Chapter 7 is designed to help protect you from being unduly harassed by creditors. By filing for Chapter 7 Bankruptcy, you can eliminate your legal obligation to pay certain over-burdensome debts such as credit cards, unsecured loans, medical expenses and in some cases business debt. What’s more, Chapter 7 Bankruptcy does not require any debt minimum for eligibility.
However, debt categories such as child support, criminal obligations, parking tickets, most taxes, car loans, mortgages and in most instances, student loans can not be discharged.
To see if all your property can be protected from confiscation by Chapter 7, you are required to disclose all your assets. You are permitted to retain basic household items, pensions, hobby equipment, retirement accounts, and most life insurance policies.
To be considered eligible for a Chapter 7, you first must pass the “means test” which calculates your gross monthly income based on an average of the past 6 months plus all other income from every member of your immediate household.
Note that in some cases, debtors who pass the means test may still not qualify for Chapter 7 protection because their income and monthly expenses may not permit it.
But even if you do not pass the means test, or are ineligible for Chapter 7 for other reasons, you may still be able to seek debt relief under Chapter 13 Bankruptcy law.
To most people, the term “bankruptcy” has a lot of negative connotations. But there are many instances in which people, through no fault of their own, find themselves in insurmountable debt. Chapter 7 Bankruptcy was designed to resolve these types of debt problems and protect individuals and families from overbearing financial strain and oppressive debt collection methods.
Emily and Steven H. own a home in Pawtucket, RI and are current on their home mortgage and two cars, but have $40,000 worth of credit card debt, mostly related to Steven’s health care. They fell behind because Steven was injured on the job and hasn’t gotten approved for disability approval. Emily works as a Customer Service Representative for a Rhode Island technology company, but her salary isn’t enough to cover their mortgage, car loan and credit card debt while their waiting for Steven’s disability to come through. Citibank sued to attach her wages. Attorney Goldman filed for Chapter 7 protection. As soon as the petition was filed, the court issued a stay, and Attorney Goldman’s office notified Citibank and the other creditors to stop all their collection activities. As a result of Attorney Goldman’s work, their $40,000 credit card debt was erased.
“When I met Attorney Goldman for the first time I was under a great deal of financial and emotional stress. I was unsure of the bankruptcy process and she patiently explained my options and I no longer felt as though I was going it alone. Working with Attorney Goldman and her staff has helped me get through one of the most difficult times in my life, and I feel like I’ve been given a second chance to get back on my feet.”
Immediate Chapter 7 Bankruptcy Benefits for Rhode Islanders
Here Are Some Frequently Asked Questions About Rhode Island’s Chapter 7 Bankruptcy Laws:
Q: If I file for Chapter 7, will I have to relinquish all of my property?
A: In Rhode Island, you are allowed to keep all exempted property with a few specific limits. You may also keep household goods such as appliances, clothing, dish ware, furniture, books and wedding rings. If you are buying a car using monthly payments, you may keep the vehicle as long as you maintain your monthly payments.
Q: What exactly is a “means test?”
A: The Chapter 7 Bankruptcy means test is a way of determining whether you can afford to payback at least a part of your unsecured debt. If your income is below the median income in your area, you automatically pass the means test.
If your income is above the median, you’ll be required to apply the means test “formula”.
Q: What happens if I don’t pass the means test?
A: You may still qualify for Bankruptcy protection under Chapter 13, which requires you to payoff some portion of your full debt using a prescribed 5-year payment plan.
Q: Can a student loan be discharged under Chapter 7?
Got More Questions?
The Law Offices of Janet Goldman has been handling Rhode Island bankruptcy cases since 1989. Our mission is to help make you financially whole once again and relieve you of unwanted debt.
You can be assured that we will make every effort to find the right solution for you. Call: (401-785-2300) for questions and set up a free preliminary consultation.
After Bankruptcy, then what?
More people than you might expect have been through, or are going through the bankruptcy process, and while it can be taxing, you can move on with your life afterwards. According to Rhode Island law, certain properties are exempt from repossession if you have filed for Chapter 7 Bankruptcy. These include your household possessions, your jewelry and other personal items, the equity in your home up to $500,000, and your car if you keep up monthly payments.
If you are having trouble with paying your bills and are under stress from nagging collectors and creditors, the sooner you act the better chances you will have in rectifying your situation and returning to a normal life. Contact the Law Offices of Janet Goldman for your first free consultation? Call us at 401-785-2300.