Debt can accumulate quickly, and before you know it, you are beyond any ability to manage it. Debt impacts your credit history as much as it does your quality of life. Creditors and third-party collection agencies can cause serious stress. Fortunately, even when you think a solution does not exist to your debt problem, there very well may be one. Filing for Chapter 7 bankruptcy in Rhode Island & Massachusetts is the quickest, easiest, and most affordable way to discharge debts and get a clean slate.
At The Law Offices of Senerchia & Sheehan, our Chapter 7 bankruptcy lawyer in Rhode Island and Massachusetts will review your overall finances, debt, and life circumstances to help you determine if filing for bankruptcy is right for you. Then, we will guide you through the process so you never have to worry about deadlines or paperwork. Contact our bankruptcy attorney today at 401-615-3880 to schedule a free initial consultation.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is a type of bankruptcy that can benefit individuals, partnerships, or corporations. If you or your business have qualifying assets, they are liquidated to pay off debt. The court appoints a Trustee to review your assets and determine if any are worth liquidating. Each state allows for a certain amount of assets to be exempted, which means those assets are shielded from liquidation. You should consult with a bankruptcy attorney in Rhode Island & Massachusetts to make sure you know what applies in your case.
Even though Chapter 7 bankruptcies are a means to liquidate assets and pay off debts, these types of bankruptcies are often referred to as “no assets.” Most people who apply for bankruptcy under Chapter 7 do not have assets that would qualify for liquidation. Nonetheless, debts are still discharged, so you get a fresh start.
Chapter 7 bankruptcy is very common––much more common than people know. That said, there are a few caveats to keep in mind. First, not all debts are eligible for bankruptcy. Second, not all individuals, partnerships, or corporations will qualify. These caveats are reasons why you should consult with a bankruptcy lawyer to make sure Chapter 7 is right for you.
Eligibility for Chapter 7 Bankruptcy
Qualifying for Chapter 7 bankruptcy typically means being able to pass what is known as the Means Test. The Means Test determines whether you can pay off your debts. To pass the Means Test, your income must not exceed the income limits set by your state.
State income limits vary because the cost of living differs from state to state. Your state's income limit depends on the number of earners and people in the household.
For example, in Alabama, the income limit for
- One earner is $52,138
- Two people is $63,401
- Three people is $70,250
- Four people is $85,687
- Each person in excess of four is an additional $9,000
In California, however, the income limits are set much higher. California's income limit for
- One earner is $70,952
- Two people is $92,321
- Three people is $100,744
- Four people is $120,898
- Each person in excess of four is an additional $9,000
The income numbers for the Means Test are updated every six months.
Who Should File for Chapter 7 Bankruptcy in Rhode Island & Massachusetts?
Any person or company can file bankruptcy under Chapter 7 if they
- Own property in the United States
- Have a permanent residence in the United States
- Have not filed bankruptcy under Chapter 7 within the last eight years
- Completed credit counseling from an approved credit counseling agency
- Satisfy eligibility criteria
Reasons You Should File
Even though you can file for Chapter 7 bankruptcy, it does not mean you should. You should consider Chapter 7 bankruptcy if
- You want a fresh start
- Your credit score is already below 600
- You want a reasonably fast process to discharge debts
- You have a lot of debt and are either close to or meet the homestead exemption amount of equity in your home (this is the amount protected against bankruptcy)
- You have a lot of debt, but you also have income or assets creditors can take
- You cannot keep up with making ends meet at the end of the month
- You will not be able to pay off your debt within five years
- No other debt relief option applies or would provide better protection and benefits
- You do not want a debt repayment plan
Reasons Not to File
On the other hand, you may not want to file for bankruptcy in Rhode Island & Massachusetts if
- You are not presently working
- You have no assets a creditor can garnish
- You receive protected income, like
- Aged, Blind, or Disabled (ABD) benefits, Child support, Federal student loan proceeds, Retirement pensions, Social Security, Supplemental Security Income (SSI)Temporary Assistance for Needy Families (TANF)Unemployment benefits
- You have secured property (e.g., a car) that the creditor can repossess but you want to keep
- You are not close to the homestead exemption amount of equity in your home
- You do not want to hurt your credit score
- You can pay off your debts within the next five years
- Other debt management solutions are available and may be more beneficial
Speaking to a Chapter 7 bankruptcy attorney can provide you the insight you need to make informed decisions about how to address your debt.
How Much Does It Cost to File for Chapter 7 Bankruptcy in Rhode Island & Massachusetts?
The cost to file Chapter 7 bankruptcy in Rhode Island & Massachusetts depends on whether you file on your own or retain a bankruptcy attorney. Filing fees must be paid, and they are mandated by the U.S. Bankruptcy Court. The total filing fees for Chapter 7 will include
- Filing fee
- Administrative fee
- Trustee surcharge
These fees are subject to change periodically. For Chapter 7, the sum of all fees is just over $300.
Retaining legal representation adds to the cost. Some attorneys may charge as little as $750 while others can charge twice that amount. Much of it depends on the geographic location, experience, skill, and total sum of the services provided.
Due Diligence Checklist for Chapter 7 Bankruptcy
There are quite a few documents you need when you file for Chapter 7 bankruptcy in Rhode Island & Massachusetts. Here's a list of some of the most common and necessary documents you will need.
- Creditors, including a copy of the most recent statement or underlying document for each creditor
- Cosigners, including their names and addresses
- Current paycheck stub and/or evidence of income received within the last six months
- Tax returns for the last four years
- Divorce decrees and/or domestic court orders related to debt and/or support obligations
- Insurance policies for all insured assets (e.g., residential homes and automobiles)
- Certificates of title to all titled assets (e.g., vehicles, boats, recreational vehicles, campers, trailers, motorcycles, all-terrain vehicles)
- Deeds to real estate, including cemetery plots
- Recorded mortgages
- Appraisals on any real estate over the last four years
- Lawsuits, judgments, or liens, including tax liens
- Credit reports from Equifax, Experian, and TransUnion
- Bank account statements covering the last 12 months
What Happens When I File for Chapter 7 Bankruptcy in Rhode Island & Massachusetts?
After you file for bankruptcy, three important and immediate things happen:
- You are given a case number;
- An automatic stay takes effect, which means creditors can no longer garnish wages or take collection action against you; and
- A bankruptcy trustee is assigned to your case––the trustee reviews all documents, verifies information, and oversees the meeting of creditors.
Once Chapter 7 bankruptcy is granted, you will see your credit score affected by it. Chapter 7 bankruptcy stays on your credit report for ten years. As you rebuild your credit, bankruptcy will begin to lose its negative effect on your credit score.
Contact a Bankruptcy Lawyer in Rhode Island and Massachusetts Today
At Law Offices of Senerchia & Sheehan, we know how debt can impact an individual, a family, or a business. If you have difficulty paying bills because of the debt you or your company have accumulated, speak to a bankruptcy attorney in Rhode Island and Massachusetts today by filling out our online form or calling us at 401-615-3880. We will schedule a free initial consultation so that you get the answers you need to all your financial questions.