Category Archives: new bankruptcy law

Does it cost more to file bankruptcy with my spouse?

Oftentimes not. In Rhode Island you can include your husband (or wife) in a bankruptcy filing at no extra charge from the court. The court filing fee is the same as if you were filing bankruptcy alone. And as for attorney fees, at my office we typically don’t charge additional fees for adding a spouse to a bankruptcy.

Even so, there are certain situations when it makes more sense for a couple to file bankruptcy separately. You’ll want to consult with an attorney experienced with bankruptcy to determine what would work best for both you and your partner.

Do income taxes get eliminated by filing for bankruptcy in Rhode Island?

If you owe federal or state income taxes from past years, you may be able to get rid of them by filing a RI bankruptcy. Generally speaking, you must wait three (3) years from the date the IRS / RI Division of Taxation processed your income tax return. (Note: this will likely be after the date you filed your tax return.) A Rhode Island attorney experienced with bankruptcy will be able to help you figure out when exactly you’re eligible to eliminate your past-due income taxes in a bankruptcy.

How can I make sure all my debts get eliminated when I file for bankruptcy?

If you're going to all the trouble of filing for bankruptcy, make sure you do it right!

Bankruptcy laws are more complex than ever, and a messed-up filing is a headache!

When you file bankruptcy in Rhode Island, you should list everyone you owe money to. If you fail to list a creditor, you risk not getting off the hook for that particular debt.  How can you avoid leaving a creditor out of your bankruptcy filing? Typically a credit report will identify most of your creditors. (Once every 12 months you can order a free credit report through annualcreditreport.com, or by calling 877-322-8228.)

However, not all debts will appear on your credit report. Medical bills, utility bills, and cell phone bills are often missing from credit reports, as are outstanding gym membership fees, unpaid magazine subscriptions, etc. In addition, debts that have been unpaid for more than seven years may stop showing up on a credit report. But if you don’t list them they might come back to haunt you after your bankruptcy (for the original amount plus a lot of interest accrued in the hands of some local collection agency– after the original creditor “charged off” the debt).

If you do accidentally fail to list a creditor when filing for Chapter 7 bankruptcy, it’s often possible to go back and amend (fix) your bankruptcy papers to include the missing creditor within 90 days after you file, though a $26 court fee will apply. Beyond 90 days, a heftier court fee ($260) will apply, and there are some situations where adding a missing creditor may not even be allowed. Chapter 13 (payment-plan type) bankruptcies can be even more risky to have to add a missing creditor.

Can I file bankruptcy when I’m receiving unemployment?

filing bankruptcy in RI can relieve unemployed workers struggling to make ends meetGenerally speaking, yes — Rhode Islanders who are unemployed can file for bankruptcy, even if they’re still getting unemployment payments. Of course, you’ll want to make sure that you’re eligible to file a wipe-it-all-clean Chapter 7 bankruptcy (versus a Chapter 13 payment plan bankruptcy). Also, if you have a worker’s compensation claim or are suing your former employer for wrongful discharge, this may complicate things a bit. But a Rhode Island attorney experienced with bankruptcy should be able to sort out these details for you.

Do I need to go to court if I file bankruptcy?

Don't expect to meet a judge simply because you're filing a personal bankruptcy petition in Rhode Island!Most people do NOT need to appear before a judge in order to complete their bankruptcy in Rhode Island. But they do need to attend a Section 341 Meeting of Creditors, which is run by a bankruptcy trustee (not a judge) who has been appointed to administer their case. Typically, the trustee will ask for ID (so remember to bring your drivers license and social security card). Then the trustee will spend several minutes asking you questions about what you own, your debts, income, etc.

If you’ve retained a good attorney, however, you won’t be alone. I attend this meeting with every one of my clients, and it’s rare for there to be any issues. In fact, most creditors don’t even bother coming. This Meeting of Creditors is held on weekday afternoons at the Federal Center, 380 Westminster Street, 6th Floor, in downtown Providence, and usually lasts for only a few minutes.

What should I bring to my free bankruptcy consultation?

People who are considering filing bankruptcy with me often ask what to bring for our first meeting. (If you’re interested in scheduling a free initial consultation to see if bankruptcy is a good option for you, call my office at 401.738.3030 today.) The purpose of this first meeting is to ensure that we’re both comfortable that going forward with a bankruptcy filing makes sense in your specific situation. So it’s generally helpful if you can bring in your recent bills, collection notices, and any lawsuit-related papers, as well as any other documents that you’d like me to take a look at. At the end of the meeting, I can give you a checklist so you’ll know exactly what information my office will need from you in order to get your case prepared and filed.

What kinds of debt can bankruptcy eliminate?

A Rhode Island bankruptcy filing can be used to get rid of many types of debt. Filing under Chapter 7  may allow many types of debts to be wiped out completely:

  • credit card debt
  • electric, gas, water, and other utility bills
  • medical, dental, and vision bills
  • personal and unsecured bank loans
  • automobile loan obligations remaining on a repossessed vehicle
  • mortgage loan obligations remaining on a foreclosed home

Any child support obligations, recent taxes, and student loans are generally not eligible for discharge. But in some cases, even student loans can be eliminated in a bankruptcy if it can be shown that these debts create an unreasonable hardship for you.

Can I modify my mortgage with a bankruptcy in Rhode Island?

According to a recent study, the typical Rhode Island house lost 25% of its value last year.  For many homeowners, the only alternative to losing a home to foreclosure may be to modify their mortgage.  Fortunately, current bankruptcy laws allow for many Rhode Island homeowners to dramatically reduce their monthly mortgage payments.

If your house is valued at less than you own on your first mortgage, you may be able to eliminate most of yoursecond mortgage with a bankruptcy (for owners of rental properties or investment real estate, it’s even better: you can often use a RI bankruptcy filing to modify both the first and second mortgage).  This can be done by filing for a Chapter 13 bankruptcy: you eliminate your second mortgage obligation and instead make a series of monthly payments for a limited period of time (between 36 and 60 months, depending on your income).

Given the magnitude of most second mortgages, this approach can result in significant savings. For example, if you have a $40,000 second mortgage, you could potentially eliminate all but $7,200 of your debt in a Chapter 13 bankruptcy.

Will I receive credit card offers after filing bankruptcy?

Many people think they won’t be able to sign up for new credit cards after filing bankruptcy. While all bets are off given the current credit crisis, in recent years the answer to the above question has typically been yes — it was fairly common to hear of clients receiving offers to sign up for credit cards soon after filing.

Why does this happen? It’s because credit card companies know that you won’t be able to file bankruptcy for a number of years, which makes you a relatively good credit risk.

Can filing for Chapter 13 bankruptcy stop home foreclosure in Rhode Island?

Yes — in many cases filing a Chapter 13 bankruptcy can stop a home foreclosure sale from proceeding. Over the years, many Rhode Island homeowners have used this type of bankruptcy filing to prevent foreclosure and allow themselves to get caught up on their mortgage payments and keep their house.