Mind Your Money by Yanely Espinal

Author:Yanely Espinal
Language: eng
Format: epub
Publisher: Yanely Espinal
Published: 2023-05-01T13:10:55+00:00

Chapter 7

Bankruptcy

Chapter 10

California state tax liens

10 years or less

Federal student loans in collections

Federal tax liens

Indefinitely

Source: Fair Credit Reporting Act, 15 U.S.C. § 1681 (1970), https://www.ftc.gov/system/files/ftc_gov/pdf/545A-FCRA-08-2022-508.pdf

The “Indefinitely” category is scary. That stuff might never get wiped from your credit report, so you really don’t want to make mistakes there. And surprise, surprise—federal student loans and federal tax liens are the culprits! If you’re in over your head with credit cards or personal loans, you can always file for bankruptcy. It’s not ideal because it takes seven to ten years to recover from a bankruptcy, but it’s a viable option.

However, bankruptcy does not wipe away outstanding student loan debt or federal taxes owed, except in extremely rare circumstances called “undue hardship.” It’s not likely a court would agree to eliminate student loan debt as a result of undue hardship because lenders generally recommend income-driven repayment plans or loan deferment. Millennials and Gen Z experienced the start of the student loan debt crisis in America, but all future college students need to learn how these loans affect their credit standing, regardless of what generation they’re in. We talk more in Chapter 5 about repaying student loans, but first, let’s go over something everyone must know: how to check your credit score.

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