Bankruptcy is a legal process allowing an individual or business to have some or all of their debt excused. It is almost always considered as a last resort because it can have some negative long-term consequences which must be considered, even if you eventually decide that they are outweighed by the benefits. Bankruptcy is controlled by federal law, and proceeds in federal courts. So, the process for filing for bankruptcy in Rhode Island will be very similar to the process everywhere else in the U.S. However, individual bankruptcy courts have different rules for exemptions, so it might be a good idea to consult with a local lawyer in North Smithfield, Rhode Island before filing.
Chapter 7 Bankruptcy in North Smithfield, Rhode Island
There are 2 typical forms of bankruptcy in North Smithfield, Rhode Island. They are known as Chapter 7 and Chapter 13 Bankruptcy. Chapter 7 liquidates part of the debtor's assets. It requires a certain percentage of the debtor's assets to be sold off to pay as much of his or her debt as possible. However, many forms of property that most people own are exempt, meaning that they don't need to be sold. This often includes houses, vehicles, insurance policies, and necessary personal items, like clothing. These assets are not available to creditors.
Once the non-exempt property is sold, the rest of the dischargeable debt is cleared. Some forms of debt, however, is non-dischargeable, including student loans, criminal fines, and others. If most of your debt in North Smithfield, Rhode Island is not dischargeable, Chapter 7 may not be the best option.
Chapter 13 Bankruptcy in North Smithfield, Rhode Island
Chapter 13 Bankruptcy in North Smithfield, Rhode Island is very different from Chapter 7. Whether or not it is a better option is very dependent on the facts of each distinct case. Chapter 13 bankruptcy does not absolve debt, it restructures it. This involves a court coming up with an adjusted repayment plan designed to be manageable for the debtor. This new plan sets aside the terms of the original arrangements that created the debt in the first place. This creates a new payment structure, typically involving a single monthly payment, that the debtor should find manageable.
Which Type of Consumer Bankruptcy Should I File in North Smithfield, Rhode Island
Chapter 13 is typically a good option for people who have a stable income, and a large amount of non-exempt property that they can't part with. On the other hand, if most of the debtor's property is exempt, and he or she does not have a stable income, Chapter 7 might be more beneficial.
In any case, you should talk with a local North Smithfield, Rhode Island bankruptcy lawyer. Your lawyer can advise you of your options and inform you of their likely result. This will make it much easier for your to make an informed choice.