Many people today have found themselves voluntarily filing a bankruptcy petition. Others however have been taken to court by their creditors due to their inability to pay their debts. This is especially so with the hard economic situation being faced all over the world. The bankruptcy law has evolved over the years and it no longer favors those filing petitions. The new law has made great changes that affect those mainly petitioning under chapters 7 and 13.
Before the new bankruptcy law, anybody could petition under chapter 7. However, it is no longer the same and it now restricts those with higher incomes. They are now required to first pay off some of their debts under chapter 13. In the past, debtors were free to choose between chapters 7 and 13 with most of the debtors choosing liquidation (chapter 7) over repayment (chapter 13).
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Chapter 7 also makes it harder for the debtors to get lawyers who can defend them. Lawyers will now be harder to get and also expensive. This is because, the new laws adds more requirements for lawyers who represents the debtors, making the fees of such lawyers to shoot up. Lawyers will have to spend more time calculating the accuracy of the debtor's means test as is required by the new bankruptcy law. This makes it hard and expensive to hire attorneys.
The new policy also requires the debtors to get counseling before they can file a petition. In these sessions, they are taught how to manage their finances and also how to budget their finances. These sessions are quite important in the financial recovery stage of the debtor. It is at this stage that the debtor will make informed decisions on whether they want to liquidate or repay their debts.
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