Today’s economy has many people facing decisions on how to cope with overwhelming debt.  Filing bankruptcy should be used as a last resort as the ramifications can be lingering and have far reaching impact that lasts for many years.

Bankruptcy will discharge your debt, however, it will also ruin your credit and can have a negative impact on purchasing a home or automobile, getting insurance and possibly even finding a job.  Even renting a home can be a difficult task as homeowners rely on credit reports to make a decision on whether to rent the property to prospective renters.

Bankruptcy should be a last resort.  Consumers need to budget, get competent credit counseling and consider every effort to get out of debt without filing bankruptcy.  If, after having tried to pay you’re your debt and finding no other alternative, bankruptcy seems to be your only way out, seek the guidance and expertise of a qualified bankruptcy attorney.  After reviewing your circumstances, your attorney will advise you as to which type of bankruptcy would be best.

There are two types of personal bankruptcy available to consumers.  Both types must be filed in Federal Bankruptcy court.   Before filing bankruptcy, your lawyer will advise you that you must seek credit counseling from a government approved organization within six months prior to filing either type of bankruptcy.   You will also have to confirm that your income doesn’t exceed a specific amount determined by the state you live in at the time of filing.

The two types of personal bankruptcy available to consumers are Chapter 7 and Chapter 13.  A brief description follows for each type of bankruptcy.

Chapter 7 bankruptcy allows you to discharge your debt, which in effect erases most of your debt.  Certain debts, such as back child support, spousal support and income taxes are not allowed to be discharged under Chapter 7.   If you have any property that can be sold, a trustee will collect the non-exempt property, sell it and distribute it to creditors.  There is no repayment plan associated with Chapter 7 bankruptcy filing.  Filing for Chapter 7 takes approximately 3 months to complete but stays on your credit report for 10 years.

Chapter 13 bankruptcy allows you to keep certain property, such as your home or car that may be otherwise forfeited during a Chapter 7 process.   The court will approve a repayment plan which will list the debts that must be repaid.  As in the Chapter 7 process, Chapter 13 will not allow child support, taxes, school loans, car loans and home mortgage payments to be discharged in bankruptcy.  Depending on the amount of debt, a Chapter 13 filing lasts from 3 to 5 years and will remain on your credit report for 7 years.

Vivix Credit Solutions would like to assist you with your financial situation before you are forced to make the bankruptcy decision.  Vivix Credit Solutions offers Credit Coaching and Credit Repair services that will help you to become debt free and improve your credit standing.  If you have any questions or would like further information, please visit our website at www.vivixcreditsolutions.com or email us at support@vivixcreditsolutions.com.  We look forward to hearing from you.