Understanding which Debts are  Dischargeable Debts in Bankruptcy

Bankruptcy is a legal process designed to help individuals and businesses facing overwhelming debt. It provides an opportunity to obtain a fresh financial start by eliminating or restructuring debts. In the state of Rhode Island, bankruptcy laws govern the dischargeability of debts, determining which debts can be eliminated through the bankruptcy process. In this blog post, we will explore the concept of dischargeable debts in bankruptcy, specifically focusing on Rhode Island's laws and regulations.

Understanding Dischargeable Debts:

Dischargeable Debts: Dischargeable debts are those that can be wiped out or eliminated through bankruptcy. Once discharged, the debtor is no longer legally obligated to repay these debts, and creditors are prohibited from pursuing further collection efforts.

Non-Dischargeable Debts: Some debts cannot be discharged through bankruptcy. These non-dischargeable debts remain the responsibility of the debtor even after the bankruptcy process is completed. Examples of non-dischargeable debts include certain taxes, child support, alimony, student loans (in most cases), and debts arising from fraud or willful misconduct.

Dischargeable Debts in Rhode Island:

In Rhode Island, bankruptcy cases are primarily filed under Chapter 7 or Chapter 13 of the Bankruptcy Code. The dischargeability of debts may vary depending on the bankruptcy chapter filed. Let's explore the dischargeability of debts in each chapter:

Chapter 7 Bankruptcy:

Chapter 7 bankruptcy, also known as "liquidation bankruptcy," involves the sale of non-exempt assets to repay creditors. The remaining eligible debts are then discharged. In Rhode Island, the following debts are generally dischargeable under Chapter 7:

Credit card debts

Medical bills

Personal loans

Past-due utility bills

Judgments (not related to fraud)

Business debts (for sole proprietors)

Chapter 13 Bankruptcy:

Chapter 13 bankruptcy involves the creation of a repayment plan, allowing debtors to repay their debts over a specified period (typically three to five years). At the completion of the plan, the remaining eligible debts may be discharged. In Rhode Island, the following debts may be discharged under Chapter 13:

Credit card debts

Medical bills

Personal loans

Some tax debts (meeting specific criteria)

Unsecured debts (that were not paid in full during the repayment plan)

Consulting an Attorney:

Navigating the complexities of bankruptcy and determining the dischargeability of debts can be challenging. It is strongly advised to consult an experienced bankruptcy attorney in Rhode Island. They can assess your financial situation, guide you through the bankruptcy process, and provide personalized advice based on your specific circumstances.

Bankruptcy offers individuals and businesses in Rhode Island a path to financial recovery by eliminating or restructuring debts. Understanding which debts are dischargeable is essential in determining the potential benefits of filing for bankruptcy. However, the dischargeability of debts can vary depending on the bankruptcy chapter filed and the specific circumstances of each case. Seeking professional legal advice from a knowledgeable bankruptcy attorney is crucial to ensure a smooth and successful bankruptcy process while protecting your rights and interests.