Chapter 7 Bankruptcy Rhode Island: 3 Things You Need to Know

If you are considering filing for bankruptcy in Rhode Island, specifically Chapter 7 bankruptcy, here are a few key things you could consider beforehand.
Information in this article does not constitute legal advice, it is for informational purposes only, and may not constitute the most up-to-date information. Readers should contact their attorney for advice on any particular legal matter.
  1. First, find out if you qualify for Chapter 7 bankruptcy and how much it will cost you to file in your area in Rhode Island.
  2. Second, remember that Chapter 7 bankruptcy isn't your only option. It's worth exploring those alternatives and weighing the pros and cons before deciding.
  3. Lastly, if you're set on Chapter 7 bankruptcy in Rhode Island, make yourself aware of the exemptions and details to know if anything could be at risk.

If you're more of a visual person, you can use the Rhode Island Chapter 7 Calculator below to estimate whether you qualify and how much it might cost you.

1) How Chapter 7 Bankruptcy Works in Rhode Island

A couple of typical questions we hear when chatting with folks who are looking into Chapter 7 are;

  1. How quickly can my debt get handled?
  2. How much will it cost to handle my debt?

How Fast Do You Get Relief in A Chapter 7 Bankruptcy in Rhode Island

You can file and discharge your bankruptcy in Rhode Island in just a few months. It usually takes around that amount of time to wrap up a no-asset Chapter 7 case. You might be wondering what "no-asset" means. It is when you don't own a house or any other assets that exceed the Rhode Island bankruptcy exemptions.

How Much Does It Cost To File Chapter 7 Bankruptcy in Rhode Island?

Filing for Chapter 7 bankruptcy nationwide usually falls somewhere between $500 and $3000. The cost can vary depending on where you're filing. This is why chatting with a local attorney is critical to get your most accurate filing costs before moving forward. There are situations where you might be able to reduce the cost of filing for bankruptcy. You can check out the Rhode Island filing fee waiver.

So, How Do I Qualify For Chapter 7 Bankruptcy in Rhode Island?

Chapter 7 bankruptcies are for those struggling to pay off their debts. To see if you could qualify for Chapter 7, you have to pass what is called the means test.

If you pass the test, you may be able to wipe out most of your unsecured debts through Chapter 7. Now, what are unsecured debts, you ask? They're debts with no collateral attached to them, such as medical bills, personal loans, some old income tax debt, old utility bills, credit card debts, and most personal judgments.

What about secured debts in Chapter 7?

If you want to get rid of secured debts such as car loans and mortgages, Chapter 7 may be able to help with those, too.  But to do so – you may be expected to give up the asset to the creditor. With the amount that is owed after turning the asset in, this may be able to be discharged at that point as it could be considered unsecured debt.

IMPORTANT: Chapter 7 Qualification via Rhode Island Means Test

The Bankruptcy Means Test is a crucial component when it comes to filing. It's a test that helps determine your average monthly and yearly income. This test then compares your income to other households in Rhode Island. If your income is lower than the median income in Rhode Island, you might be eligible for a bankruptcy discharge under Chapter 7. To see if you qualify for Chapter 7 bankruptcy, try the Rhode Island Chapter 7 Bankruptcy Means Test Calculator. It's a handy tool that estimates your eligibility for Chapter 7 bankruptcy in Rhode Island.

Check it out below!

My Income Exceeded The Chapter 7 Means Test Allowable in Rhode Island

If you're making more than the average person in your state, you might have to dig deeper into the means test or explore other options. It's not a straightforward pass-or-fail kind of deal. There's still a chance to pass the second part and qualify.

Chapter 7 Bankruptcy Rhode Island Income Limits

Based on data from the IRS and Census Bureau, you can check to see Rhode Island's updated income limits. These limits generally update every 6 months or so. If you're filing for bankruptcy in Rhode Island on or after November 1, 2023, you'll want to pay attention to these numbers.

# of PeopleAnnual Income
1$69,648
2$89,735
3$115,152
4$133,440
5$143,340
6$153,240
7$163,140
8$173,040
9$182,940

You can add $9,900 per extra person.

Will I lose my belongings if I file Chapter 7 bankruptcy? Understand Rhode Island bankruptcy Exemptions

Bankruptcy exemptions are available to protect assets within a specific value.  However, it's important to note that in Chapter 13 cases, if there's non-exempt equity in your property, it can affect the payment plan for your bankruptcy.

For most people, their home is their most valuable asset, and they want to shield it from bankruptcy proceedings. In Rhode Island, a specific exemption called the Rhode Island bankruptcy homestead exemption helps with this. The homestead exemption varies based on age and marital status in most states. For Rhode Island, regardless of age and marital status, it is estimated that you can protect up to $500,000 of equity in your home.

Chapter 7 Bankruptcy Rhode Island Pros and Cons

Pros

  • Your debt could be discharged in just a matter of a few months.
  • There is potential to keep your home and belongings.
  • You could put a stop to debt collection lawsuits.
  • You can avoid deficiency.

Cons

  • You have to meet the qualification requirements.
  • You could lose your home, vehicles, or other belongings if your assets exceed the exemption limit.
  • Filing can hurt your credit report for up to 10 years. This means that obtaining credit or loans in the future may be challenging.
  • It can also negatively impact your credit score.
  • Certain types of debts are non-dischargeable in Chapter 7 bankruptcy. This means you may still be responsible for paying off certain debts even after going through bankruptcy.
  • Lastly, preventing foreclosure can be difficult when filing for Chapter 7 bankruptcy. While it may provide temporary relief, it doesn't guarantee a permanent solution to your foreclosure problems.

2) Alternatives to Chapter 7 Bankruptcy in Rhode Island

a) Chapter 13 Bankruptcy in Rhode Island

Chapter 13 bankruptcy lets you restructure your debts into a monthly plan based on what you can afford. It can stop foreclosures, repossessions, and wage garnishments in Rhode Island.

Ch. 13 offers a chance to catch up on your mortgage and car payments over three or five years. Additionally, for debts like child support and alimony, Chapter 13 might help you reduce those unpaid amounts. But here's the catch: you must keep up with your regular support payments. If you meet specific requirements, you might be able to lower your car loan payments and even wipe out second mortgages.

b) Debt Relief/Debt Settlement

If you're considering debt settlement, there are a few things you should keep in mind. Like bankruptcy, it can have a medium to high impact on your credit. This option is where you allow your accounts to fall behind at least a few months to use as leverage with the creditors.

The goal is to renegotiate the debt to 50% of what you currently owe. If you are working with a settlement company, ensure you understand the fees they will charge and the duration and other details of the plan. There is also a risk of your creditors suing when going behind. It is essential to understand all the pros and cons that go into a debt settlement plan!

c) Rhode Island Debt Management

The difference between settlement and management is what is being negotiated. Debt settlement companies work to lower the actual amount you owe, while debt management companies focus on getting you lower interest rates.

Both programs usually last around 3 to 5 years. Debt management can be a bit pricier compared to debt settlement. Also, not all creditors are willing to work with debt management companies. They mainly can assist with credit card debt.

You could see a drop from your current 22-30% interest to 10% or lower. Although debt management is more of a proactive plan where the goal is to stay current on the accounts, you may still have a low to medium impact on your credit score in this plan.

d) Rhode Island Debt Payoff Planning

Savvy debt payoff planner is an app that can help you prioritize your debts. The Savvy method essentially combines both the avalanche and snowball method. The goal is to use your disposable income to pay off more than just the minimums. A debt payoff plan can help prioritize which accounts to pay off first, resulting in a quicker payoff.

3) Specific Rhode Island Chapter 7 Bankruptcy Information:

Rhode Island Chapter 7 Bankruptcy Credit Counseling and Debtor Education Courses

Before filing for bankruptcy, you must complete a credit counseling course. This course will help you better understand your financial situation and explore bankruptcy alternatives. It's like a crash course in money management!

Once you've filed your bankruptcy case, it's time for the next step: the debtor education course. This course is designed to give you the tools and knowledge to make smarter financial decisions in the future.

Rhode Island Chapter 7 Bankruptcy Court Locations

Next, let's talk about these 341 meetings of creditors.

Due to the pandemic, many meetings have been happening over the phone or through Zoom. Here are the court locations for filing bankruptcy in Rhode Island, based on the bankruptcy district.

District of Rhode Island

The Federal Building and Courthouse is in Providence, Rhode Island, with the zip code 02903.

Chapter 7 Bankruptcy Trustees Rhode Island

Here are the bankruptcy trustees in Rhode Island, sorted by bankruptcy district. Check out the table below for their names and phone numbers:

NamePhone
Joseph M. DiOrio(401) 632-0911
Stacy B. Ferrara(401) 828-5800
Lisa A. Geremia(401) 885-1444
Charles A. Pisaturo, Jr.(401) 274-3800

Conclusion

Now that you've got some information on Chapter 7 bankruptcy in Rhode Island, you might be wondering if you qualify. Well, we've got you covered with our Chapter 7 bankruptcy means test calculator. Try it out below to estimate your qualifications and cost:

NamePhone
Joseph M. DiOrio(401) 632-0911
Stacy B. Ferrara(401) 828-5800
Lisa A. Geremia(401) 885-1444
Charles A. Pisaturo, Jr.(401) 274-3800

To understand the ins and outs of filing Chapter 7 bankruptcy, look at our comprehensive Chapter 7 bankruptcy process guide.

Now, most folks choose to work with a bankruptcy attorney when filing for Chapter 7 or Chapter 13. But did you know there's also the option to go it alone? Yep, you can file for bankruptcy without an attorney. If you're curious about how it all works, head over to this resource on filing bankruptcy without an attorney.

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