Students about to go off to university are being warned not to bank on bankruptcy as a way out of debt.
School leavers about to go off to university appear to have mugged up on the bankruptcy laws before they've even arrived on campus. I'm not sure if I sympathise with them or whether I find it rather cheeky!
According to the latest survey of soon-to-be students, the credit reference agency, Equifax, found that 11% of respondents are considering taking advantage of the relaxed bankruptcy laws if they get into too much debt while at university.
Perhaps they haven't thought it through though. They may think that bankruptcy is potentially an easy way out but not only will their credit rating be shot for at least six years but bankruptcy could stop them from working in various professions including finance and law.
So if you're just about to go to university and have aspirations for their future profession, it's vital to understand the importance of managing your finances properly.
It's highly likely you're going to have to borrow money while you're at university and since this is where you could come a cropper financially, try the following tips:
- Make sure you're registered on the electoral roll as lenders always use this as confirmation of your identity and proof of the address details you supply when you apply for credit.
- If you get turned down for credit, ask the lender why and get hold of a copy of your credit report to see what information lenders are seeing about you.
- Learn to budget properly with monthly out goings and repayments of credit agreements.
- Use any extra money to pay off the debt with the highest interest.
- Make sure you understand why it's important to always make at least the minimum payments. Missed or late payments will remain on your credit file for six years and will have an impact on future financial decisions.
And finally, if you do get into financial difficulties, be prepared to face up to them. Banks can be very understanding with students who are genuinely trying to face up to their financial problems so persuade them to speak to their creditors about the possibility of making alternative payment arrangements.