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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.

Do Chapter 7 Debtors Have to go to RI Bankruptcy Court?

Going to court is rarely fun. Financial and family court matters can be issues of serious stress and discomfort. Court cases are filled with uncertainty and conclude only after lengthy legal battles.

Thankfully, a Rhode Island Chapter 7 bankruptcy case is entirely different. In the vast majority of RI bankruptcy cases, debtors rarely enter a courtroom. Although your RI bankruptcy lawyer files your petition with the US Bankruptcy court in Providence, your case is reviewed by an attorney at the US Trustee’s office, meaning that your bankruptcy case does not need to be heard in a courtroom. No judge, jury, or bailiff will be necessary.

The room where I handle my RI bankruptcy creditor meetings is nothing like a courtroom, with only a few scattered tables and chairs. RI Chapter 7 bankruptcy meetings are almost always the same: no excitement, no drama, very predictable and uneventful. You will sit next to me and across from the bankruptcy trustee at a table with a tape recorder and computer. The bankruptcy trustee will typically hear your case within an allotted 5-minute time span. Only improperly-prepared petitions, or extrememly complicated bankruptcy cases, take longer.

One key to a stress-free Chapter 7 bankruptcy case is to find an experienced bankruptcy lawyer with attention to detail and who can do things right the first time. If this kind of lawyer prepares your petition, your hearing should be entirely uneventful.

If you hire a lawyer from a bankruptcy mill, however, be prepared for headaches.

The bankruptcy hearings take place at the Federal Center, 380 Westminster Street, 6th floor, room 620. You should arrive 30 minutes prior to your hearing and have with you a state issued identification card (driver’s license) and your Social Security card.

15 Ways To Prepare for Filing Bankruptcy in Rhode Island

by Craig Stein

What To Do Today to Prepare for Filing Bankruptcy in Rhode Island

A smooth Rhode Island bankruptcy case generally depends on how prepared you are. Here are some simple steps you can take to make your Chapter 7 case less stressful for both of us. It really works!

Stop using all of your credit cards immediately. No more robbing Peter to pay Paul.
Ideally, try to make sure that there is little to no purchase activity in the prior 90 days.
If there were very large purchases, cash advances, or balance transfers in the prior 365 days, there should be no less than 3 payments made on such credit accounts. Your lawyer may suggest making additional payments or waiting several months before filing for bankruptcy.
Do not withdraw retirement funds early to pay bills. These withdrawals may be counted in the six-month income calculation and delay your filing date.
Do not transfer any property out of your name, like real estate, bank accounts, or other valuable property.
Gather your income tax records for the past two years.
Make copies of all pay-stubs for the last 6 months and keep collecting them up until the filing date of your case.
If you already have a judgment against you, do not warn a creditor’s law firm that you may be filing bankruptcy soon. This might trigger them to seize any money you have in your bank account.
If you intend to keep certain secured property, continue to make payments to that secured creditor. This is very important if you want to protect your house and car.
Perform a title examination on your real estate to make sure there are no unknown liens.
Do not repay debts owed to friends and family members within one year prior to filing bankruptcy. The trustee could force them to refund the money to the bankruptcy court.
Disclose all property that you may have an interest in. This includes parent’s bank accounts, parent’s real estate, personal injury cases, and anyone who may owe money to you.
Download your free credit reports at http://www.annualcreditreport.com to make sure no creditor is omitted from your bankruptcy petition.
Start saving money for your bankruptcy filing. Although most attorneys will provide a free consultation, they are not permitted to file your case until they are paid in full.
Hire the best bankruptcy lawyer you can afford. Find one who devotes his practice to bankruptcy representation, knows what he is doing and is not a beginner.

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.

The Truth About Debt Settlement Plans: Part I

Is debt settlement a realistic option? As a Rhode Island Bankruptcy lawyer, I get calls daily from families who are struggling with excessive credit card debt. If the credit card debt is less than $ 8,000, I rarely suggest bankruptcy as the solution, unless there is additional non-credit card debt that makes debt repayment impossible.

In every debt consultation, however, I ask what other solutions have been attempted to repay debt. Then the stories of debt settlement attempts and debt management plans begin. Many have paid large sums of money to finance a debt settlement plan that failed. Hundreds and thousands of dollars were wasted on unrealistic plans that were doomed from the start. Why does this happen to so many people?

The term “debt settlement plan” is a misleading one. Most of the Rhode Island advertisements I have seen for this kind of debt settlement plan—whether on the internet, on television, or in phone books—are placed by “debt management” companies, also known as “credit counseling” companies. Despite their name, most of these companies only aim to get you to sign up for what they call “debt management plans” (DMPs) and do not give actual advice on credit. What you might not know is that credit card companies sponsor DMPs in order to collect money from you. In essence, then, “credit counseling” companies serve as bill-collectors for credit card companies.

The debt settlement advertisements run by these “credit counseling” companies are misleading as well. For example, when ads claim that DMPs will “reduce your debt by 60%,” they may lead you to believe that they will actually reduce the amount of your debt. However, the most a “credit counseling” company can do is reduce the interest on your credit card—and not by much. In reality, you still must pay your entire debt along with most of the interest. Ultimately, “debt settlement” plans do anything but do away with your debt.

Additionally, when setting you up with a “debt settlement plan,” “credit counseling” companies often fail to take all your expenses into account. This is usually because the plan they offer you is far more expensive than what you can afford to pay. Thus, although they promise to eliminate debt, DMPs do not bring you any closer to making ends meet. In fact, almost 90% of DMPs tank before completion. All said and done, the hope offered by DMPs is nothing but a scam—lowering the interest rates on your credit card by a few points is far from a financial fix.

What’s worse, “debt management” plans actually damage your credit. As part of an arrangement called “fair share,” credit card companies are paid a percentage of the amount that the “debt settlement” company collects from you. Thus, the more you pay a “debt settlement” company to get yourself out of debt, the more of your money goes to pay off the credit card companies. And as long as these companies can continue to milk you, they will—regardless of whether you can afford your plan or not.

One Caveat: For those who only need help with budgeting, and have a modest amount of debt that can be reapaid comfortably in 24 months or less, I am the first to recommend a call to a local office of Money Management International.