Rhode Island Bankruptcy Laws: What are the Laws regarding Bankruptcies in the State of Rhode Island?
When your debts are out of control, creditors tend to come knocking at your door, so that they can collect what you owe. However, the stress of handling all the bills while ensuring you have enough finances to survive will take a severe toll on your quality of life.
During these situations, the best option is to file for bankruptcy, as it will allow you to regain control over your debts. However, due to the varying nature of laws present around it, you find the whole process overwhelming. At the same time, you don’t know what to expect, if you choose to file for bankruptcy. Today, you will get to learn about the laws regarding bankruptcies in the state of Rhode Island:
Different types of bankruptcies in Rhode Island
Chapter 7 in Rhode Island
If you don’t have a large number of assets under your name, filing for Chapter 7 is an excellent idea. In this case, all your debts get wiped out, allowing you to start fresh once again. However, a trustee will place all the non-exempt property on sale and distribute the proceeds of the sale to your creditors.
Chapter 7 has the power to eliminate unsecured debt, such as medical bills and credit cards. After three to six months, the court will discharge your bankruptcy. The advantage of Chapter 7 is that it gives you the opportunity to save the money you would have to spend repaying your debt to creditors. However, this type of bankruptcy won’t eliminate credit such as student loan, income tax debts, alimony, child support, and government fines.
Chapter 13 in Rhode Island
If you have enough income to pay off your debt, after subtracting your living expenses, Chapter 13 is an excellent way to go. Under this option, the amount you owe gets consolidated, and you have to pay it back to the creditors within three to five years.
You need to come up with a repayment plan, whose amount varies according to your disposable income. The advantage is that you get to keep your non-exempt property. However, you have to pay an amount equal to the value of the non-exempt property. Also, you have the option of categorizing your creditors, which allows you to pay different amounts to them. It is beneficial if you have a co-debtor involved in your credit.
Federal exemptions in Rhode Island
In Rhode Island, you have the freedom of selecting between state and federal exemptions. Keep in mind that you cannot pick exemptions from both lists.
Joint bankruptcy in Rhode Island
When married, you and your spouse have the option of filing joint bankruptcy. As a result, you along with your partner can get up to double the exemption for several properties, as long as it is both your names.
How to file for bankruptcy in Rhode Island?
Before you file for bankruptcy, you need to complete the Means Test, which determines your eligibility. During this examination, the state will find out if your family income is lower than the median income of the state. The amount is after the deduction of standard living expenses, which can vary from county to county.
Also, you need to complete credit counseling and debtor education sessions with licensed agencies, before filing for bankruptcy. Once you finish these processes, you can download the form from U.S Bankruptcy Court page. Here, you need to enter information such as property transactions, expenses, assets, and income.
After you complete the paperwork, you also have to pay a fee for the process. For Chapter 7, the amount stands at $335 and $310 for Chapter 13 respectively. If you are unable to do so, you can make the payments in installments or ask for a waiver.