Millenials are known to live life in the fast lane expecting instant results. Once they have cash in hand, they only consider the immediate short term gratification. For example, instead of saving up money to eventually buy a car, most young people will prefer to first get the money on credit and pay for the car later on.
A culture of instant gratification undermines the need to save money. It is crucial to address this issue and find a lasting solution.
However, we cannot be oblivious to the fact that filing for bankruptcy is sometimes the best option for some young people. There are provisions in the law that help individuals who are in debt to find a way to get back on their feet. Millennials need to understand all the options available to them before they file for bankruptcy.
Chapter 13 and Chapter 7 of the constitution provide young people ways in which they can file for bankruptcy and alleviate their debts. Each of these avenues requires different requirements from applicants. Chapter 7 requires applicants to take a test to determine the disposable income in their hands. Young people who have well-paying jobs are not approved for Chapter 7 bankruptcy.
Chapter 13 bankruptcy does not require liquidation of assets. This is a good option for millennials who want to spread out their debt payments. Filing for Chapter 13 bankruptcy allows young people to pay their debts and escape penalties like late debt payment fees.
In order to make an informed decision, millennials need to make an appointment with a bankruptcy attorney. A bankruptcy attorney will give a clear picture of the financial situation and show how ways to get out of debt. Maybe filing for bankruptcy may not be the best option for you.
Millenials need to consider all these factors before filing for bankruptcy. There is a need to educate young people on the importance of saving and the effects of long-term debts.