Qualifying for Chapter 7 Bankruptcy

Debtors cannot simply decide to file Chapter 7, they must first pass a means test. The means test is based on a formula based on median income which the federal government compares your household income to the median household income for your family size in the county in which you live. The median income is different for each debtor since factors like household size do have an impact on the rate.

It is important to note that many people who do not pass the means test initially are able to pass it when factoring in all of their household expenses and the amount of debt they owe. Before filing it is important to have an attorney experienced in bankruptcy law review the means test. Borrowers who earn less than the median income for a family their size are generally eligible to file for Chapter 7.

Another criteria which must be met is each debtor must attend a credit counseling class during the process. This course is available on-line and is easy.

Filing For Bankruptcy in Rhode Island: What You Need To Know

If you are considering filing for bankruptcy and live in Rhode Island, or Massachusetts, you need to know the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy. These are the two main types of personal bankruptcy but each have their own set of rules and stipulations that are paramount in choosing the right one for your own personal needs.

  • Chapter 7 Bankruptcy. This type of bankruptcy filing is known as straight bankruptcy. What it involves is a liquidation of your assets that are not considered exempt. Exempt property can be your home, tools for work, automobiles and some household furnishings, retirement funds, and some money in the bank. You can file for Chapter 7 bankruptcy once every eight years. You must also qualify for this type of bankruptcy since only those that cannot afford to pay on their debts are considered. If you can afford to pay some of your debtors then you have to choose the Chapter 13 status instead. Also keep in mind that some debts cannot be discharged. Some examples include back taxes and student loans.

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Bankruptcy Debt Exclusions

It is important to understand that regardless of which chapter of the Bankruptcy Code you are eligible to use, there are some debts which cannot be changed through bankruptcy. These debts include student loan debt and taxes owed for three years or less.

If your finances are in a shambles and you want to get your financial life in order, you should consider contacting a qualified bankruptcy lawyer for assistance.  Whether you live in Rhode Island or Massachusetts I can help you. Contact me to determine which bankruptcy filing is right for your needs as well as to get the help necessary to file the proper documents and meet the requirements of the bankruptcy court.

Best Bankruptcy Attorney in Rhode Island

Robert went beyond our expectations and guided us through an incredibly difficult situation. He was understanding, non judgemental, classy and respectful. I confidently recommend Robert and promise you will feel a great peace of mind that you didn’t think possible.

- Chapter 11 bankruptcy client

The Difference Between Chapter 7 Bankruptcy and Chapter 13 Bankruptcy

When your finances are in turmoil, you may be considering filing for bankruptcy.  While this is not an option anyone wants to think about, sometimes there is no other alternative. For those considering bankruptcy, one of the first things that need to be understood is the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy. While there are similarities, there are tremendous differences as well.

  • Chapter 7 defined – The simplest form of bankruptcy, Chapter 7 literally wipes away consumer debt. Some assets such as a primary residence and automobile may be exempt depending on your individual case. It is important to consult with an attorney experienced in bankruptcy law to be certain you will be able to keep all of your property.
  • Chapter 13 defined – More commonly called wage-earners bankruptcy, this allows the debtor to restructure existing debt. Borrowers who do not qualify for Chapter 7 are often able to file Chapter 13.

How to determine which bankruptcy filing is right for your needs

When your finances are in turmoil, you may be considering filing for personal bankruptcy.  While this is not an option anyone wants to think about, sometimes there is no other alternative. For those considering bankruptcy, one of the first things that needs to be understood is the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy. While there are similarities, there are tremendous differences as well.

  • Chapter 7 defined - The simplest form of bankruptcy, Chapter 7 literally wipes away consumer debt through a liquidation process. Some assets such as a primary residence and automobile may be exempt depending on your individual case.
  • Chapter 13 defined – More commonly called wage-earners bankruptcy, this allows the debtor to restructure existing debt. Borrowers who do not qualify for Chapter 7 are often able to file Chapter 13.

Qualifying for Chapter 7

Debtors cannot simply decide to file Chapter 7, they must first pass a means test. The means test is based on a formula based on median income which the Census Bureau shows was $65,981 in Massachusetts between 2006 and 2011.  The median income is different for each debtor since factors like household size do have an impact on the rate. Borrowers who earn less than the median income for a family their size are generally eligible to file for Chapter 7. [Read more...]

What is the difference between Chapter 7 and Chapter 13 Bankruptcy?

If you are considering filing for bankruptcy and live in Rhode Island, you need to know the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy. These are the two main types of personal bankruptcy but each have their own set of rules and stipulations that are paramount in choosing the right one for your own personal needs. [Read more...]

Be Wary of Debt Settlement Companies: Bankruptcy May Be Your Best Option

In their desperation, many people turn to debt settlement companies for help with their financial problems. Unfortunately in doing so, many folks can actually worsen their financial situation.

Debt settlement companies have exploded in number in recent years. Their commercials promise to settle your debts for a fraction of what is owed. What they don’t say in the commercials is that debt settlement fails for about two-thirds of those who try it, pushing many of them into the bankruptcy that they were trying to avoid.

In addition, there is evidence of the financial danger that debt settlement companies pose to consumers. The Better Business Bureau has called debt settlement an “inherently problematic business.” Also, the Federal Trade Commission, the Government Accountability Office and attorneys general in 41 states have uncovered evidence of abuses by many such companies.

Debt settlement can be a financial trap

Debt settlement companies are pro-profit institutions that attempt to negotiate with your creditors to reduce the amount you owe. For this service, they generally charge very high fees-some as high as 15 percent of the debt owed. Some of the other shortcomings of the debt settlement process are:

  • Debt settlement companies will often charge you even if they did not successfully settle your debt.
  • Unlike other debt relief processes, creditors do not have to work with debt settlement companies. If the settlement attempt was unsuccessful (or the creditors refuse to settle), you could have to pay interest or late fees, adding to you debt.
  • If any debt is forgiven during the debt settlement process, it is taxable as income.

Bankruptcy can offer real relief

If you are overwhelmed by debt, bankruptcy is often a better option than debt settlement. Some of the advantages that bankruptcy has over debt settlement are:

  • Bankruptcy costs much less than debt settlement companies.
  • Any debt that is reduced or discharged through bankruptcy is not taxable.
  • Bankruptcy can stop foreclosures, garnishments, car repossessions and collection phone calls, as creditors are legally required to work with you.
  • Bankruptcy attorneys are required to act in your best interests.

Although bankruptcy is a powerful tool, it is not the right tool for everyone who is having financial difficulties. If you find yourself in this situation, call me to discuss your matter. As an experienced bankruptcy attorney I will consider your individual situation, advise you whether bankruptcy is right for you and inform you of your debt relief options.

How to Improve Your Credit Score

Improving your credit score will not happen overnight. However, you can take action now to improve your score for the future.

Paying your bills on time is one of the most important things you can do. This includes not only credit card payments and bank loans, but also bills for things like utilities and cell phones. While these will not appear on your credit report when you make timely payments, they can appear as delinquencies if you pay them late.

When it comes to credit cards and revolving debt, try to keep the balances as low as possible. High debt can reduce your credit score, as can having too much debt when compared to your income. Moving debt around so that one card has more debt but another has none also will not help to improve your score.

While it may seem logical that if you close out credit cards with zero balances your credit will improve, that is not necessarily the case. Lowering the number of open revolving accounts can improve your score in some instances, but it also decreases the total credit you have available to use, which can actually lower your score.

Try to use your existing credit whenever possible and avoid applying for new credit, as credit applications appear on credit reports as inquiries and may signify to creditors that you are taking on new debt.

It is also important to avoid being referred to collections by creditors. Most creditors want to avoid giving your case to a collection agency, because the creditor ends up with a loss, even if you eventually pay the collection agency in full. Consequently, most creditors will try to work out a payment plan with you.

Improving your credit is a lengthy process. You must rebuild your credit history, which in turn will improve your credit score. Each reported delinquency reduces your score, and the amount of time it will take before these negative elements no longer count against you depends upon your particular history.

Credit inquiries remain on your credit report for two years. Delinquencies and most public record items remain for seven years, while bankruptcies can remain for up to 10 years and unpaid tax liens will stay on your report for 15 years. How quickly your score improves will depend upon which of these types of delinquencies appear in your credit report.

How to Prevent Foreclosure on Your Home

There are several tactics one may take to prevent foreclosure on their home.

Filing Chapter 13 bankruptcy is an option to halt foreclosure proceedings if you have been unable to make mortgage payments due to an unexpected and expensive illness or the loss of a job. Once bankruptcy is filed, an automatic stay is issued that halts all relevant legal proceedings, including foreclosure actions. I will then help you to create a reasonable three- to five-year repayment plan that will get your mortgage payments back on track.

In some situations, however, foreclosure defense alternatives such as mortgage modification may better suit your personal circumstances and financial goals. My years of experience as a bankruptcy attorney allow me to quickly evaluate whether bankruptcy is your best option for debt relief and stopping foreclosure.