Name: Attorney Mark Buckley, CFP
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Filing Chapter 7 Bankruptcy in Rhode Island: Not A Moral Issue

I don’t know anyone in Rhode Island who thinks filing for bankruptcy is taking the easy way out. I’ve yet to converse with anyone who wanted to file a Chapter 7 bankruptcy as a way to cheat credit card companies, or to seek revenge for high interest rates.

Who Files Bankruptcy in Rhode Island?

My clients come from from every part of Rhode Island. They are young, old and all the stages in between. Some have little schooling, while others have college degrees including masters and doctorates. What I have encountered are trustworthy, diligent people who feel trapped by too much debt.

They want to do the right thing and repay their debt, but they simply can’t. With so much debt, they are stuck. They are unable to move forward.

Family welfare and personal health soon begin to suffer. With overwhelming guilt, these people have become slaves to their debt and are afraid to ask for help. They believe others will judge them as immoral for filing a Chapter 7 bankruptcy. Despite their best efforts, they are going over the financial waterfall and there is no catching up.

Many things can prevent an honest debtor from paying his bills: job loss, a medical crisis, a loss of overtime at work, a divorce, a change in interest rates. Any one of these events can send a person running to a bankruptcy lawyer, dejected and embarrassed.

Is Filing Bankruptcy A Moral Issue?

So when did filing bankruptcy become a moral issue? Because most Americans come from a Christian or other strong spiritual tradition, we value honesty and integrity in our personal and business dealings. We may even be familiar with a verse in the Old Testament book of Psalms which says, “The wicked person borrows but does not pay back.” Does this suggest that all debt must be repaid, no matter the circumstance?

[Read more…]

Bankruptcy Lawyer’s Advice on Reaffirmation Agreements

What is a Reaffirmation Agreement?

There are two documents which protect a secured creditor. Both are very powerful. One is a security agreement where you pledge property (house or car) as collateral. The other is a promissory note that makes you personally liable for the loan. If you later default, the creditor can then go after the property AND you.

If you file a Chapter 7 bankruptcy, however, the promissory note is destroyed. Great news for you, but not so great for the lender. If you stop making payments, the creditor’s only recourse is to take back the property. You can’t be sued for the debt!

As you decide whether to keep the property, the lender often becomes nervous and prepares what is called a reaffirmation agreement. Such an agreement is a new contract where you forfeit bankruptcy protection and the lender agrees not to repossess the property if you stay current. This new agreement then replaces the original promissory note that was destroyed in your Chapter 7 bankruptcy filing.

If a reaffirmation agreement allows you to keep your property in exchange for a promise to repay, who would have a problem with this? Answer: most experienced Chapter 7 bankruptcy attorneys. [Read more…]

Rhode Island Bankruptcy Information

You’ve done your best to repay creditors, but now there is not enough money to go around. Interest rates have skyrocketed, minimum payments have tripled, and you’ve fallen behind on several accounts. If you need to protect your house, your car, and stop all collection activity, will filing bankruptcy help?

If bankruptcy is the solution, will you be filing a Chapter 7 or a Chapter 13 case?

To understand the differences between these two options, let me try to paint a picture. Imagine standing outside the US Bankruptcy Court with all of your bills in hand. As your stare at the building, you notice there are only two doors to gain entrance; one door is very narrow while the second door is very wide. Its easy to see that one door is designed to keep people out and the other seems to let everyone in. Which door should you try to enter?

Well, the narrow doorway is like a Chapter 7 bankruptcy. People who earn too much income will not be able to enter and cannot file a Chapter 7 case. Only those whose gross household income (during the prior 6 months) falls below the median income (of other similar households) are permitted to file a Chapter 7 bankruptcy. A Chapter 7 bankruptcy takes 90-100 days, costs less money than a Chapter 13, and allows you to discharge most debts. Even though the doorway appears narrow, about 92% of bankruptcy filers in Rhode Island qualify and are able to enter for debt relief.

To understand a Chapter 7 case better, lets consider the following example. The median 6-month income for a Rhode Island 4-person household is presently $ 43,501 gross (0r $ 87,002 annually). If your 4-person household gross income in the past 6 months (not including Social Security income, or unemployment benefits) is lower than $ 43,501, you can enter the narrow doorway of a Chapter 7 bankruptcy. Just remember that you cannot enter the Chapter 7 doorway twice within in eight year period and time is measured from the date of your prior filing.

So what is the other doorway and why is it so wide? The second door leads to a Chapter 13 filing and is wide because bankruptcy law encourages the repayment of debt where there is ability. A Chapter 13 petition is, essentially, a 5 year repayment plan and is for those who either earn too much income, or are trying to protect property that could be lost in a Chapter 7 case. In Rhode Island, less than 10% of all bankruptcy cases are of the Chapter 13 variety.

I hope you now understand your choices a little better. It really comes down to your household income and your ability, or inability, to repay unsecured creditors. While its possible to file a Chapter 7 bankruptcy if your income is higher than the median income, I would need to perform an analysis and ask you a number of questions to see if you qualify for immediate debt relief. If you show me your pay-stubs for the prior 6 months, I can let you know your options. We can also develop a plan for filing down the road if your income is only temporarily high.

Where is the Rhode Island Bankruptcy Court?

The Rhode Island Bankruptcy Court is located at 380 Westminster Street, Providence, Rhode Island 02903. It is on the sixth floor of the Federal Center which is a red brick building. There is plenty of parking outside the buiding and it should cost about $ 8 for 90 minutes.

Upon entering the Federal Center building, keep to the left. There is a metal detector and security checkpoint to go through. After going through security, you can then take the elevator to the sixth floor. Take a right off the elevator and through a second security checkpoint before gaining entrance to the Rhode Island Bankruptcy Court.

As stated in a prior blog, most clients who file a Chapter 7 Rhode Island bankruptcy don’t have to actually go into the Rhode Island Bankruptcy Courtroom. They are required, however, to attend a 341 meeting of creditors. This meeting of creditors is where the debtor is asked a series of questions by the assigned bankruptcy case trustee. Please note that the 341 meeting of creditors is also held on the sixth floor of the Federal Center, but is not a part of the bankruptcy court offices. Just be sure to take a left when getting off the elevator. The hearings are held in Room 620.

Upon entering room 620, there is a waiting room for clients and bankruptcy lawyers as they wait for their case to be heard. You should plan to arrive 30 minutes before your scheduled hearing to get situated and to ask any final questions of your bankruptcy lawyer. You will be surprised how quickly your case is heard. Five Rhode Island bankruptcy cases are scheduled during a 30 minute block.

For more particular information, feel free to visit the US Bankruptcy Court website for Rhode Island and directions can be found using Google Maps.

RI Bankruptcy Law:Preparing to File a Chapter 7 Bankruptcy

Bankruptcy is never anyone’s first choice. But, if you live in Rhode Island and are drowning in debt, there are some simple steps you should take TODAY to prepare for the possibility of a Chapter 7 bankruptcy. Here are just a few ways to make life less stressful for both of us.

Stop the insanity. Do not use your credit cards anymore for anything . . . . including everyday living expenses.

If we work together, I must know about every purchase made in the past 90 days.
You should make no less than 3 payments after a major purchase, cash advance or balance transfer. Depending on your circumstances, I may advise making a few more payments, or waiting a few months before filing your case.
Keep away from your 401k plans and other retirement accounts. A recent distribution may jeopardize your case.
Don’t get clever with your property. You cannot take your name off of deeds to real estate, or other valuable property without causing major problems.
Obtain your income tax records for the past two years.
Gather copies of all pay-stubs for the prior 6 month period. Continue to collect them going forward.
Be private. Do not divulge your plans to any debt collector. They may decide to go after your bank accounts now if they think you are filing bankruptcy next month.
Keep paying on your house and car if you intend to keep this property. You should try to get current on these obligations before filing your case.
For homeowners, perform a title examination. I need to know if there are judgment liens against any real estate.
Don’t play favorites. You should not pay more than $ 200 back to friends and family members in the past year.
Be prepared to disclose all property that you may have any interest in. Is your name on a parent’s bank account, or real estate? Are you owed money by anyone for any reason?
Request your free credit reports at http://www.annualcreditreport.com to identify all creditors.
Start saving money for your Chapter 7 bankruptcy case. Although I provide a free telephone consultation, I cannot file your case until all fees are paid in full.
Call me TODAY with all of your questions. I will give you my honest assessment, then you will understand what needs to be done to get out of debt once and for all.