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...]

What is the National Debt Relief Program Act?

Below is a summary of the National Debt Relief Program Act:

  • Within six months before filing, you must take an approved financial management course.
  • If your current monthly income is less than the median income in your state of residence, you may file for Chapter 7 debt elimination of all of your consumer debt. You may not include tax debt, or government-backed student loans.
  • If your current monthly income is more than the median income in your state of residence, you must apply a means test:

Means Test

Step 1: Your monthly income – your monthly expenses = A

Step 2: A x 60 = B

Step 3: If B of step 2 is >$10,000, or >25% of your debt, then are eligible to file under Chapter 13 for debt reorganization

If B of step 2 is <$6,000, or <25% of your debt, then you are eligible to file under Chapter 7 for consumer debt elimination

Should I use a credit counseling agency before filing for bankruptcy?

As an experiecned bankruptcy attorney, I can explain to you how debt management and credit counseling services operate and help you determine if they are right for you.

You should be aware that the credit counseling industry is under national scrutiny for deceptive advertising and charging excessive fees. In many cases, people who want to avoid bankruptcy may sign up for a debt repayment plan at the credit counseling office, only to find themselves scrambling to pay the associated fees, on top of a burdensome debt load. I urge my clients to listen carefully, ask many questions, and think about the financial implications of signing on to a debt repayment plan during a required credit counseling session.

How do I begin to rebuild my credit after bankruptcy?

Ways to Rebuild Credit After Bankruptcy

  • Don’t believe the bankruptcy myths the credit industry wants you to believe.
  • When you file, exempt your home and car so you have some debt to repay
  • Open a credit union account, take out a small loan after a year, repay on time
  • Open a secured credit card account, repay on time
  • Don’t apply for credit cards for which you’ll be denied. Denied credit goes onto your report.
  • Include a statement explaining your bankruptcy with credit applications.
  • Remember the lessons learned during the required credit counseling session.