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Filing Bankruptcy In Rhode Island
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Debtors in Rhode Island seeking debt relief file straight bankruptcy, when a financial fresh start is needed. Debtors desiring to retain assets and pay off creditors file chapter 13. The type of bankruptcy depends on individual circumstances and financial goals.
Options for Personal Bankruptcy in Rhode Island
All states follow U.S. Bankruptcy Code Title 11. Therefore, residents of Rhode Island can file straight bankruptcy under chapter 7 and restructuring bankruptcy under chapter 13.
Chapter 7 Bankruptcy
To avoid abuse of the law, debtors must pass a means test to verify the need for bankruptcy relief. Then, the court trustee sells all applicable assets to distribute the proceeds among the creditors. However, in most cases, the debtor will not have any qualifying assets. Then, the majority of remaining balances are forgiven, so the debtor has a fresh start. However, some debts cannot be expunged by bankruptcy. For example, student loans and child support must be paid. To make a financial determination, the statistical average of single wage earners in Rhode Island is $46,466, the two-person household is $59,314, and a family of three is $72,809.
Chapter 13 Bankruptcy
For the individuals who want to pay their bills and retain their assets, filing chapter 13 makes that possible. The court negotiates with creditors regarding the minimum amount acceptable to resolve debt. Oftentimes, late fees are erased and interest charges are reduced, making the payments more affordable. The debts are combined and calculated to be paid within 3-5 years. Then, the debtor is instructed to pay that amount to the trustee on a monthly basis, until all debts are paid. As long as other payments are kept current, assets are retained. However, the debtor is limited to no more than $1,010,650 in secured debt and $336,900 in unsecured debt.
Filing Bankruptcy during Foreclosure
Filing bankruptcy after foreclosure proceedings are initiated generally only delays the resale of property. Even though creditors must cease all attempts to receive payment, until after the bankruptcy is determined, lien holders can petition the court to release the property. If granted, the foreclosure is usually completed. Therefore, consulting a bankruptcy lawyer, before notice is given, may reveal some options for ultimately retaining the property.
Rhode Island Bankruptcy Exemptions
Rhode Island has a specific list of asset exemptions that the debtor can claim, when filing for bankruptcy. The following chart includes only a few of those assets:
Type of Asset(s) |
Details on Applicable Exemption(s) |
|
Homestead |
none |
|
Insurance |
Fraternal and society benefits, accident and illness proceeds, life insurance proceeds-if prohibited from paying beneficiary debts, temporary disability |
|
Misc. |
Minor child wages, business partnership assets |
|
Pensions |
ERISA, IRAs, firefighters, police, public and state employees |
|
Personal Property |
Household items up to $1000, books and Bible up to $300, dead body and burial plot, clothing, debt of promissory note or exchange, $50 of cooperative association holdings |
|
Public Benefits |
Unemployment and workmen’s comp, death and disability, AFDC, blind, elderly, and disabled aid, veterans and state disability |
|
Wages |
Unpaid wages of $50, military pay, seaman pay, earned but unpaid wages of welfare recipient, wages from charitable organization to the poor, wages of the spouse |
Rhode Island Bankruptcy Court Filing Options
Need Bankruptcy Advice?
Use a Bankruptcy Lawyer
Hiring a bankruptcy lawyer is highly recommended. The stress of the proceedings is difficult at best. Knowing all of the nuances of Rhode Island’s bankruptcy laws is virtually impossible. A legal expert makes sure the debtor claims all applicable exemptions, files all of the necessary paperwork, answers the many legal questions, and provides needed counsel. The moral support alone makes court a lot easier.
Use a Filing Service
A filing service is only responsible for filling out paperwork and filing it with the court. The service does not always adhere to all of the laws. They do not provide counsel or answer questions in court. In the event of an error, the case may be thrown out of court and the debtor charged with fraud.
File “Pro Se”
Debtors that cannot afford legal counsel may file pro se and represent themselves in court. However, it is better to borrow the money and have a bankruptcy lawyer. Without professional assistance, assets exemptions are missed, the questions and proceedings of the court are confusing, and the debtor often suffers financial and legal consequences for not fully knowing the bankruptcy law.
Courts and Rhode Island Bankruptcy Trustee Information
Rhode Island District Court Main Office
Federal Bldg and
United States Courthouse
One Exchange Terrace
Providence, RI 02903-1270
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