Chapter 7 Bankruptcy - Providence Bankruptcy Lawyer

Chapter 7 Bankruptcy is known as a “liquidation” bankruptcy because a Trustee appointed by the court may sell property that you own which is not exempt from debt collection and use the proceeds to pay some or all of your creditors. The truth is, however, that most people who file a Ch. 7 bankruptcy do so because they have high personal debt and little or no equity in any property. Rhode Island law generally prevent owners from losing property because it sets limits of what can actually be taken by the Trustee and sold to pay creditors.

In order to make a determination about your property, you will be required to estimate the current market value of all of your belongings, including real estate, vehicles, boats, bank accounts, and your personal possessions. This is the value for which you could sell these items, not the cost to replace them. Some suggestions for getting property values are:

Chapter 7 bankruptcies are also referred to as "fresh start" cases. This is because at the end of your bankruptcy case, often in 5-6 months, you receive a discharge which can make you completely or partially debt free! Once the judge “discharges” the case, you no longer owe some or all of your debts and most creditors are prohibited by law from attempting to collect these debts or from suing you.

Ch. 7 bankruptcy does not discharge all debts. Most commonly discharged debts include medical bills, credit card debt, and personal loans that are owed to businesses such as these:

Debts that you must still pay after bankruptcy may include taxes owed to the IRS or other tax agencies, past due child support payments or alimony, student loans, personal injury judgments, criminal penalties, debts which you have been court-ordered to pay, and debts not disclosed in the bankruptcy.

Other Debts that May be Discharged in a Chapter 7 bankruptcy:

One of the main reasons Providence residents will file for Chapter 7 bankruptcy is to be able to 'walk away' from underwater mortgages and car loans they can no longer pay. This is known as "avoiding liens" and is one of the biggest benefits of filing for bankruptcy.

An experienced Providence Chapter 7 Lawyer will also give advice on certain leases and executory contracts that can be avoided and discharged in a Chapter 7 bankruptcy case.

How do you file for a Ch. 7 Bankruptcy in Providence – Providence County, Rhode Island?

A Chapter 7 bankruptcy can be filed by an individual (a single person, a married couple, or one spouse only), a business partnership in Providence, or a Providence - Providence County corporation or other business entity.

If you have previously received a discharge under a Ch. 7 or Ch. 11 bankruptcy, you cannot file for Chapter 7 until eight years after the filing date of the case in which you received a discharge.

You cannot file a Ch. 7 bankruptcy case until six years after the filing date of a Ch. 13 or Ch. 12 bankruptcy if you received a discharge in one of those chapters. There is an exception to this rule: if you made plan payments in your Chapter 13 or Chapter 12 case equal to all or at least 70% of the “allowed unsecured claims,” you would be eligible to file a Ch. 7 bankruptcy case sooner than six years after the filing date.

Credit Counseling

Providence and Providence County residents filing for Chapter 7 bankruptcy must take an approved credit counseling course within 180 days prior to filing their case. There are many approved agencies in the Providence area, including:

Consumer Credit Counseling Services
4 Richmond Square, Providence, RI
(401) 588-5160

Credit Bureau of Greater Prov
40 Fountain Street, Providence, RI
(401) 274-1591

Nelson & Gray Advisory, Corporation
190 Broad Street, Providence, RI
(800) 969-7919

Disposable Income

For individuals, their income must be below the median income for the State of Rhode Island, which is between $45,000 to $87,000 per year, depending on family size. If your income is above the median for Rhode Island, individuals or married couples must pass the “Means Test.” (The Means Test is not required for business entities that are filing for Ch. 7 Providence Bankruptcy.)

The means test looks at your gross personal income (or business income) for the past six months reduced by allowed IRS expenses. This adjusted income figure must be below the median for Rhode Island in order for you to qualify to file Chapter 7 bankruptcy.

Even if the result of the means test is that you are over the median, a Providence County bankruptcy lawyer can tell you whether there are other circumstances which will still allow you to file a Chapter 7 bankruptcy.

"Presumption of Abuse" in Chapter 7 Cases (Individual Debtors)

If the means test shows that you are over the median income for your area, your case is considered to be a "presumption of abuse." It's a shame Congress chose to use this particular language, because it basically means the debtor is trying to abuse the bankruptcy system. While there are definitely dishonest persons trying to cheat the system, the majority of Providence residents who file for chapter 7 bankruptcies are hardworking, honest people who find themselves in deep financial trouble. These people need the relief granted by bankruptcy, but sometimes their particular financial circumstances put them on the "wrong side" of the means test results and they cannot qualify for a Chapter 7 bankruptcy (based on the means test alone). It is imperative to contact a qualified Providence  Chapter 7 Lawyer for assistance!

Basics of a Ch. 7 Bankruptcy Case in Providence, RI:

Your Providence liquidation bankruptcy attorney will guide you through these steps:

► Preparing the documents for filing: clients will be asked to provide a variety of records including tax returns for the previous 2 years; pay advices for the past 6 months; bank statements; credit card statements; copies of bills; copies of leases and contracts; titles for homes, trailers, and/or vehicles; a social security card; a driver's license or other identification.

► A determination is made by Providence Bankruptcy Lawyer and the client of which property to list as exempt (protected in the bankruptcy).

► Credit counseling course is completed (for individuals).

► The case commences when the petition is filed; schedules, statements, forms and supporting documents are also filed. The filing fee is paid.

► Creditors receive notice of the bankruptcy filing.

► Claims are filed by creditors (called "Proof of Claim").

► Meeting of creditors is held (also known as the 341 Hearing).

► Objections, amendments, redemptions, etc., are drafted and filed, as necessary. Your Providence County Chapter 7 Bankruptcy Law Firm will know what needs to be filed and when.

► The Trustee will make determinations of how to treat certain debts and liens.

► Discharge of debts!

Chapter 13 versus Chapter 7 bankruptcy filing in Providence, Rhode Island

You may get more financial help if, instead of filing in Providence under Chapter 7, if you file for bankruptcy under Ch. 13. For a complete discussion of the benefits of a Providence Chapter 13 filing, please visit the Providence Ch. 13 page..

Ch. 7 Bankruptcy Law Firms Serve Providence and the Surrounding Areas

Serving clients throughout Eastern New Hampshire, including Allenton, Ashaway, Attleboro, Bayside, Boston, Bradford, Cambridge, Chepachet, Cranston, Cumberland Hill, East Greenwich, Exeter, Fort Ninigret, Greenville, Harrisville, Hartford, Hope Valley, Kingston, Misquamicut, New Haven, Nooseneck, North Scituate, North Swansea, Pawtucket, Perryville, Providence, Rumford, Shannock, Springfield, Usquepaug, Valley Falls, Wakefield, Warwick, Washington, West Warwick, Westerly, Wood River Junction, Woonsocket, Worcestor, areas in the vicinity of Theodore Francis Green Memorial State Airport, and other communities in Providence County.

While the information provided above may be helpful in answering your basic questions about qualifying for a Chapter 7 bankruptcy, it is best to consult a Providence Bankruptcy Attorney or Providence Bankruptcy law firm for legal advice about your specific circumstances. Don't rely on your own understanding of bankruptcy laws; trust an experienced Providence bankruptcy lawyer to review your situation and provide you with the guidance you are seeking.