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Advantages/Disadvantages: Filing Chapter 7 for Your Warwick Bankruptcy

by Mark Buckley

For Warwick consumers struggling with heavy debt, filing for bankruptcy relief is an option when there is not enough money to pay all of your bills.  Job loss, illness, divorce, or loss of overtime are the typical reasons for financial chaos.  Typically, income has dropped, expenses have increased, or a combination of both.  If you don’t earn enough money to pay your creditors, a Chapter 7 bankruptcy may be the best chance for your debt-relief.  Here are several advantages and disadvantages to consider.

Advantage: You may become debt-free in only a few months

Typically, your Warwick bankruptcy takes three months to complete.  A Chapter 13 bankruptcy, however, is typically a 5-year process.  The power of filing a Chapter 7 bankruptcy, therefore, is getting immediate debt-relief and not wasting years with a crippling payment plan.  The quicker you file a Chapter 7 bankruptcy, the more money you save, and the faster you can rebuild a better financial future.  A successful Chapter 7 bankruptcy should destroy most of your unsecured debt.  Debts like credit cards, medical bills, utility bills, car repossessions, mortgage foreclosures, payday loans, and personal loans.

Disadvantage: Filing bankruptcy may lower your FICO credit score

You credit score is based on several factors, like your debt to income ratio, credit usage rate, payment history, etc.  If you are 100% current on all credit accounts, it is true that filing bankruptcy could reduce your credit score.  Most people who are in financial trouble, however, are already maxed out on credit and have missed payments.  In other words, their credit score was already damaged before calling their Warwick bankruptcy lawyer.  The good news is that bankruptcy can help you salvage what is left of your credit and begin the process of rebuilding your FICO score.  I even enroll my bankruptcy clients in a powerful credit rebuilding program.  Most have seen their credit scores reach 720 in as little as 12-18 months after the bankruptcy discharge is issued.

Advantage: Rhode Island and Federal bankruptcy exemptions help protect your property

If you have lived in Rhode Island for at least 2 full years, you can use RI bankruptcy exemptions to protect most, if not all of your assets.  Most Warwick bankruptcy filers, however, can choose Federal bankruptcy exemptions instead of state exemptions.  Under RI law, a homeowner can protect up to $ 500,000 in equity so long as she has owned the property for 40 months.  Under Federal law, $23,675 of equity in your home can be protected, or $ 47,350 if the property is co-owned with a spouse who is jointly filing. There are also exemptions for protecting vehicles, household goods, jewelry, retirement accounts, etc.  There is even a potential “wildcard” exemption to help protect additional assets, like cash, collectibles, or bank accounts.  While every case is different, the clear majority of Warwick bankruptcy cases filed do not involve surrendering any property.  A good bankruptcy lawyer can let you know, prior to filing, if there is any property at risk.

Disadvantage:  Your open credit card accounts will be shut down

Because your bankruptcy filing will be on your credit report, all creditors will proactively close your credit accounts.  Even if you have a small balance and are current, it will be closed once your Warwick bankruptcy case is filed.  You are not allowed to keep certain credit accounts off of your list of creditors in the bankruptcy petition.  The positive news, however, is that those who wish to rebuild their credit typically receive credit offers within 6 months’ after bankruptcy.  I’ve had clients buying cars within one year and houses within 3 years of filing.

Advantage: A Chapter 7 bankruptcy will stop all debt collection activity immediately

The moment I file your bankruptcy petition, all debt collection calls, letters and lawsuits will stop.  No more stressful and harassing phone calls throughout the day.  No more calls to your house, your employer, your neighbors, or your relatives.  A bankruptcy filing will even stop a foreclosure or credit card lawsuit.  Bottom line, bankruptcy is designed to help get your financial house back under control and to provide a start fresh.

There are pros and cons for each person considering bankruptcy.  To determine if a Chapter 7 bankruptcy is right for you, contact a reputable bankruptcy attorney and ask about all debt-relief options.  Start by gathering basic financial documents, like pay stubs, tax returns, and credit reports and call for a free consultation.

To find out more about the pro and cons of bankruptcy from Attorney Mark Buckley, call 401 467-6800 now for a free bankruptcy consultation.  Serving clients in Warwick and all communities throughout Rhode Island.

Filed Under: Blog

Debt Settlement Lawyer

by Mark Buckley

Debt settlement can be the right solution in certain situations.  Its a matter of knowing when its appropriate and how to do it effectively.

I’m not talking about the typical debt-relief advertisements you hear on radio and television.  You know the ones.   They instruct you to stop paying your bills and send them your money instead.  Usually to some address outside of Rhode Island.

After starving your creditors for 6+ months, the theory is that there should be a pool of money big enough to offer settlements to your desperate creditors.

These programs usually fail because they are not a good fit for most people drowning in debt.  If you owe a lot of money and are dealing with too many creditors, it isn’t likely that everyone will agree to negotiate.

Will you be satisfied if you can only settle some of your accounts, while the remaining debt is unpayable?  You might create a tax liability on the forgiven debt, and a possible lawsuit on the unpaid debt.

To make matters worse, debt settlement companies are paid-in-full long before you realize its a losing battle.  You could waste thousands of dollars and be left with a problem that still requires filing bankruptcy.

So when does debt settlement make sense?  Answer:  When you have a pile of money, under your own control, that can be used to offer lump sum settlements.

Effective debt settlement works best when you have cash in hand and can afford to pay income tax on the amount of debt forgiven.  Money talks.

A few times each year, I encounter such a person.  Someone who has immediate access to money, but wants to pay as little as possible to settle old credit accounts.  If this describes you, I can help.

I had a client who owed $ 60,000 in old debt and now could afford to pay the debt in full.  Wanting to avoid the interest and penalties that accumulated over many years, he asked me to contact each creditor and settle for the smallest amount possible.  I negotiated settlement for less than $ 8,000 and he was more than happy to pay the income tax owed.

If bankruptcy is avoidable,  and you have the money to make it work, a debt settlement may be an option to consider.

As your debt settlement lawyer, I can be the go-between to negotiate a low settlement.  I can explain that unless we receive a good offer, the creditor will likely get nothing in a bankruptcy.

Filed Under: Blog, New Blog, Personal Finance, Rhode Island Chapter 7

Debt Settlement Companies: Unbelievable

by Mark Buckley

Debt settlement company advertisements are everywhere. They sound appealing: who wouldn’t want to settle their debt for pennies on the dollar? Most everyone would rather erase their debts without having to file for bankruptcy—but do debt settlement companies promise more than they can deliver?

It’s important to understand that most of the advertisements are dramatized and do not represent typical results. The smiling characters on the TV screen are usually not actual clients sharing personal experiences, but actors voicing what may be “possible”.

Sending a monthly check to a far away debt settlement company usually does not end well. One of the first signs of trouble is that the company in question does not have a local office.

If you truly need help budgeting or drafting a repayment program, you would do well to work with a legal/financial adviser from your own community. In fact, calling a reputable local bankruptcy lawyer should be your first step in making sense of your debt-relief options. Even if your situation does not require a bankruptcy solution, a good bankruptcy lawyer can explain non-bankruptcy options and make sure you don’t become a victim of a debt settlement scam.

Also, be sure to never sign a contract or start any debt repayment program until you have had it thoroughly examined by a qualified bankruptcy lawyer. Too many people have thrown away valuable time and money on unworkable debt repayment plans. Even those who may be successful in settling a debt, need to be prepared to pay income tax to the IRS on the amount of debt forgiven. A 1099-Misc income form will likely be sent to you before your next tax filing.

If you are struggling with excessive unsecured debt, it is important to understand how a Chapter 7 bankruptcy may help.  It is the most common form of consumer bankruptcy and only takes 90 days to complete.

For each case filed, the Rhode Island Bankruptcy Court assigns a trustee and schedules a meeting of creditors. This private meeting occurs thirty days into the process and does not take place in a courtroom. At the creditor meeting, the debtor is asked a series of questions by the trustee in order to make sure the debtor’s petition is complete, accurate, and truthful. These question and answer sessions are quite short, and most trustees can conduct six or so of these meetings in a half-hour. After the meeting, sixty days remain before debts are wiped out.

Filed Under: Blog, Personal Finance, Rhode Island Bankruptcy Articles

Disclosing All Property When Filing Bankruptcy

by Mark Buckley

hiding moneyIn Rhode Island, are you required to disclose all of your property when filing for Chapter 7 bankruptcy?

In a word: Yes.

A Chapter 7 Bankruptcy exists to protect you and your property. However, to receive a discharge of debt, you must  disclose all of your assets.

During the bankruptcy process, a debtor will be asked if he is telling the truth. Bankruptcy lawyers will even use the phrase “under penalty of perjury” to remind a client that hiding assets is a violation of federal bankruptcy law punishable by jail.

You see, under Rhode Island bankruptcy law, it makes no difference if:

  1. Your property came as a gift or through inheritance
  2. Someone else paid for it
  3. It is easily hidden and there is no paper trail

Your bankruptcy petition must fully list all of your property.

Understand that the US Trustee has many tools to discover hidden assets. Even calls from “anonymous tipsters” help trustees make sure that a debtor is not attempting to conceal assets.

Disclosing all property to your bankruptcy lawyer is actually in a debtor’s own best interest. Telling your lawyer the complete truth will help him protect you and your property.

Common property interests that require complete disclosure in your Rhode Island bankruptcy petition:

  1. Any claims you have for money, including personal injury claims and potential lawsuits
  2. Gifts you may have received
  3. Assets you disposed of in the last 4 years
  4. Possible inheritance interests after someone has died
  5. Bank accounts/ real estate owned by parents with your name on it
  6. Property you may receive in a divorce settlement
  7. Personal debts owed to you by a friend or family member

Most who file bankruptcy are honest, hardworking people who have run out of options. Having a debtor list all his property in a bankruptcy petition makes the system fair for everyone.

Bottom line: your bankruptcy petition must be complete, accurate, and truthful.  Don’t leave out any property.

Filed Under: Blog, Exemption Laws, New Blog, Rhode Island, Rhode Island Chapter 7

Attorney Mark Buckley receives Client Distinction Award 2022

by Mark Buckley

The Martindale-Hubbell® Client Distinction Award is based on Client Review Ratings in the categories of communications ability, responsiveness, quality of service, and value for money.

The results have been compiled and Attorney Mark Buckley has earned a Client Review Rating Score of 4.5 or higher on a scale of 1-5.

Less than 1% of the 900,000+ attorneys listed on martindale.com and lawyers.com have been accorded this Martindale-Hubbell honor of distinction.

Filed Under: Blog, Home Page Featured

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