Recent Blog Posts

Do I qualify for relief under chapter 7

Steven Hart, Attorney — Mon, 18 Apr 2011 14:50:00 GMT

To qualify for relief under chapter 7 of the Bankruptcy Code, the debtor may be an individual, a partnership, or a corporation or other business entity. Subject to a means test for individual debtors, relief is available under chapter 7 irrespective of the amount of the debtor's debts or whether the debtor is solvent or insolvent. An individual cannot file under chapter 7 or any other chapter, however, if during the preceding 180 days a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court, or the debtor voluntarily dismissed the previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. In addition, no individual may be a debtor under chapter 7 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. There are exceptions in emergency situations or where the U.S. trustee (or bankruptcy administrator) has determined that there are insufficient approved agencies to provide the required counseling. If a debt management plan is developed during required credit counseling, it must be filed with the court.

One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a "fresh start." The debtor has no liability for discharged debts. In a chapter 7 case, however, a discharge is only available to individual debtors, not to partnerships or corporations. Although an individual chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged. Moreover, a bankruptcy discharge does not extinguish a lien on property.

If you have questions about whether filing bankruptcy is right for you, give my office a call today and schedule a free confidential consultation with me.

What are the alternatives to a chapter 7 bankruptcy

Steven Hart, Attorney — Sun, 17 Apr 2011 18:35:00 GMT

Debtors should be aware that there are several alternatives to chapter 7 relief. For example, debtors who are engaged in business, including corporations, partnerships, and sole proprietorships, may prefer to remain in business and avoid liquidation. Such debtors should consider filing a petition under chapter 11 of the Bankruptcy Code. Under chapter 11, the debtor may seek an adjustment of debts, either by reducing the debt or by extending the time for repayment, or may seek a more comprehensive reorganization. Sole proprietorships may also be eligible for relief under chapter 13 of the Bankruptcy Code.

In addition, individual debtors who have regular income may seek an adjustment of debts under chapter 13 of the Bankruptcy Code. A particular advantage of chapter 13 is that it provides individual debtors with an opportunity to save their homes from foreclosure by allowing them to "catch up" past due payments through a payment plan. Moreover, the court may dismiss a chapter 7 case filed by an individual whose debts are primarily consumer rather than business debts if the court finds that the granting of relief would be an abuse of chapter 7. 11 U.S.C. § 707(b).

If the debtor's "current monthly income" (1) is more than the state median, the Bankruptcy Code requires application of a "means test" to determine whether the chapter 7 filing is presumptively abusive. Abuse is presumed if the debtor's aggregate current monthly income over 5 years, net of certain statutorily allowed expenses, is more than (i) $11,725, or (ii) 25% of the debtor's nonpriority unsecured debt, as long as that amount is at least $7,025. (2) The debtor may rebut a presumption of abuse only by a showing of special circumstances that justify additional expenses or adjustments of current monthly income. Unless the debtor overcomes the presumption of abuse, the case will generally be converted to chapter 13 (with the debtor's consent) or will be dismissed. 11 U.S.C. § 707(b)(1).

Debtors should also be aware that out-of-court agreements with creditors or debt counseling services may provide an alternative to a bankruptcy filing.

If you have questions about whether filing bankruptcy is right for you, give my office a call today and schedule a free confidential consultation with me.

When may I refuse to submit to a chemical test in Rhode Island

Steven Hart, Attorney — Sat, 26 Mar 2011 14:20:00 GMT

Any person who operates a motor vehicle within the State of Rhode Island is deemed to have given his or her consent to chemical tests of his or her breath, blood, and/or urine for the purpose of determining the chemical content of his or her body fluids or breath. For the Prosecution to successfully prove a refusal to submit to a chemical test case in Rhode Island against a suspected drunk driver the State must establish the following:

That there was reasonable suspicion to stop the suspected drunk driver’s vehicle. This is usually based on traffic infractions. Anonymous tips alone that a driver may be operating his/her vehicle while intoxicated is not enough for a valid vehicle stop;
That the suspected drunk driver was afforded a reasonable opportunity to have a physical examination by a physician selected by him/her;
That the suspected drunk driver had been informed of the penalties incurred as a result of noncompliance with the refusal statute; and
That the suspected drunk driver refused upon the request of the law enforcement officer to submit to the chemical test.

If you have been charged with DUI and/or Refusing to Submit to a Chemical Test, I encourage you to call my office for a free confidential personal consultation with me.

When does a child support obligation terminate in Rhode Island

Steven Hart, Attorney — Sat, 12 Mar 2011 18:00:00 GMT

The Rhode Island Family Court has jurisdiction to hear and determine all motions for support of children. The court also has the jurisdiction to enforce and modify any order or decree granting child support. In some cases, the Rhode Island Family Court has jurisdiction to modify an order or decree granting child support from another state.

The most important thing an obligor parent should know is that a Rhode Island child support order does not terminate automatically. Therefore, a party seeking a reduction in child support or to terminate his or her support obligation must present evidence showing a change in circumstances - either an abatement of the needs of the children or an impairment of the financial ability to provide for those needs. The obligor parent cannot simply stop paying child support or reduce their child support payment independently. He or she must file a motion with the court requesting a modification or termination of their child support obligation. The family court clerk will schedule a hearing for a Judge to consider this request.

Generally speaking, an order of child support may be terminated at the time of a child's eighteenth (18^th) birthday unless the child is still attending high school. If the child is still attending high school at the time of his or her eighteenth (18 ^th) birthday, the court will continue said order until such time as the child graduates from high school or attains the age of nineteen (19) years, whichever occurs first.

Notwithstanding the foregoing, the court, in its discretion, may order child support to continue, in the case of a child with a severe physical or mental impairment still living with or under the care of a parent, beyond the child's emancipation as defined above. The court shall consider the following factors when making its determination: (1) the nature and extent of the disability; (2) the cost of the extraordinary medical expenses; (3) the ability of the child to earn income; (4) the financial resources of the child; (5) the financial resources of the parents; (6) the inability of the primary caregiver of the child to sustain gainful employment on a full-time basis due to the care necessitated by the child. The onset of the disability must have occurred prior to the emancipation event. The court may periodically review the case to determine if circumstances warrant the continuation of child support.

If you are currently paying child support for a child that is about to attain the age of eighteen (18) years, I encourage you to call my office for a free confidential personal consultation with me.

What are the advantages of filing a Chapter 13 Bankruptcy

Steven Hart, Attorney — Tue, 08 Mar 2011 16:10:00 GMT

A chapter 13 bankruptcy is also called a wage earner's plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. If the debtor's current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period "for cause." (1) If the debtor's current monthly income is greater than the applicable state median, the plan generally must be for five years. In no case may a plan provide for payments over a period longer than five years. 11 U.S.C. §1322(d). During this time the law forbids creditors from starting or continuing collection efforts.

Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Nevertheless, they must still make all mortgage payments that come due during the chapter 13 plan on time. Another advantage of chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan. Doing this may lower the payments. Chapter 13 also has a special provision that protects third parties who are liable with the debtor on "consumer debts." This provision may protect co-signers. Finally, chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under chapter 13 protection.

If you are behind on your mortgage payments and want to save your home from foreclosure, give my office a call today to schedule a free confidential consultation with me.

What is a "Discharge" in Bankruptcy

Steven Hart, Attorney — Mon, 07 Mar 2011 16:25:00 GMT

A fundamental goal of the federal bankruptcy laws enacted by Congress is to give debtors a financial "fresh start" from burdensome debts. This goal is accomplished through the bankruptcy discharge, which releases debtors from personal liability from specific debts and prohibits creditors from ever taking any action against the debtor to collect those debts. Unless there is litigation involving objections to the discharge, the debtor will usually automatically receive a discharge.

Not all debts are discharged. The debts discharged vary under each chapter of the Bankruptcy Code. Therefore, a debtor must still repay those debts after bankruptcy. Congress has determined that these types of debts are not dischargeable for public policy reasons (based either on the nature of the debt or the fact that the debts were incurred due to improper behavior of the debtor). The most common types of nondischargeable debts are certain types of tax claims, debts not set forth by the debtor on the lists and schedules the debtor must file with the court, debts for spousal or child support or alimony, debts for willful and malicious injuries to person or property, debts to governmental units for fines and penalties, debts for most government funded or guaranteed educational loans or benefit overpayments, debts for personal injury caused by the debtor's operation of a motor vehicle while intoxicated, debts owed to certain tax-advantaged retirement plans, and debts for certain condominium or cooperative housing fees.

The timing of the discharge varies, depending on the chapter under which the case is filed. In a chapter 7 (liquidation) case, for example, the court usually grants the discharge promptly on expiration of the time fixed for filing a complaint objecting to discharge and the time fixed for filing a motion to dismiss the case for substantial abuse (60 days following the first date set for the 341 meeting). Typically, this occurs about three months after the date the debtor files the petition with the clerk of the bankruptcy court. In individual chapter 11 cases, and in cases under chapter 12 (adjustment of debts of a family farmer or fisherman) and 13 (adjustment of debts of an individual with regular income), the court generally grants the discharge as soon as practicable after the debtor completes all payments under the plan. A chapter 12 or chapter 13 plan may provide for payments to be made over three to five years.

If you have questions about whether filing bankruptcy is right for you, give my office a call today and schedule a free confidential consultation with me.

What is "Lien Stripping" in bankruptcy and how can it reduce my mortgage payments.

Steven Hart, Attorney — Sun, 06 Mar 2011 16:37:00 GMT

With the drastic decline seen in Rhode Island housing values, many individuals are finding themselves in situations where the balances of their mortgages exceed the fair market value of their home. In a Chapter 13 bankruptcy petition, the US Bankruptcy Court can "strip" or modify second mortgages and home equity loans thereby eliminating a debtor's monthly mortgage payment and reducing his or her total debt by tens of thousands of dollars.

Here is an example: Lets assume that your home has a current fair market value of $250,000. Perhaps the value of your home was $350,000 three to four years ago but its value has dropped due to the recession. The balance on your first mortgage is $275,000 and the balance on your second mortgage or home equity line is $55,000. In this scenario, a Chapter 13 debtor may "strip" the second mortgage holder's lien off their property and treat the entire balance of that debt in their Chapter 13 Plan as a general unsecured claim without priority. As a general rule, a Chapter 13 discharge releases the debtor from all debts provided for by the plan or disallowed, with the exception of certain debts referenced in 11 U.S.C. § 1328.

Mortgage modification in bankruptcy is a confusing topic and is only available in Chapter 13 cases. In some cases you can avoid a second mortgage lien and in other cases you cannot. As with most bankruptcy issues, the answer is: "It depends."

If you have a second mortgage or home equity loan and wish to keep your home, call my firm to learn how filing bankruptcy may help you.

Welcome to our Litigation Blog.

Litigation — Wed, 02 Mar 2011 21:40:00 GMT

We are pleased to announce the launch of our Litigation Blog.