In college - should I declare bankruptcy?

Question

I currently have a lot of debts to my name that were run up by my mom a few years ago in my name.

I also have some credit card debt that I defaulted on. I'm being sued for one account with the option of settling for $900.00. There is also another account I will need to start paying off to keep from being sued.

I'm a student and money is VERY tight even with the job I work and financial aid refund supplements.

If I pay this $900 now and can't afford the rest of the payments later and get sued, I may have to declare bankruptcy, especially if more collectors come at me with my mom's accounts that were in my name (her name isn't attached to any of them).

Should I go ahead and try to pay my debts off or should I just go ahead and declare bankruptcy?

Answer 1

Oof!  Tough spot to be in!  My first suggestion would be to cut off any cards in your name that your mother uses.  Sorry, but she's an adult and should be able to take care of herself; she has no right to run up your debt.  Besides, you're an adult too and cutting some apron strings is appropriate.

Bankruptcy is an option, although I would hold off on it.  $900 is a lot, but it's not ruinous; you could probably manage it with some deep sacrifices and some time.  If you explain what's going on to the other people you owe, lots of times they will strike a deal with you.  They'd rather know ahead of time that you are going to be late with a payment instead of you just not paying.  A bankruptcy will stay on your credit report for seven years, and when you are out of college and trying to establish your career it might come back to haunt you.  I'd hate to see that happen over $900.

Answer 2

I'd say avoid bankruptcy if you can. If you get sued there will be re-payment options, typically based on your income level. Bankruptcy rally screws with you for years, avoid it if you can.

Answer 3

Boy, that is a difficult situation to be in!  If you declare bankruptcy, you will have a major strike against your credit which will affect you for at least 7 years.  If you can avoid it at all, please do.

On the other hand, it seems to me that you have said some things which would give me pause.  I don't know how old you are, but it sounds like the debts your mother ran up against you might constitute fraud, and you could be absolved of those.  Also, it is a shame you waited until you were sued for the credit card debt, but the amount seems very small, and it is probably not even possible for you to go into bankruptcy (which would cost you much more than that in attorney fees) for that amount.  

You should definitely talk to a credit counselor to see what else could be done before considering bankruptcy.