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Rhode Island Bankruptcy Laws

Rhode Island Bankruptcy Laws should be known by every resident of the state of Rhode Island. In the past decade, the men and women of Rhode Island have succumbed to Chapter 7 and Chapter 13 bankruptcy programs to protect themselves from the harassment of creditors that threaten to repossess and foreclose their assets. For some citizens who are not familiar with Rhode Island bankruptcy laws may be taken aback with the changes made to some of the provisions of the state laws since 2005. The Bankruptcy Abuse Prevention and Consumer Protection Act has made new regulations regarding the parameter of applying for Chapter 7 or Chapter 13.

One of the qualifications to pass when applying for bankruptcy is the credit counseling program. A mandatory attendance and completion of credit counseling is required for debtors 6 months prior to the formal petition of bankruptcy protection. The group governing the program should be recognized by the state of Rhode Island and a proper documentation should be presented to the courts to prove that you have taken the said counseling.

Of the two bankruptcy programs applicable to individuals, married couples, and families, Chapter 7 is more popular because of its enticing offer to give creditors the chance to start anew financially. Although this may be the case, there are intricacies involved in the eligibility of the program. If and when you are considered eligible, the mountain of paperwork filed should be accurate to prevent your plea from being rejected. For every bankruptcy case a trustee is randomly assigned by the court. This trustee’s sole responsibility is to review your bankruptcy case, and in Chapter 7 for instance, administers a set of evaluations to compare your monthly income with the median income level of the state. Should the debtor’s income register higher than what most common Rhode Island citizens earn, then he is disqualified from the process.

If a debtor does not pass the Chapter 7 bankruptcy program, the court may recommend Chapter 13 instead. Although this program does not liquidate your debts, it gives you an assurance that you get to keep your assets and properties. Why is this so? Because a repayment plan is made by the debtor for the court’s approval with the trustee’s supervision upon implementation to pay all outstanding debts. The plan is to be implemented in three to five years and during this period an automatic stay is issued to the debtor’s creditors to prevent them from harassing the debtor or repossessing the assets. During this period, the debtor will remit his payments to the trustee, and the trustee distributes these to the respective creditors.

Rhode Island bankruptcy laws have specific exemptions aside from the federal laws’ list of exemptions. The debtor is given the choice of what exemption to use during bankruptcy application. The following is the scheme imposed by Rhode Island:

• Your home for up to $300,000, if purchased within 1,215 days of the bankruptcy application, the exemption is up to $125,000;
• A vehicle worth $12,000;
• Jewelry worth $2,000;
• Tools of trade worth $1,200;
• Family books worth $300;
• Household goods and furniture at $9,600; and
• Personal benefits like disability, public assistance, and unemployment benefits.

Before choosing the best exemptions that will fit with your situation make sure to ask a lawyer’s advice.