Bankruptcy Blog

A recent article in the New York Times said that the U.S. Treasury Department projects that by mid June of this year the value of the homes of 5.1 million homeowners will be less than 75 percent of what they owe on the mortgage.

Some are suggesting that this may be the magic number that has more underwater homeowners walking away from their mortgages. With mortgage modifications slow to materialize for people having trouble with their mortgage payments, many who struggle to make it will decide that the battle should be over.

The Treasury Department and others argue that more people talk about walking away than actually do, but in the current economic climate the emotional attachement that many feel for their home is beginning to melt into thin air.

In many cases, people look to bankruptcy to help them through their financial problems. Bankruptcy can clear your unsecured debt and adjust the amount you owe on your car, but bankruptcy courts cannot alter the terms of a mortgage, a terrible injustice in my opinion.

Allowing people in financial distress to get help restructuring all their debt should be a priority in the United States. Instead, this country seems to want to protect nothing but bonuses paid to executives at banks who inflated profits with financial transactions that had little real value.

Rhode Island non-dischargeable debt will be the same as in other states. Non-dischargeable debt is decided at the federal level and listed under federal bankruptcy laws. If you fail to continue paying non-dischargeable debts, collections for these debts will continue even if you have filed bankruptcy.

It is important to talk to your Rhode Island Bankruptcy Lawyer about all of your debts. Rhode Island non-dischargeable debt can include:

• Federal, state and local taxes. May be subject to specific time rules.
• Spousal Support/Alimony
• Child Support Payments
• Most Student Loans
• Mortgage Liens
• Certain types of purchases for luxury items within 90 days of filing
• Secure Debt
• Penalties and fines by government agencies
• Fraud committed in a fiduciary role including larceny and embezzlement
• Punitive damages assessed for “willful and malicious acts”
• Debts not outlined on the schedule and forms filed with the Bankruptcy Court
• Drunk Driving fines
• Certain cash advances or purchases for luxury items with in a certain time frame.

Chapter 7 Bankruptcy is the easiest and most common type of bankruptcy, but many people will not qualify to file Chapter 7 Bankruptcy or they will not want to liquidate their assets. Chapter 13 Bankruptcy will not discharge your debts as quickly, in fact you will have to repay all or most of your debt, but Chapter 13 Bankruptcy does allow you many benefits including:

• Stop a home foreclosure and allow you to repay missed mortgage payments
• Give you the ability to reorganize your debts with a more favorable debt repayment plan.
• End certain types of wage garnishments
• Stop harassing creditor calls
• Stop repossessions
• It may affect your credit for less time than Chapter 7 Bankruptcy.

Contact a Rhode Island Bankruptcy Attorney before filing Chapter 13 Bankruptcy. A bankruptcy attorney will file your bankruptcy forms, help you develop your bankruptcy repayment plan and appear in court for you. After the bankruptcy petition is filed, a trustee will be appointed to help you manage your debt repayment plan. If you complete the plan, your debts will be discharged. This can take from three to five years.

There have been certain assets and property that will be protected from your creditors in the bankruptcy process. These assets are called exemptions and are listed in federal bankruptcy law. Some states have created their own list of exemptions. Depending on the state where you live, you may be able to choose either the state bankruptcy list or the federal bankruptcy list. Certain states will not allow you to choose, but will require you to use the state bankruptcy list.

Exemptions for both lists were created to let you maintain certain assets so you can start over after bankruptcy. In the state of Rhode Island, you may choose either the federal bankruptcy exemptions or the State of Rhode Island Bankruptcy Exemptions.

Chapter 7 Bankruptcy will allow you to discharge most of your unsecured debt including: hospital bills, unsecured personal loans and high credit card debt. Filing Chapter 7 Bankruptcy will liquidate your assets to pay your creditors. The first step in the bankruptcy process is to contact a Rhode Island Bankruptcy Lawyer who can file your bankruptcy petition. After the petition is filed, an automatic stay will temporarily halt debt collection efforts. Debt collection may continue if a judge determines there is cause.

A trustee is appointed by the bankruptcy court to sell your assets and property and use the proceeds from the sale to pay your debts. Chapter 7 Bankruptcy is the most common, least expensive and easiest method to discharge most of your unsecured debt. Chapter 7 Bankruptcy will usually take between four to six months to complete. If you are a partnership, corporation, married couple or individual, you may qualify to file Chapter 7 Bankruptcy.

A Rhode Island Bankruptcy Attorney can be an invaluable resource to file all the necessary bankruptcy forms and answer all of your bankruptcy questions.

The goal of bankruptcy changes enacted in 2005 under the Bankruptcy Abuse Prevention and Consumer Act (BAPCPA) was to make it more difficult for individuals to file Chapter 7 Bankruptcy and discharge all of their debts. The BAPCPA was passed to require individuals who were able, to file Chapter 13 Bankruptcy and repay their creditors. Other changes that were made to federal bankruptcy law include:

• A new income test to determine if individuals will qualify for Chapter 7 Bankruptcy
• Additional bankruptcy document requirements
• Certain taxes under Chapter 13 Bankruptcy now can not be discharged
• You must complete a credit counseling  course prior to filing bankruptcy
• You must complete a financial management course prior to the discharge of your debts

The main change in the BAPCPA was to force individuals to pass a series of tests to determine if they can file Chapter 7 Bankruptcy. The first test is the income test. The income test compares your income to the median income of other residents in your state. If your income is below the median income compared to other Rhode Island families, you may be able to file Chapter 7 Bankruptcy. If your income is higher than the median income for other Rhode Island families, you will have to complete additional “means tests”.

The purpose of means testing is to determine how much disposable income you may have to pay your creditors. The test takes your gross income and subtracts certain expenses such as your house payment, your car payment, child support, tuition (up to $1650) and taxes owed. If you can still pay $6,000 or $100/month in debt repayment over the next sixty months you may not be able to file Chapter 7 Bankruptcy. If you do not pass that test, but you could still pay 25% of your disposable income toward debt repayment over the next sixty months, you may not be able to file Chapter 7 Bankruptcy.

Incomes for all states are published under the State Median Income List by the United States Trustee program. For the state of Rhode Island, after March 15, 2009, the average median income for a single wage earner is $46,466.  For a family of two the median income is $59,314 and for a family of three it is $72,809. For a family of four it is $91,415.

The means test information provided is general in nature and is not legal advice. It is important to contact a Rhode Island Bankruptcy Lawyer if you are considering filing Chapter 7 Bankruptcy.

Federal bankruptcy laws have been created to allow individuals to get a fresh financial start. No one wants to file bankruptcy, but if you are like one million other individuals last year, unable to pay your bills and sinking in debt, filing bankruptcy may be a good option for you.

There is no right answer about whether or not it is time to file bankruptcy, but if you answer yes to any of the following questions, you may be facing a financial crisis.

• Do you open new credit card accounts to pay the high balances on other credit accounts?
• Do you have to use credit card cash advances to pay off debts?
• Have you suffered a medical crisis and can not pay all the high medical fees?
• Have you lost your job?
• Are you facing a home foreclosure?
• Are you harassed day and night by creditor calls?

Filing Chapter 7 Bankruptcy may allow you discharge most of your unsecured debt with in a four to six month time period. Filing Chapter 13 Bankruptcy may allow you to consolidate and restructure your debt payments to repay all or most of your creditors. If you are considering bankruptcy, it is important to contact a Rhode Island Bankruptcy Attorney.

Many individuals will not be able to file Chapter 7 Bankruptcy because their income will be too high. Others will not want to liquidate their property. Filing Chapter 13 Bankruptcy is another good option. It will not immediately discharge your debts, but many times you will be able to create a payment plan which has more favorable repayment terms.

A trustee will be appointed by the bankruptcy court to help manage your repayment plan. The repayment plan is approved by the bankruptcy court. After you have filed your petition and your plan is approved, creditors will no longer be able to contact you for debt repayment. The exception may be for creditors who are collecting payments for non-dischargeable debts which are not outlined under your bankruptcy repayment plan. If you complete the terms of the bankruptcy repayment plan, your debts may be discharged with in three to five years.

An Idaho Bankruptcy Attorney can help you with all the steps in the bankruptcy process from filing your petition, completing your schedules, meeting with the judge in bankruptcy court and helping create your bankruptcy repayment plan.

There will be certain assets and personal property which will not be part of the bankruptcy process and will be protected from your creditors. The federal government has listed these assets as “exemptions” and they are protected to help you start over after you file bankruptcy.

Most bankruptcy laws are created at the federal level, but certain states have decided to create their own list of exemptions. Many states will let you choose either the federal bankruptcy exemptions or the state bankruptcy exemptions. Other states will only allow you to use the state bankruptcy exemptions.

In the State of Idaho you can not use the federal bankruptcy exemptions but must choose the state of Idaho Bankruptcy Exemptions.

The BAPCPA required that you pass an income test to file Chapter 7 Bankruptcy. The income test will analyze your median income and determine if it is above of below other similarly sized Idaho families. If your median income is above, additional means testing will have to be done. If your income is below, you most likely will be able to file Chapter 7 Bankruptcy. The goal of the BAPCPA was to increase the number of individuals who would be required to repay all or most of their debt by encouraging them to file Chapter 13 Bankruptcy.

Means testing will analyze your net income and determine how much disposable income you have which could be used to repay your debts. To find this figure, you subtract certain allowable expenses such as your car payment, house payment, child support, taxes owed and $1650 of school tuition. If the remaining amount allows you to pay $6,000 or $100 per month over the next 60 months toward debt payment, you may not be able to file Chapter 7 Bankruptcy. If you can not do this, but you could pay 25% of your remaining income to your creditors over the next 60 months, you may not be able to file Chapter 7 Bankruptcy.

The information provided here is very general and is not considered legal advice. An Idaho Bankruptcy Attorney should be contacted to determine if you can file Chapter 7 Bankruptcy in Idaho.

State median data is provided by the United States Trustee Program. For the State of Idaho, after March 15, 2009, the median income for a single wage earner is $40,910 and for a family of two it is $51,946. For a family of three it is $54,633 and for a family of four it is $66,939.

Filing Chapter 7 Bankruptcy can be a quick, easy and cheap way to discharge most or all of your unsecure debt. Chapter 7 Bankruptcy is a liquidation bankruptcy and your non-exempt assets will be sold to repay your creditors. Creditors will be paid in the order determined by federal bankruptcy law. Chapter 7 Bankruptcy can take four to six months to complete, and at the end of this time most unsecure debt such as hospital bills, unsecure personal loans and credit card debt can be discharged. Corporations, individuals, partnerships and married couples all may be able to file Chapter 7 Bankruptcy.

Federal bankruptcy laws were updated in 2005 under the Bankruptcy Abuse Prevention and Consumer Act (BAPCPA). The BAPCPA made several major changes to bankruptcy law including:

• Individuals must meet new income requirements to file Chapter 7 Bankruptcy.
• Individuals must complete a certified credit counseling class prior to filing bankruptcy.
• Individuals must complete a money management class prior to the completion of bankruptcy.

Many people want to know if they can file Chapter 7 Bankruptcy with out an Idaho Bankruptcy Attorney.  The answer is yes, but bankruptcy can be complicated and a bankruptcy attorney can file all the necessary bankruptcy forms, the schedules, the petition and appear in court for you.

There will be certain debts which will not be discharged by filing either Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. These debts are called non-dischargeable debt and are decided by federal bankruptcy law.

Regardless of where you live, all non-dischargeable debt will be the same and failure to pay these debts will allow your creditors to continue their debt collection efforts even if you have filed bankruptcy. It is important to discuss all of your debts with an Idaho Bankruptcy Attorney.

In the state of Idaho, the following debts will not be discharged by filing bankruptcy:

• Federal, state and local taxes. May be subject to specific time rules.
• Spousal Support/Alimony
• Child Support Payments
• Most Student Loans
• Mortgage Liens
• Certain types of purchases for luxury items within 90 days of filing
• Secure Debt
• Penalties and fines by government agencies
• Fraud committed in a fiduciary role including larceny and embezzlement
• Punitive damages assessed for “willful and malicious acts”
• Debts not outlined on the schedule and forms filed with the Bankruptcy Court
• Drunk Driving fines
• Certain cash advances or purchases for luxury items with in a certain time frame.