Filing for Bankruptcy in Rhode Island (RI)

In most respects, filing for bankruptcy in Rhode Island isn’t any different than filing in another state. The bankruptcy process falls under federal law in Rhode Island.

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Facing financial challenges is a part of life. But if you're one of the millions struggling financially due to a job loss, illness, or another event in Rhode Island, bankruptcy can help. Here, you'll find an explanation of Chapters 7 and 13, checklists to help you understand the process and stay organized, and Rhode Island's property exemption laws and filing information.

However, we couldn't squeeze everything into this article, so be sure to check out its companion, What You Need to Know to File for Bankruptcy—you'll find lots more details there.

How Bankruptcy Works in Rhode Island

In most respects, filing for bankruptcy in Rhode Island isn't any different than filing in another state. The bankruptcy process falls under federal law, not Rhode Island state law, and it works by unwinding the contracts between you and your creditors—that's what gives you a fresh start.

But Rhode Island's laws come into play in a significant way. They determine the property you can keep in your bankruptcy case. You'll also need to know other filing information, which we explain after going over some basics.

Choosing the Right Bankruptcy Chapter For You in Rhode Island

Most people file either Chapter 7 or Chapter 13. If you don't know the differences between the two, you're not alone. The short explanation below and our handy Chapter 7 versus 13 chart will help clarify things.

Chapter 7 bankruptcy. Chapter 7 is often a bankruptcy filer's first choice for several reasons. It's quick—it only takes a few months to complete. And it's cheap—you don't pay anything to creditors. It works well for those of us whose property consists of the essential items needed to live and work.

However, people with more assets could lose them, especially if they own unnecessary luxury items. For instance, you might have to give up your RV, baseball card collection, or timeshare in the Bahamas—even your house or vehicle if you have too much equity in it or you're behind on the payments. Unlike Chapter 13, Chapter 7 doesn't have a payment plan option for catching up on late mortgage or car payments. So you could lose your home or car if you're behind when you file.

Chapter 13 bankruptcy. By contrast, Chapter 13 filers must pay creditors some or all of what they owe using a three- to five-year repayment plan. But the payment plan allows Chapter 13 to offer benefits not available in Chapter 7. For instance, not only do you keep all of your property, but you can save your home from foreclosure or your car from repossession. If you need time to repay a debt you can't discharge in bankruptcy, you can use this chapter to force a creditor into a payment plan. The biggest downside to this chapter? It can be expensive. Many people can't afford the monthly payment. Learn more about when filing Chapter 13 is better than Chapter 7.

Caution for businesspeople. Be sure to learn about the ins and outs of small business bankruptcies. The principles discussed apply to consumers only.

Will Filing Bankruptcy in Rhode Island Erase My Debts?

Bankruptcy wipes out many bills, like credit card balances, overdue utility payments, medical bills, personal loans, and more. You can even get rid of a mortgage or car payment if you're willing to give up the house or car that secures the debt. (Putting property up as collateral creates a "secured debt"—if you don't pay what you owe, the lender gets to take the property back.)

But you can't discharge all debts. Nondischargeable debts, like domestic support arrearages and recent tax debt, won't go away in bankruptcy, and student loans aren't easy to wipe out (you'd have to win a separate lawsuit). You'll want to be sure that bankruptcy will discharge (get rid of) enough bills to make it worth your while.

Steps in a Rhode Island Bankruptcy

We all know that seeing the forest helps us recognize the trees, so it's probably a good time to consider the significant steps you'll take during your bankruptcy journey. Think of this checklist as a roadmap, but you can also use it to track your progress. The good news? You've already made headway on the first two items!

Bankruptcy Steps Checklist

Keeping Property When Filing Bankruptcy in Rhode Island

You won't lose everything in bankruptcy. You'll use your state bankruptcy exemption laws to protect your property. We list the significant exemptions below, but first, understanding the following will help you maximize what you'll keep in your case.

  • Exempt and nonexempt property. You can keep property protected by an exemption or "exempt" property. When a bankruptcy exemption doesn't cover the property, you'll either lose it in Chapter 7 or have to pay for it in the Chapter 13 repayment plan.
  • Choosing state or federal exemptions. You can choose whether you use the state exemption list or the list of federal bankruptcy exemptions, but you can't mix and match exemptions from both sets. Filers who use state exemptions can also use the federal nonbankruptcy exemptions.
  • Doubling exemptions. Spouses filing together can double some (but not all) exemption amounts if both own the property.
  • Retirement accounts all filers can protect. You can keep your tax-exempt retirement accounts, including 401(K)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans and traditional and Roth IRAs to $1,512,350 per person (for cases filed between April 1, 2022, and March 31, 2025). (11 U.S.C. 522(b)(3)(C); (n).) Learn more about retirement accounts in bankruptcy.

Rhode Island's Bankruptcy Exemption List

Here are some commonly used Rhode Island bankruptcy exemptions.

Rhode Island's Homestead Exemption

The Rhode Island homestead exemption is one of the most generous in the country. You can protect $500,000 of equity. Married couples cannot double the homestead exemption. (R.I. Gen. Laws § 9-26-4.1.)

You must live or intend to live on the property to claim the exemption. Also, you should be aware of additional rules that could limit your ability to take full advantage of this exemption.

You must have purchased your home at least 40 months before the bankruptcy (if you sold your home and bought a new one in that same state with the sale proceeds, then the time you owned your first home will still count toward the 40-month requirement). If you can't satisfy this requirement, federal law caps your homestead exemption at $170,350 regardless of your state exemption amount (figure adjusts on April 1, 2022). Your homestead exemption is also capped at $170,350 if you have committed bankruptcy fraud or certain other crimes. (28 U.S.C. 522(p),(q).)

Find out more about the Rhode Island homestead exemption.

Rhode Island's Motor Vehicle Exemption

You can safeguard up to $12,000 in equity in a car, van, truck, SUV, motorcycle, or another vehicle. (R.I. Gen. Laws § 9-26-4.) Find out how the motor vehicle exemption works in a Chapter 7 case.

Rhode Island's Wildcard Exemption

You can protect the value of any asset of your choice up to $6,500, or add this to another exemption to increase its value. (R.I. Gen. Laws § 9-26-4(16))

Other Rhode Island Exemptions

  • Personal property. $9,600 in furniture, household goods and supplies to (spouses cannot double) (§ 9-26-4.1); $300 in family books (§ 9-26-4(4)); burial ground (§ 9-26-4(5)); clothing (§ 9-26-4(1)); $2,000 in jewelry (§ 9-26-4(14)); prepaid or savings tuition account (§ 9-26-4(15)).
  • Tools of the trade. Library of a practicing professional (§ 9-26-4(2)); tools used for work to $2,000 (§ 9-26-4(2)).
  • Wages. All earned but unpaid wages for a member of the military on active duty or a sailor; up to $50 owed other types of employees (§ 9-26-4); all wages of a spouse or minor children for one year after receiving public benefits, or an amount paid by a charitable organization or fund providing low-income relief (§9-26-4).
  • Pensions. Tax-exempt retirement accounts (§ 9-26-4(11)); ERISA-qualified benefits (§ 9-26-4(12).); firefighter and police officers' benefits (§ 9-26-5); private employee benefits (§ 28-17-4); state and municipal employee benefits (§ 36-10-34). Additional protections exist. Learn more about retirement accounts in bankruptcy.
  • Public Benefits. Blind, aged, and disabled benefits; general assistance (§ 40-6-14); state disability benefits (§ 28-41-32); crime victims' compensation (§ 12-25.1-3(b)(2)); workers' compensation (§ 28-33-27); unemployment compensation (§ 28-44-58); veteran's disability or survivor's death benefits (§ 30-7-9).
  • Insurance. Fraternal society benefits (§ 27-25-18); proceeds or benefits from accident or sickness insurance (§ 27-18-24); proceeds from a life insurance policy (if the contract explicitly states it can't be used to pay creditors) (§ 27-4-12); temporary disability insurance (§ 28-41-32).
  • Miscellaneous. A minor child's earnings (§ 9-26-4(9)); business partnership property. (§ 7-12-36)

Additional exemptions exist. Also, some exemptions are subject to conditions, and amounts adjust periodically. To ensure you're exempting all property possible, independently verify exemptions or speak with an attorney. You'll find the state exemption statutes on the website for the State of Rhode Island.

Preventing Bankruptcy Exemption Problems

Exempt your property carefully. The bankruptcy trustee—the court-appointed official assigned to manage your case—will review the exemptions. A trustee who disagrees with your exemptions will likely try to resolve the issue informally. If unsuccessful, the trustee will file an objection with the bankruptcy court, and the judge will decide whether you can keep the property.

Example. Mason owns a rare, classic car worth $15,000, but the state vehicle exemption doesn't cover it entirely. Believing that the car qualifies as art—at least in his mind—Mason exempts it using his state's unlimited artwork exemption. The trustee disagrees with Mason's characterization and files an objection with the court. The judge will likely decide the vehicle doesn't qualify as art.

Purposefully making inaccurate statements could be considered fraudulent. Bankruptcy fraud is punishable by up to $250,000, 20 years in prison, or both.

Qualifying for Bankruptcy in Rhode Island

You'll meet the initial requirement if you've never filed for bankruptcy before. Otherwise, check whether enough time has passed to allow you to file again. The waiting period varies depending on the chapter previously filed and the chapter you plan to file. Learn more about multiple bankruptcy filings.

You'll also need to meet specific chapter qualifications.

You'll qualify for Chapter 7 bankruptcy if your family's gross income is lower than the median income for the same size family in your state. Add all gross income earned during the last six months and multiply it by two. Compare the figure to the income charts on the U.S. Trustee's website (select "Means Testing Information").

Want an easy way to do this online? Use the Quick Median Income Test. If you find that you make too much, you still might qualify after taking the second part of the "means test." If, after subtracting expenses, you don't have enough remaining to pay into a Chapter 13 plan, you'll qualify for Chapter 7.

Qualifying for Chapter 13 can be expensive because the extra benefits come at a hefty price, and many people can't afford the monthly payment. To qualify, you'll pay the larger of:

Find out more about calculating a Chapter 13 bankruptcy payment.

Hiring a Bankruptcy Lawyer in Rhode Island

Most people find it worthwhile to get counsel. A bankruptcy attorney will help you:

  • qualify for the chapter of your choice
  • determine when it's time to file
  • help you keep the property you want
  • make sure you don't run afoul of fraud or other issues, and
  • explain when you can stop paying the bills you'll erase in your case.

You can expect creditors to call until you file. It's usually best to ignore them because telling creditors about your bankruptcy can encourage them to take more drastic collection steps before losing the right to collect altogether. However, if you hire counsel and refer creditors to your lawyer, they'll have to stop calling you.

Are you curious whether your case is simple enough to file yourself? Our quiz will help you identify potential complications while educating you about bankruptcy. You'll find it here: Do I Need a Lawyer to File for Bankruptcy?

Filing Your Bankruptcy in Rhode Island

Now that you've decided to file, the fun begins! Well, not really. The first step—gathering your financial information—can be a bit of a chore. But using our bankruptcy document checklist should help you organize the things you (or your attorney) will need.

Bankruptcy Document Checklist

Bankruptcy Forms, Means Test Multipliers, and Course Providers

After assembling the documents, your next step will be to prepare the paperwork. Here's what you'll need and where to find it.

  • Bankruptcy forms. You'll find free downloadable bankruptcy forms on the U.S. Courts website.
  • Means test multipliers. Go to the U.S. Trustee website to get the figures needed to complete the means test.
  • Education providers. The U.S. Trustee website also lists providers under "Credit Counseling & Debtor Education." Scroll down until you get to your district. And don't give up—it's a long list. (Individuals must complete credit counseling during the 180 days before filing for bankruptcy and a debt management course after filing the bankruptcy case.)

Rhode Island Bankruptcy Court Website and Location

Your case starts when you file your paperwork with the local bankruptcy court and either pay the filing fee or request a fee waiver. You'll find filing instructions, local forms, and hours of operation on the Rhode Island bankruptcy court website. The location and contact information for Rhode Island bankruptcy court is as follows:

U.S. Bankruptcy Court, District of Rhode Island
380 Westminster Street, 6th Floor
Providence, Rhode Island 02903
Telephone: (401) 626-3100
Fax: (401) 626-3150

After Filing for Bankruptcy in Rhode Island

Your creditors will stop bothering you soon after you file. It takes a few days because the court mails your creditors notice of the "automatic stay" order that prevents most creditors from continuing to ask you to pay them. Here's what will happen next:

  • You'll turn over financial documents proving the statements in your bankruptcy paperwork.
  • You'll attend the 341 meeting of creditors—the one appearance all filers must attend.
  • You'll complete a debtor education course and file the completion certificate.

These things all must happen before you get a Chapter 7 bankruptcy discharge. Chapter 13 filers will also attend a repayment plan confirmation hearing and complete the three- to five-year payment plan.

Need More Bankruptcy Help?

Did you know Nolo has been making the law easy for over fifty years? It's true—and we want to make sure you find what you need. Below you'll find more articles explaining how bankruptcy works. And don't forget that our bankruptcy homepage is the best place to start if you have other questions!

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Helpful Bankruptcy Sites

Department of Justice U.S. Trustee Program

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We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.

Updated April 20, 2022

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