In many parts of the world, people are filing petitions for bankruptcy every year.
Statistics record that millions of people all over the world opt for financial distress every year.
There are mainly two chapters under which financial crisis are filed.
Chapter 7 allows for the debtor to sell his property through a trustee to pay off his debts.
Chapter 13 requires the debtor to continue working to earn money that can allow him to pay off his debts.
It is important that 180 days before the debtor files a petition they undergo counseling.
This will be done by a non-profit budget and credit counseling in an agency approved by the court.
Bankruptcy counselors in these agencies will advice the debtor on what actions to take.
They will also advice the debtor on appropriate options available to them and their advantages and disadvantages.
The first session with the counselors normally lasts approximately ninety minutes.
The second and final one takes only two hours.
In Canada, these agents have joined up with credit guarantor who in a bid to dissuade debtors from filing a financial distress petition end up making booming business out of the whole situation.
It is important for debtors to know that these agents can also take the place of trustees.
They are instrumental in giving advice to the debtor on matters concerning debt repayment.
Bankruptcy counselors are also instrumental when the debtor has made a repayment plan.
This is because they act as the middle ground on which the payment is made.
When the debtor is making the payments, the credit advisers will take a certain percentage of the amount as their fee.