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Bankruptcy Information

Information on filing Chapter 7 and Chapter 13 bankruptcy in Rhode Island & Eastern Massachusetts from Attorney Mark Buckley.

Health Care Costs and Filing For Bankruptcy

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America may be a world leader in many areas, but healthcare affordability is not one of them. According to a recent survey conducted by Health Affairs, American adults, more than the citizens of any other industrialized nation, avoid critical healthcare because of the high cost of coverage.

This comes as no surprise to bankruptcy lawyers, and certainly not to those who have filed for Chapter 7 bankruptcy relief due to unavoidable medical bills.

Health Affairs’ survey revealed several interesting facts—

  • one-third of American adults neglected recommended medical care when obviously ill (whereas in Germany, only one quarter of adults went without care.)
  • one-fifth of Americans reported having trouble paying off medical bills (barely 10% of Europeans and Canadians cited similar troubles.
  • almost one-third of Americans surveyed agreed on the confusing nature of insurance policies and documentation.
  • America reported the widest margins relative to available healthcare between income levels, with the poorest citizens receiving the least care.

Most of my clients have at least some medical debt at the time I file their bankruptcy petition.  For some, it is the primary reason they need to file for bankruptcy relief.  Many had either no health insurance, or poor coverage, at the time of a major illness or accident.  I’ve seen medical bills range from a few thousand dollars, to hospitalizations costing over $ 100,000.

If you face a mountain of unpayable medical debt, give me a call.  I can advise whether it makes sense to file for bankruptcy in your particular situation.

Rhode Island Bankruptcy Debtors Catch a Break

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Twice a year, the US Census Bureau and the IRS provide data used by bankruptcy lawyers to determine who qualifies for debt relief.  On May, 1, 2012, the new income numbers became effective for all new bankruptcy case filings.  The good news is that median income figures rose for all household sizes in Rhode Island.

Below are the new median income figures that I will use for my Rhode Island clients who need to file for bankruptcy:

  • 1 person household $ 47,798 (up from $ 46,335)
  • 2 person household $ 61,506 (up from $ 59,624)
  • 3 person household $ 68,909 (up from $ 66,800)
  • 4 person household $ 88,990 (up from $ 86,267)
  • Add $ 7,500 for each additional household member above a 4 person household

As a reminder, these are gross income figures.  To determine whether you qualify for Chapter 7 bankruptcy relief, I will examine your trailing 6 months of gross income from all sources, except Social Security and unemployment.  I will then double the gross figure and compare it to the chart above.

Bottom line: Many more who need to file for bankruptcy protection in Rhode Island now qualify.  This window of opportunity may only be available for a short period, so if you are considering bankruptcy, call a qualified RI bankruptcy attorney today.

Top 7 Reasons To File Chapter 7 vs Chapter 13

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The US Bankruptcy Code provides a number of choices to people struggling with debt. The most popular choice is to file a Chapter 7 Bankruptcy petition. Here are seven reasons why.

  1. Time—A normal Chapter 7 bankruptcy case takes about 100 days from beginning to end. After a brief creditor’s meeting one month into the process, the case ends two months later.
  2. Property—Because federal and/or State exemption laws allow a debtor to protect their assets, most Chapter 7 filers do not lose any property. The bankruptcy trustee handles most cases as “no asset” cases, meaning that the debtor is not required to forfeit any property.
  3. Cost—Filing under Chapter 7 is considerable cheaper than filing under Chapter 13.  Even though lawyer fees may differ from state to state, most bankruptcy attorneys will quote a fee that is fair and affordable. Bankruptcy lawyers who practice exclusively in bankruptcy (not general practitioners) understand you don’t have extra money to overpay for their services.
  4. Repayment—You are not required to repay unsecured non-priority creditors like credit cards, utility bills, personal loans, or medical bills. If you created your debt in good faith and no creditor objects to your bankruptcy, most unsecured credit obligations will be destroyed in your bankruptcy.
  5. Privacy—Record of your bankruptcy is only accessible in the court system. In most cases, the only people who will know you filed for bankruptcy protection are you, the court, and your creditors.
  6. Credit—Most people who file under Chapter 7 can reestablish credit shortly after their bankruptcy concludes. (Your debt to income ratio improves once your debt has been eliminated: the first step towards rebuilding your credit.)
  7. Stress—Most chapter 7 filers never set foot in a courtroom.   Instead, they merely attend a brief, informal hearing with the trustee assigned to their case.

How To File a Chapter 7 Bankruptcy Petition

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For the last 30 years, I’ve been drawing pictures and timelines to explain to my Chapter 7 bankruptcy clients how the process works. I finally decided to make a video and hope you find it helpful.

RI Bankruptcy Advice: Tell the Truth

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Your Duties to Disclose During Bankruptcy

A successful Chapter 7 bankruptcy requires honesty in order to work. When filing for bankruptcy in Rhode Island (or any state for that matter), honesty is not just necessary: it is mandatory. Anyone filing for bankruptcy should know that they are expected—required, rather—to act in good faith and be completely transparent with their RI bankruptcy attorney and Chapter 7 bankruptcy trustee.

There are three areas in particular where this “duty to disclose” comes into play for those filing for bankruptcy.

(1) Duty to Disclose Pre-Bankruptcy Asset Transfers

Imagine you own a number of expensive assets (real estate, valuable jewelry, multiple cars, perhaps a boat) but have created considerable debt in acquiring them. Scared that you may lose something, you secretly transfer these items to a close relative before filing for bankruptcy, with the intent of taking them back after your debt has been eliminated. This would be considered fraud under bankruptcy law and could be grounds for the denial of your debt discharge. For this reason, you are required to alert your attorney of any and all transfers of interest in the period before you filed for bankruptcy.

(2) Duty to Disclose Payments Made Before Your Bankruptcy

You may or may not have been advised to avoid repaying loans to family and friends prior to filing for bankruptcy. This is partially because of your “duty to disclose” pre-bankruptcy payments, since repaying loans from family and friends in this context can also be considered as fraudulent. In repaying old debts, you have chosen a lesser priority “creditor” over another higher-priority creditor, an action that can have serious repercussions in bankruptcy court. For this reason, any pre-bankruptcy payments beyond what bankruptcy court considers “essential” must be disclosed to one’s bankruptcy attorney.

(3) Duty to Disclose Any Lawsuits

Your “duty to disclose” extends to payments you expect to receive as well. If you are currently involved in a lawsuit from which you expect to receive some form of financial settlement or compensation, you have an obligation to alert your bankruptcy attorney of your situation.

Bankruptcy is a complicated business, so consulting a qualified bankruptcy attorney is an intelligent move for any person struggling with excessive debt. A good bankruptcy attorney can help you make sense of bankruptcy law’s complex procedures and make the most of a difficult financial situation. The Law Offices of Mark Buckley offer free debt consultation and are a good place to start when looking for financial direction.

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