It’s hard to tell when it will be necessary to declare bankruptcy in Rhode Island, but here are a few tell tale signs: you’re making only minimum payments on your bills, you can’t pay off your debt in five years, you’re getting foreclosure notices, or you have lost your job. If you are in any of these situations, then filing for bankruptcy might be a good choice for you. Keep in mind that bankruptcy will not get rid of all your debts though, some notable exceptions being: alimony, child support, back taxes, student loans, large purchases made recently, debts owed to the governments, or large cash advances made within the last 70 days.
The best kind of bankruptcy for most people is Chapter 7. In order to qualify, you must have an annual income that is less than the median annual income for the state. This form of bankruptcy is also known as liquidation, because you are basically liquidating your possessions to pay off your debt. The good news is that each state has exemptions which are basically a limit on how much your debtors may take from you. These exemptions are usually very generous so you don’t have to worry about losing much if any of your property when you declare bankruptcy in Rhode Island.
When you are ready to file for Chapter 7 bankruptcy in Rhode Island, you will first have to go through a credit counseling program of no less than six months. This is due to a new law passed in 2005. Next, you will have to gather up a lot of your personal information regarding your finances such as: how much you make, your source of income, a list of your major assets and possessions, your last two tax returns, and a list of your creditors and how much your owe them. This information will then be used in order to prepare your petitions for bankruptcy and the many schedules and forms that go along with it.
Finally, you and your lawyer will go over your possessions to see which ones qualify to be exempt from your creditors. Some examples of exemptions given when you file for bankruptcy in Rhode Island include: your home up to $20,200, life insurance payments, health aids, motor vehicle up to $3,225, jewelry up to $1,350, and lost earnings payments.