Rhode Island Bankruptcy Means Test
Everyone filing Chapter 7 bankruptcy in Rhode Island first has to pass the Rhode Island bankruptcy means test. This test is intended to make sure only folks who truly cannot afford to pay even a portion of their debts are given the wide-ranging relief granted in a Chapter 7 bankruptcy in Rhode Island. The first portion of the Rhode Island bankruptcy means test compares your income to the applicable income limits. If your household income is greater than the median household income in the Ocean State, you may nevertheless pass the Rhode Island means test for bankruptcy and file Chapter 7 bankruptcy in Rhode Island.
Data on Median income levels for Rhode Island
Rhode Island Median Income Standards for Means Test for Cases Filed On or After May 1,2021
Do I Qualify For Bankruptcy Bankruptcy Means Test Standards For Kent County
You may be surprised to learn that whether you can file for bankruptcy can come down to which state and county you live in.
Which type of bankruptcy you qualify for depends, in part, on whether your annual income is more or less than the Rhode Island median income. Before looking at numbers and formulas, however, you should be familiar with the two main types of personal bankruptcy:
Who Files For Bankruptcy
The typical bankruptcy filer is a person already in fragile economic circumstances, often with large amounts of credit card debt, who then suddenly gets hit by hard lucklike job loss, injury, divorce, or uninsured medical expensesleading to unmanageable payments and insurmountable penalties.
Bankruptcy is designed to help people like this, who need help making a clean breakto get a fresh start on life, rather than struggling under the crushing burden of unpayable debt.
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The First Step To Solid Financial Ground
Our first course of action is to determine whether you qualify for Chapter 7 or Chapter 13 debt reorganization. Once you hire us, we will prepare all the necessary documents and act as your representative at all meetings with creditors and hearings with the Bankruptcy Trustee. You don’t have to handle this on your own any more. Now you’ll have an advocate.
What Are Bankruptcy Exemptions
Every state has laws that designate certain types of property that are off-limits to unsecured creditorsthat is, creditors that don’t have a lien on your property. Credit card debt and medical bills are the two most common types of unsecured debt.
Unsecured creditors cannot force you to sell your exempt property to pay off your debt. Even if the creditor goes to court, wins a court judgment against you, and takes steps to attach a lien to your property, you are still entitled to your exemption amount before the creditor gets any proceeds form a sale.
If you sell your exempt property voluntarily, the creditor has a right to have its lien paid from the sale proceeds before you receive anything. As a practical matter, most of the property of people who file for Chapter 7 bankruptcy is exempt, so they don’t want to sell what they have. If all of your property is protected by exemption laws, you are said to be “judgment proof”meaning that creditors can’t collect anything from you, whether or not you file for bankruptcy.
One important thing to remember is that an exemption protects only the “equity” in your property. That’s the difference between the value of the property and what you owe to creditorslike your mortgage lenderwho have a secured interest in it.
To learn what property is exempt in your state, see the Exemptions section of this website.
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The List Of Creditors
You have to provide notice of your bankruptcy case to all of your creditors. If you dont give them notice they wont know about your case and the automatic stay that they are supposed to follow. In addition, you might be stuck with a debt after your case is closed if you fail to list it and give the creditor notice. If you forget to list a creditor you will need to pay an additional court fee to amend your creditors list and schedules. If your case is closed you will need to reopen your case in order to add in a creditor. There is no guarantee that the court will allow you to reopen your case but even if you are allowed to reopen your case you will have to pay another case filing fee.
To provide notice to your creditors you must list their names and addresses on a sheet and file it with the bankruptcy court. The creditors names and addresses on the list must match the information you provided in your bankruptcy Schedules D, E and F. If you have more than one address for a creditor, use all of the addresses. Some creditors have specific bankruptcy addresses for you to use. If not, you should use their correspondence or customer service mailing address and not the payment address. If they have an attorney or collection company you should provide their address as well.
How Trustees Can Increase The Size Of The Bankruptcy Estate
The whole point of bankruptcy is to make sure that everyone gets their rightful share of the “pie” when there’s not enough pie to go around. Or to put it an more legal way: to provide an orderly distribution of available assets to all creditors, based on the priority outlined in federal bankruptcy law.
The job of the trustee is to make that “pie” as large as legally possible.
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Rhode Island Bankruptcy Lawyer Cost
The average cost of a bankruptcy lawyer for a typical Chapter 7 bankruptcy in Rhode Island is $1,150. How much it would cost to hire a lawyer for your Rhode Island bankruptcy depends on your specific circumstances but Rhode Island bankruptcy lawyers typically offer free initial consultations and can provide you with a specific quote for your case at its conclusion.
Attorney cost estimate: $1,100 Ã¢â¬â $1,200
Rhode Island Bankruptcy Process How To File Bankruptcy In Rhode Island
2005 Bankruptcy Act Credit Counseling The 2005 Bankruptcy Act requires all individual debtors who file bankruptcy on or after October 17, 2005, to undergo credit counseling within six months before filing for bankruptcy relief and to complete a financial management instructional course after filing bankruptcy.
2005 Bankruptcy Act Means TestUnder the 2005 Bankruptcy Act your income and expenses will be analyzed to determine if you qualify to file a Chapter 7 or if you must file Chapter 13. To apply the means test, the courts will look at the your average income for the 6 months prior to filing and compare it to the median income for Rhode Island. If the income is below the median, then you may choose Chapter 7. If your income exceeds the median, the remaining parts of the means test will be applied to determine if you can file Chapter 7 or if you must file Chapter 13.
Gathering PaperworkTo begin the bankruptcy process you must itemize your current income sources major financial transactions for the last two years monthly living expenses debts and property . You should also collect your tax returns for the last two years, deeds to any real estate you own, your car titles, and the documents for any loans you may have.
The cost for filing a Chapter 7 bankruptcy is $306. This fee may not be waived but you may be able to pay it in installments. The fee of $281 for a Chapter 13 bankruptcy cannot be waived.
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Attend A Creditors Meeting
Several weeks after you file for bankruptcy, you will be required to attend a 341 hearing, which is also called a “creditors meeting.” The bankruptcy trustee assigned to your case will lead the meeting and may ask you questions about the information you’ve provided on your bankruptcy forms. Creditors may also show up at the hearing to ask you questions.
The bankruptcy trustee will tell you exactly what to bring to the meeting, but you should be prepared to bring the following:
- pay stubs
- tax returns for the past few years
- bank statements
- property ownership documents, like deeds and the pink slip for your car, and
- copies of mortgage documents.
The book How to File for Chapter 7 Bankruptcy provides detailed information about what to expect at a 341 hearing.
How To File For Chapter 7 Bankruptcy
If bankruptcy sounds like it may be the right solution for you, learn more about the process in How to File for Bankruptcy in Warwick, Rhode Island.
Or you may want to jump right into a more in-depth resource like Nolos book, How to File for Chapter 7 Bankruptcy, which walks you through the process step-by-step, including how to fill out and file your bankruptcy forms.
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Mandatory Debtor Education Debt Management Course
$0 to $75
As if you don’t have enough hoops to jump through, when you’ve completed all the other parts of your bankruptcy, you still don’t get that magic piece of paper called the “discharge” until you complete a course in debt management.
This is yet another requirement motivated by Congress’s frequently mistaken assumption that people who file for bankruptcy wouldn’t be broke if they weren’t so careless with their money. Chances are, you really are brokeand not because you’re irresponsibleso you should see if you qualify for free or reduced rates.
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Choosing The Right Bankruptcy Chapter For You In Rhode Island
Most people file either Chapter 7 or Chapter 13. If you don’t know the differences between the two, you’re not alone. The short explanation below and our handy Chapter 7 versus 13 chart will help clear things up.
Chapter 7 bankruptcy.Chapter 7 is often a bankruptcy filer’s first choice for several reasons. It’s quickit only takes a few months to complete. And it’s cheapyou don’t pay anything to creditors. It works well for those of us whose property consists of the essential items needed to live and work.
People with more assets could lose them, however, especially if they own unnecessary luxury items. For instance, you might have to give up your RV, baseball card collection, or timeshare in the Bahamaseven your house or vehicle if you have too much equity in it or you’re behind on the payments. Unlike Chapter 13, Chapter 7 doesn’t have a payment plan option for catching up on late mortgage or car payments. So you could lose your home or car if you’re behind when you file.
Caution for businesspeople. Be sure to learn about the ins and outs of small business bankruptcies. The principles discussed apply to consumers only.
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Filing For Personal Bankruptcy
Different types of bankruptcy are available for people in different circumstances. In Chapter 13 bankruptcy you get help restructuring debt so you can pay past creditors while still having enough money to pay your bills today. Chapter 7 bankruptcy cancels most types of debt and gives you a truly fresh start. When you meet with Attorney Simonian, he will explain the advantages and disadvantages of each type of bankruptcy, the fees and costs associated with the bankruptcy process, and advice on how to proceed.
Protect your home, your car, your future and your peace of mind by working with an experienced attorney. Call Rhode Island and Massachusetts Chapter 7 lawyer John Simonian at .
These economic times continue pushing many Rhode Islanders’ household budgets right to the edge unemployment, foreclosures, fuel prices. Many people including people who are retired are using bankruptcy to bring stability to their finances. Here is a recent article in USA Today. Here in RI, bankruptcy is even under consideration by the City of Providence. Due to circumstances often beyond our control, sometimes there becomes no other legal option – except to file bankruptcy. Fortunately, Rhode Island is a state founded on the belief in “Fresh Starts. Read What My Clients Have To Say:
phone: fax: 401-785-8313
The Documents You Will Have To File
You will have to file the following documents with the court in a Rhode Island Chapter 7 bankruptcy case:
- the voluntary bankruptcy petition
- a list of all of your creditors
- the bankruptcy schedules A-J
- statement of your financial affairs
- statement of intention
- copies of all pay stubs received by you within 60 days before filing
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Take Credit Counseling Course
You have to take two mandatory credit counseling courses to complete your Chapter 7 bankruptcy. The Chapter 7 trustee may request the certificate of completion in the meeting of creditors. The first course is a pre-bankruptcy course, and the second is the pre-discharge course.
If you are filing with an attorney, your attorney may have suggestions for both the credit counseling and debt education course. If not, you can see the list of approved credit counseling courses in Rhode Island.
Payment Of The Retainer And Filing Fee
We accept debit cards linked to an active bank account as well as cash and checks. You can also pay the retainer in installments. If you choose this option, be advised that will do an amount of work on the Petition commensurate with the fraction of the retainer which has been paid. We will not file the Petition until fully retained with few exceptions . You may also be gifted the retainer by a friend or relative who may pay by cash, check, or debit/credit card on your behalf.
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Figuring Out If Youre Eligible For Chapter 13
You may qualify for Chapter 13 bankruptcy if you have a steady income and your debts are worth less than the dollar amounts set by federal bankruptcy law. In 2019, the amounts are:
- $1,257,850 of secured debt.
These amounts are adjusted every few years and set out in 11 U.S. Code, Section 109.
In addition, to qualify for Chapter 13, you must have filed your state and federal income tax returns for the past four years.
Do I Qualify For Bankruptcy
To qualify for Chapter 7 bankruptcy, you must show that either:
- your income is below Rhode Islands median income for your family size, or
- your income and expenses, calculated together, leave you unable to pay your debts. This is determined under a complex formula called the bankruptcy means test.
If you don’t qualify for Chapter 7, you may still qualify to file under Chapter 13. To qualify for chapter 13, your debt must be under the limit set by the bankruptcy code and you must be current on your tax filings for the last four years.
Take Bankruptcy Course 2
After filing Chapter 7 in Rhode Island you have to take bankruptcy course 2 before your discharge can be entered. This course focuses on financial management and aims to educate debtors in bankruptcy on how to manage their finances responsibly going forward. No matter how well educated you may be on financial management, you have to complete this course as you are not eligible to receive your discharge otherwise. As with the first course, you have to take it from a provider approved to offer it to people filing bankruptcy in Rhode Island. It typically takes about 1 – 2 hours and can be done from the comfort of your own home. There is a small fee associated with the course, so make sure you shop around a bit so you can find an approved course provider that works best for you and your budget. When you are done, it’s important to let the court know about it. Often times the course provider will do so by filing the appropriate certificate with the court. Alternatively, you can complete and file this certification after you have completed the class. This will let the court know that you are ready to have the discharge entered in your Chapter 7 bankruptcy in Rhode Island.
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Chapter 7 Bankruptcy is the liquidation of your debts, while Chapter 13 Bankruptcy is for the repayment of your debts over a period of time. Most individuals file under Chapter 7 Bankruptcy, however if you are trying to save your home from foreclosure, you would likely file under Chapter 13.
Under Bankruptcy you are entitled to keep certain assets up to certain values these are called Exemptions / Protections. If you are filing for Bankruptcy protection in Rhode Island, you are given the choice of either using the State Bankruptcy Exemption laws or the Federal Bankruptcy Exemption laws to protect your assets from being taken, liquidated, and the funds disbursed to your creditors. We will assess your assets and advise as to which set of Bankruptcy Exemptions is best at protecting your assets.
There are some very big differences in the two sets of Exemption laws as to how much you can protect under each. The following is just a brief illustration:
HOUSE: If you are trying to protect your home the State Bankruptcy Exemption allows you to protect up to $500,000 in equity in your primary residence while the Federal Exemption only allows you to protect $25,150 in equity .
JEWELRY: can be protected under the State Excemptions up to $2,000 and under the Federal Exemptions up to $1,700 .
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