There are over a million people facing bankruptcy all over the world. There are many reasons that force people to be financially distressed. Some of these reasons could be out of the control of the debtor, though others are due to irresponsible spending habits. Medical bills could also escalate to the point where a person with no medical insurance may not be able to pay. Other reasons which make people to file a petition could be loss of a job, alimony and students loans which are all out of the control of an individual.
People who opt for personal insolvency today should be aware of the various modifications that are there in chapters 13 and 7. Unlike in the past, people no longer have the choice of which chapter to file under. In the past people filing a personal bankruptcy petition would opt for chapter 7 which was more popular. This is no longer applicable since the introduction of the means test, which is used to determine the chapter to use.
In the past before the new law was put in place, counseling was not a mandatory part of filing for a personal insolvency petition. However the rules have changed and an individual must go through counseling before and after the petition. Without the financial management certificate, the debtors petition may not be accepted.
In case the mean test proves that the debtor can indeed pay the debts, the only option would to file under chapter 13 which allows the debtor to pay pending debts. Since bankruptcy is a serious decision, the debtor should consult a lawyer before making that crucial decision.
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