Debt Collector Calls in Rhode Island
Since 2005, the bankruptcy “Means Test” has been used to determine who qualifies for Chapter 7 bankruptcy relief here in Rhode Island. It acts as a “gatekeeper”. The Means Test attempts to measure the cost of living in Rhode Island and how your gross income compares to that of other families of the same size.
The test is arbitrary and has had some unfair results.
For each state, the census calculates the median (middle) gross income for all family sizes. A person filing for bankruptcy must then show all the gross income generated in their household for the prior 6 months, double it, then compare that number to the census figure.
If their gross income falls below the census figure, they pass the means test and can move forward. If their gross income is higher than the census figure, the process gets very complicated and can prevent a debtor from filing a Chapter 7 case.
Failing the Means Test often means having to pursue relief under Chapter 13 of the bankruptcy code which is a 5 year repayment plan.
On November 1, 2009 there will be new income limits for Rhode Islanders who are contemplating a bankruptcy filing. Only households of 2 or 3 persons will find it easier to file bankruptcy after the change. Single persons and households larger than 3 will find it more difficult.
Here are the new median income figures for RI households that will be used for Means Testing effective 11/1/09
- 1 person $ 45,222
- 2 people $ 62,806
- 3 people $ 76,846
- 4 people $ 87,002
- 5 people $ 93,902
- 6 people $ 100,802
- 7 people $ 107,702
- 8 people $ 114,602
- each additional person add $ 6,900
But what counts towards gross income? And how do we calculate family size for income comparison when there are so many living arrangements these days? These are good questions and cannot be answered in this article because every case is different.
If most/all your income is being used just to pay monthly credit obligations you need advice today. Call 467-6800 for a free telephone consultation, or leave some contact information and I will be happy to call you.
It takes about 90 days to get through a Chapter 7 bankruptcy in Rhode Island. After I file your case, the RI Bankruptcy Court assigns a case trustee to review the file.
The court then schedules a hearing date for the meeting of creditors (also called a 341 meeting). Your hearing will be about 30 days into the process and take place in Providence.
Your hearing will NOT be in a courtroom.
At the 341 meeting of creditors, the assigned trustee will review your 50 page bankruptcy petition. He will ask questions to make sure your petition is complete and truthful.
Because 6 hearings are scheduled every 30 minutes, your hearing should move along quickly. No need to worry. We will review any potential issues prior to your hearing so you’ll feel comfortable and prepared. When your hearing ends, we wait about 60 days before the dischargeable debts are wiped out.
But what happens before we file your case? Does it take a long time to prepare? This largely depends on you. Because every case is unique, there may be several good reasons to not file your case immediately. Here are just a few:
- It takes time to gather records: tax returns for past 2 years, pay records over prior 6 months, recent account statements/ bank records.
- Legal issues: time may be needed to research special circumstances.
- Recent Purchases: time is needed to let cards “cool down” after big purchases or cash advances.
- Unusual income: If you have a spike in income, the mean’s test may require us to wait for your average monthly income to lower.
- Bankruptcy costs: The court requires these costs to be paid in full before I am permitted to file your case.
It is possible to file a case in as little as 24 hours, but it is not typical or recommend-ed. A lot of work must be done in order to complete a quality 50 page bankruptcy petition and I never want to file a case that has not been triple-checked. I want your case to be bullet-proof.
My goal is to get it right the first time and not be rescheduled for a second hearing. This has been my experience in filing almost 3,000 cases in Rhode Island.
If bankruptcy is something you would like to learn more about, give me a call. I will take the time to explain all of your options and help you each step of the way.
Are you drowning in debt? Do you rely on credit cards for daily living expenses? Are you wondering whether bankruptcy can help? If so, I offer a free 30 minute phone consultation to Rhode Island and Massachusetts residents who want to explore options. Ask me any question you want because there is no charge for the telephone consult.
After I understand your situation, you can decide if an appointment would be helpful to begin the debt-relief process. I will then need to review a number of important documents. Here are the top 10 documents you should gather for our first meeting.
- Federal Income Tax returns for the prior two years;
- Bank account statements (personal and business) for the past year;
- Pay advice statements (pay-stubs) for the past six (6) months, including spouse;
- All bills, invoices, credit card statements, loan statements, mortgage statements for which you are personally liable, including business debts where you have signed a personal guaranty;
- All collection letters, copies of lawsuits, complaints, attorney notices, etc for all debts;
- Recent credit report. Go to www.annualcreditreport.com to obtain a free copy;
- If you own real estate – copy of deeds, and any mortgages, liens, etc.
- If divorced, a copy of the divorce decree, any order regarding property settlements within the past three (3) years, and alimony or child support orders in effect or amendments thereto;
- A photo copy of your driver’s license;
- A photo copy of your social security card
Some documents may be difficult to gather in an emergency. If you are facing lawsuits, including wage attachment and foreclosure, time may be limited. Call me immediately at 467-6800 and we can concentrate on the documents most important to your case.