Name: Attorney Mark Buckley, CFP
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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.

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…]

Filing Bankruptcy in Rhode Island

In Rhode Island, there almost 5,900 lawyers for a population of 1,050,788 people. We could easily fill the Providence Performing Arts Center (PPAC) to capacity . . . . . . TWICE.

If you needed to file bankruptcy in Rhode Island, could you imagine standing on the stage of PPAC trying to figure out which lawyer in the crowd was the ideal choice?

Bottom line: there is no shortage of lawyers willing to take your bankruptcy case.

So, where do you begin? Do you call the lawyer with the biggest bankruptcy advertisement, or do you take the bargain-basement lawyer who advertises on place-mats at your favorite Chinese restaurant?

Here is a better approach. Go for the most experienced lawyer you can afford.

Just as you would not hire a dentist whose only tools were pliers and a bucket, neither should you hire a bankruptcy lawyer without first seeing if he has the tools necessary to represent you.

Here are just a few questions to ask:

Is he really just a general practice lawyer? I believe a debtor is best represented by an attorney who devotes his entire practice to bankruptcy.
How long has he been practicing bankruptcy law? If he just changed his personal injury law firm to a “bankruptcy boutique” last week, you should know.
How many bankruptcy cases has he personally handled? Would you feel better knowing he has handled a few cases like yours, or a few hundred cases like yours?
Who will do most of the work? Does he just spend 30 minutes with you on the initial consultation then his secretary takes over? Are you filling out lengthy questionnaires with little to no access to the attorney?
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 in knowing that your case is handled properly and professionally.

Interview by ABC6 News: Filing Bankruptcy in Rhode Island

by Mark Buckley

Here is a link to a recent news story about when you should consider bankruptcy as an option for debt relief. ABC6 News: Filing Bankruptcy in Rhode Island The only part of the story that should be clarified is that while a Chapter 7 bankruptcy limits the amount of equity you can protect in a home, the laws are quite generous.

In Rhode Island, we can choose between Federal and State exemption laws that allow great protection for real estate. The bottom line is that in the 3,000 clients I have represented over the years, the court has never taken a house.

If you are considering bankruptcy and are concerned that filing a Chapter 7 case may affect your home, give me a call at 467-6800. I will explain how we can discharge your consumer debt and protect your house at the same time.

I am available for telephone consultations and in-home appointments throughout Rhode Island and Massachusetts.

How Fast Can You File My RI Bankruptcy?

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.