Chapter 13

Bankruptcy for RI Seniors

Bankruptcy Relief For RI Seniors

“An increasing number of Americans aged 65 and older are declaring bankruptcy,” writes Reuters in a recent report. “Those aged 65 and older represented seven percent of bankruptcy filers in 2007, a mind-boggling jump from 1991. They are easily the ‘fastest-growing age demographic…’”

The sad fact is that many older Americans cannot help living beyond their means. Age discrimination, paired with fewer job openings, makes it almost impossible to increase their income. American seniors are dealing with an unsettled economy, decreasing pensions, increasing medical expenses, and unstable investments. Because members of America’s senior population rely mostly on fixed incomes, they are increasingly forced to rely on credit just to survive.

In the end, the only course of action left for many senior citizens is to file for Chapter 7 bankruptcy relief. Although the idea of filing bankruptcy may initially be hard to accept, it is important to understand the benefits of filing for bankruptcy when there are no other reasonable options for debt repayment.

One of the biggest misconceptions about filing for bankruptcy is that you automatically have to give up certain assets. This is clearly not true. In Rhode Island, for example, those who meet the residency requirements can protect up to $ 300,000 worth of equity in their home. Rhode Island exemption laws also allow protection of up to $ 12,000 worth of equity in motor vehicles (cars, trucks, motorcycles).

There is also generous protection of retirement accounts, household furniture, clothing, jewelry and a Rhode Island “wildcard” that can be used to protect an additional $ 5,000 worth of other property. Bottom line, most who file a Chapter 7 bankruptcy in Rhode Island don’t lose any property at all.

An ideal Chapter 7 debtor should be current on the secured debts for property she intends to keep, like mortgages and car loans. In as little as 100 days after filing her Chapter 7 bankruptcy petition, her case concludes and her dischargeable debt is wiped out.

While the number of seniors filing for bankruptcy relief is increasing, many others still do not understand their rights under the law. They are often bullied by creditors to hand over their social security checks and not have enough money left over to buy food or medicine. It becomes increasingly important to seek the help of a qualified bankruptcy attorney in these situations.

Choosing the Best Rhode Island Bankruptcy Lawyer

The tiny state of Rhode Island is home to 5,878 licensed attorneys. With a population of only 1,050,788, Rhode Island has one lawyer for every 178 people.

Did you know that an attorney is licensed in the general practice of law? With only a few exceptions, any lawyer can represent any matter he pleases, whether it be a murder case, a speeding ticket, or a bankruptcy case. With tough economic conditions affecting the legal profession, many lawyers are doing just that: reinventing themselves as bankruptcy lawyers. You will find no shortage of lawyers willing to take your Rhode Island bankruptcy case. Advertisements for bankruptcy lawyers are everywhere. The question is, however, which RI bankruptcy lawyer should you hire?

The answer is simple: Get the best experienced bankruptcy lawyer you can afford.

The key is finding a lawyer who concentrates his practice exclusively doing bankruptcy work. Just because a lawyer will take a bankruptcy case doesn’t mean he has experience in the field of bankruptcy law. Just as you wouldn’t hire a dentist with only pliers and a bucket for tools, you don’t want to hire an inexperienced lawyer to represent you in the Rhode Island bankruptcy court.

Here are just a few questions to ask:

What areas of law does he practice in addition to bankruptcy law? A debtor is best represented by an attorney who devotes his entire practice to RI bankruptcy law.
How long has he been practicing bankruptcy law? If he changed his personal injury law firm into a “bankruptcy boutique” just last week, you have the right to know.
How many bankruptcy cases has he personally handled? Would you feel better knowing he has handled only a few cases like yours, or a few hundred?
Who will do most of the work? Does he spend just 30 minutes with you on the initial consultation before letting his secretary takes over? If he has you filling out lengthy questionnaires without spending much time with you himself, you should be concerned. You may be at a “bankruptcy mill.”
Who will represent you at the creditor’s meeting? Will you be disappointed if an attorney you’ve never spoken to before represents you at your hearing, because the lawyer you hired is too busy to attend?
Are his fees comparable to what other experienced bankruptcy lawyers are charging? Not too low, not too high.

Like most things in life, you get what you pay for. An experienced bankruptcy lawyer will save you money by avoiding costly mistakes and offer you the peace of mind that comes from knowing that your case has been handled properly and professionally.

14 Lies About Bankruptcy

Search the words “bankruptcy”, or “filing for bankruptcy”, or even “Rhode Island bankruptcy lawyer” on the internet and you will discover a subject surrounded by a confusion and misinformation.

However, if you are drowning in debt, it becomes crucial to separate fiction from fact. Is bankruptcy as bad as your creditors would have you believe? Let’s analyze a few of the charges leveled at bankruptcy to find the truth.

Myth 1: Under The NEW Bankruptcy Law….There’s No More Help (or It’s Too Late To File)

Nothing could be further from the truth. Despite what you may have heard from the press, this claim is completely unsupported. In reality, you can do almost as much (and in some cases, more) under the new law as you could under the old law. Many clients are actually making out better under the new law than they did under the old.

Myth 2: Everyone Will Know You Have Filed For Bankruptcy

This is another falsehood. The average person can obtain a financial fresh start without the world ever finding out: chances are the only people who will know about your RI Chapter 7 filing are the people you decide to tell. Although it is true that your bankruptcy is a matter of public record, the number of bankruptcies filed yearly is so massive that the possibility of anyone knowing you filed is extremely remote.

It is crucial to note the importance of not telling others of your bankruptcy filing. Like divorces and cancer, financial problems makes good gossip, and if you tell one person, you tell the world. Unless you actually want your friends and family to know you filed for bankruptcy, keep it under your hat.

Myth 3: You Will Lose Everything You Have

Most of my clients don’t lose anything. Every state, including Rhode Island and Massachusetts, has its own set of exemptions that protect various kinds of property under bankruptcy. For example, Rhode Isand’s exemption laws protect a person’s house, car, truck, household goods, furnishings, retirement plans, IRAs, wages, personal injury claims, and cash value in life insurance. In most cases, creditors will not require the signing of a reaffirmation agreement to keep secured property. Even if you have more property than can be covered by available exemptions, filing for the slightly-more-expensive Chapter 13 bankruptcy allows you to keep your property.

Myth 4: You Will Never Be Able To Own Anything Again

No matter how many people believe this myth, it too is untrue. If anything, bankruptcy actually helps you get back on your own feet financially. In the future you will be able to buy, own, control and possess whatever you can afford, and if you are able to come up with the money for it, there is no law preventing you from buying homes, cars, trucks, equipment, household goods, et cetera.

Myth 5: You Will Never Get Credit Again

The opposite is true: filing for bankruptcy leaves you in a better position to get credit than not filing. This is because filing for bankruptcy eliminates debt. Once your debt is behind you, you look more attractive to banks and credit card companies. In fact, it probably won’t be long before you start getting credit card offers-which is a mixed blessing because you don’t want to get right back into debt all over again.

Banks, credit card companies and other lenders might charge you higher interest rates at first, and will demand more money in down payments, but if you are financially responsible and keep your job, the quality of your credit will only improve as time goes by. In most cases, if a client has not re-established good credit after 3 years, it is not because he filed bankruptcy; something else must have happened to disrupt his credit.

Myth 6: Filing Bankruptcy Means You’re a Bad Person

On the contrary, filing bankruptcy is a sign of financial responsibility.

Filing RI bankruptcy helps remove certain debts so you can take better care of your family, freeing your loved ones from the constant threat of unpaid bills and harrassing bill collectors.

Over 750,000 families file for bankruptcy relief every year. The majority of these are industrious, honest, law-abiding people who have simply fallen on hard times-whether it be job loss, family emergencies, medical difficulties, failed businesses, or otherwise. Bankruptcy laws were created with such unforeseen circumstances in mind, in order to allow families trapped under crushing mountains of debt to make a fresh start for themselves.

Myth 7: Filing Bankruptcy Will Hurt Your Credit For 10 Years

To believe this myth is to confuse two entirely different concepts. The fact that a bankruptcy filing is reported on your credit report for up to 10 years does not mean that you will have no credit, or bad credit, for 10 years. In reality, filing for federal debt relief might not actually have a negative effect on your credit score at all.

Generally speaking your credit is already a mess-or maxed out-by the time you make an appointment to see a bankruptcy attorney. More than likely you have very little or no credit for bankruptcy to hurt.

Myth 8: If You’re Married…Both You and Your Spouse Have To File For Bankruptcy

Thousands of cases exist in which husbands or wives filed for bankruptcy separately from each other. While it is sensible for a husband and wife who both have a lot of debt to file for bankruptcy together, doing so is never a legal requirement. If there is not enough debt in both spouse’s names, I will only file for the spouse who actually needs help.

Myth 9: It’s Really Hard To File For Bankruptcy

With an experienced bankruptcy attorney, filing for bankruptcy is far from difficult. In all honesty, the most difficult part of filing for bankruptcy is making the decision to do so. After that decision is made, filing bankruptcy in Rhode Island should be a straightforward process.

Myth 10: Only Deadbeats File For Bankruptcy

Most who file consumer bankruptcy do so in order to protect their family from financial ruin. The majority of people who file for debt-relief are hardworking individuals who resort to filing as a last-ditch attempt to deal with large bills. Life-changing experiences like divorce, job-loss, failed businesses, illness, and unforeseen emergencies can happen unexpectedly. As a step to free your family from crushing debt created by these events, bankruptcy is a noble act.

Compare this to the real definition of a deadbeat: someone who lets himself get deeper and deeper into debt each year, allows creditors to abuse him, and pays his hard-earned money to those creditors while his family suffers. His house falls apart, his car falls apart, his life falls apart, his family falls apart.

He doesn’t seek to fix his situation because he doesn’t care. “Deadbeats” don’t file for bankruptcy: financially responsible people who care about their families do.

Myth 11: Even If You File For Bankruptcy, Creditors Will Still Harass You and Your Family

The moment you file bankruptcy, an order called the “automatic stay” is issued by the Rhode Island Bankruptcy Court. This order is a grave warning that tells your creditors to leave you alone. The automatic stay prohibits you from all collection actions and even prevents your creditors from being allowed to talk to you. Creditors must cease all new collection attempts and halt all collection attempts they have already started. Their failure to do so gives you the right to take your creditor to court. Bankruptcy Court Judges are not friendly to violators of the “automatic stay.” In essence, creditors can either leave you alone or suffer the consequences: many Bankruptcy Court Judges have been known to issue severe punishment on offending creditors.

Think about the peace of mind you will have once you file for bankruptcy protection. No more collection letters, phone calls, repossessions, lawsuits, or threats of foreclosure from hungry creditors. You are protected by the “automatic stay”and have the full force of the bankruptcy court system backing you.

Myth 12: If You File For Bankruptcy, It May Cause More Family Troubles and May Even Lead To Divorce

Filing for bankruptcy does not cause family troubles-not being able to provide for your family does. Stress and anxiety in the family are the products of the symptoms, not the cure. When unpaid bills loom, creditors can knock at the door, and nothing can be done about it. In this environment, families will experience tremendous levels of pressure. If this pressure is allowed to continue for long, it can lead to family rifts and even divorce.

Bankruptcy, by its very nature, is designed to remove this pressure by destroying debt. Once the burden of debt is removed, stress lowers and your family can breathe easy again. Filing for bankruptcy can be an important first step in re-building relationships strained by financial hardship.

Myth 13: You Can Only File Once For Bankruptcy Protection

Under Chapter 7 bankruptcy law, you can get a “discharge” once every eight years, allowing you to file for debt relief again if necessary. The wait is even shorter under Chapter 13, where it is only six years.

Myth 14: You Can Pick and Choose Which Debts and Property To List In Your Bankruptcy

Unfortunately, this is not only impossible, but illegal. You must list all of your property and all of your debts when filing for bankruptcy. One of the prime reasons people want to leave out a debt is because they want to continue paying it off. However, the same result can be achieved under bankruptcy. Bankruptcy does not prohibit you from paying back whoever you like. In fact, in some cases you need to continue paying certain debts under bankruptcy-if you want to keep cars, trucks, or houses you owe money on, for example, you must continue paying off your debt. You are protected under law and are able to keep the property for as long as you stay current on these loans.

Bottom line: Knowledge is power. And in these days of financial instability, economic turmoil, and rampant debt, knowledge about your financial options is crucial to keeping your family and possessions secure. Wouldn’t you prefer to know the truth about bankruptcy than remain in the dark about your options? Before you come to your own personal verdict, make sure you know enough information to make a responsible decision.

The sad truth is that myths and ignorance are a creditor’s best friends.

Rhode Island Bankruptcy Law: Myths vs Reality

Who files bankruptcy in Rhode Island and why ?

Recent studies show that since 2008 the number of bankruptcies filed by those making more than $60,000 per year has increased by 6.9%. With filings up 36.5% from what they were this time last year, many blogs and commentators are labeling America’s current economic condition a recession for the middle class. I can say that this is true for Rhode Island as well.

Many myths surround bankruptcy. One of these myths is that filing Chapter 7 is just an “escape route” for the financially irresponsible. Another is that filing Chapter 7 is only what truly poor people do. These bankruptcy myths , however, are easily refuted.

In fact, the economic recession has hit the Rhode Island real estate profession particularly hard. Today, more and more real estate developers and real estate agents are filing for bankruptcy protection due to the collapse of the housing bubble in the Ocean State.

Rhode Islanders have two basic bankruptcy options

Different kinds of bankruptcy exist for specific situations. For instance, Chapter 7 bankruptcy is usually filed by unemployed workers, or those whose income dropped due to loss of overtime. Chapter 7 filers must show that their gross income during the prior 6 months is lower than the median income of other similar sized Rhode Island households. Although a Chapter 7 bankruptcy erases most debts, it limits the amount of property a debtor is entitled to keep.

Because the RI and Federal exemption laws protect a vast array of property, very few Chapter 7 debtors lose any property in the process. Put your fears to rest by contacting a qualified Rhode Island attorney. He will explain what property can be protected and what cannot. In most cases, you will lose nothing.

If you have alot of property, and are unable to protect all of it in a Chapter 7 filing, a Rhode Island Chapter 13 bankruptcy allows you to pay equity above available exemptions to unsecured creditors. That way, you can keep your property if you can afford to do so. Chapter 13 creates a three to five-year payment plan for people who still earn a living (or have some regular source of income.) The payment plan consists mostly of secured debts such as car and mortgage payments. Also, unlike a Chapter 7 bankruptcy which requires up-front payment for attorney fees, Chapter 13 attorney fees can be part of the payment plan.

Debt-Settlement Scams and Tax Consequences

A word of warning to those considering debt-settlement firms instead of filing for bankruptcy: don’t. Although many debt-settlement companies pose as credit-saving alternatives to bankruptcy, most end up doing more harm to your credit than filing for bankruptcy would. This is because creditors will continue to report your missed payments to credit bureaus—even if you are in a “debt-settlement” program.

Also, settling debt for less than the full amount owed will trigger a 1099 statement reported to the IRS. In other words, you are walking into a tax liability. Interestingly, bankruptcy has shown to improve most client’s credit scores. It does so by stopping negative reporting and immediately improving your debt to income ratio.

Another problem with debt settlement firms is that they are subject to very little regulation. Debt settlement firms demand payment up front before all debts are settled. This means they have little incentive to settle a debt completely after they have already been paid. In short, “debt settlement” is far from guaranteed. Compare this with bankruptcy, an organized legal process with pre-defined results.

Timing is key when considering filing bankruptcy in Rhode Island. You must be careful to not file bankruptcy too early or wait too long. Instead, start by calculating your debts and estimating what it would take to pay it off on your own. If the amount is too large, or would require you to sacrifice your family’s basic needs to make a dent in your debt load, then consult an experienced consumer bankruptcy attorney.

If you have missed even one mortgage payment, car payment, or credit card bill, you need advice now. You don’t need to wait for your car to get repossessed or your mortgage to get foreclosed. Use your head, remain calm, and remember that bankruptcy is powerful and can restore order to a financial mess.

RI Bankruptcy Filing: Can’t I Just Keep One Credit Card?

Will the Rhode Island Bankruptcy Court let me keep one Credit Card out of my Chapter 7 case?

The quick answer is no. When a debtor files a RI bankruptcy, she must list ALL of her debts. If there is a balance owed to anyone on the day her case is filed, she must list that creditor in her Rhode Island Chapter 7 bankruptcy petition.

Many filing for bankruptcy relief will ask me, a RI bankruptcy lawyer, for permission to leave just one card out, in case of a future emergency. I understand their fear. Because we live in a society run on credit, how would any of us survive on cash alone? Fortunately, there is good news.

As you may remember, the typical Rhode Island Chapter 7 bankruptcy takes about 90 days from the date of filing to the date of discharge. Once your case comes to completion and your debts are wiped out, your financial picture changes drastically for the better.

Most filing for RI bankruptcy relief see their credit score improve after a bankruptcy filing. The reason for this is because a credit score is based on the consumer’s debt to income ratio. By filing a Chapter 7 bankruptcy and destroying unsecured debt, you are improving this ratio and making yourself more credit-worthy.

After your RI bankruptcy case is over, don’t be surprised by the rush of credit card companies looking to do business with you. You are a good risk in their eyes not only because of your new credit score, but because you are unable to file a Chapter 7 bankruptcy again within the next eight years.

But what about debts owed to friends or family members?

All debts must be listed; even debts owed to friends and family members. It all comes down to whether the money was given to you as a gift, or as a loan. If it is a gift, as is often the case, then there is no debt and the friend or family member does not have to be listed as a creditor.

However, if the money was given as a loan, even if there were no formal promisory note (IOU) signed, the obligation must be listed in your bankruptcy petition. Be careful to think this matter through accurately. If you owe money to mom, she must be listed as your creditor.

One last piece of advice. At the bankruptcy hearing, and on the bankruptcy petition itself, you will be asked under penalties of perjury if you repaid any debts to friends or family members in the past year. Understand that the bankruptcy trustee has the power to request copies of your bank records. If you have repaid debts to friends or family members, you must fully disclose this information.