State Laws

Rhode Island Bankruptcy Laws

     

Rhode Island Bankruptcy Exceptions
Despite the belief that bankruptcy eliminates all debts, some debts cannot be relinquished through bankruptcy. These kinds of debts include alimony, child support, most student loans, taxes, and others.

Rhode Island Bankruptcy Meeting
Bankruptcy filers are not required to go to court but are required to attend a creditors meeting. Here the petitioner, the trustee, and any creditors will meet. These meetings are often short, as most creditors do not attend. This meeting allows creditors to question the petitioner about the financial situation and the forms of bankruptcy.

Debt disputes can be made at this time and will later need to be handled in a court of law with a judge present. Most often these meetings do not require court hearings at all.

Chapter Thirteen Bankruptcy
Chapter Thirteen bankruptcy does not require individuals to liquidate or sell their property to relieve themselves of debts. This can only happen in extraneous circumstances. When a Chapter Thirteen bankruptcy petition is granted, the bankruptcy court will evaluate the individual's personal income, the household income, the number of individuals residing in the household, personal expenses, current debts, and personal property.

The court will then create a repayment plan specifically tailored to the individual's current circumstance. The repayment plan will breakdown what is still to be owed and how much should be paid a month for five years. Each month will have the same amount owed, or more can be included if the individual wishes. No repayment plan will exceed five years.

Chapter Seven Bankruptcy
Chapter Seven bankruptcy requires that property be liquidated to eliminate debts. The court will assign a trustee to the case. He or she will organize the non-exempt property and use the compensation to pay off creditors. This entire process can take six months or can be as little as three months.

Rhode Island Property Exemptions
Chapter Seven bankruptcy liquidates property, however certain kinds of property will be except. This means that though funds are required, an individual's living necessities will not be liquidated. Property liquidations will be based on the property's value, not for what the property was originally purchased.

The property value is what it is currently worth and not what it was worth five or ten years ago. Property like motor vehicles, real estate, and furniture are most often not required for liquidation. These items can be worth less at the present time then when they were purchased. The equity of the property will be considered as well as the amount of the property still to be owed.

Many valuable items are often noted as non-exempt, such as jewelry over a certain price limit, and are required to be sold. If an individual wishes to keep the property, he or she is required to provide the money for which the property would have been otherwise liquidated.

Rhode Island has several categories for properties that are exempt, including pensions and wages. Individuals have the right to choose the United States' federal exemptions for Chapter Seven liquidation or Rhode Island state exemptions.

See also:
Rhode Island Gun Laws
Rhode Island Divorce
Rhode Island DUI Laws
Rhode Island Misdemeanors External link (opens in new window)
Rhode Island Felony External link (opens in new window)
Rhode Island Expungement External link (opens in new window)