How do I know if I am eligible for Chapter 7 or Chapter 13 bankruptcy?

In Rhode Island, whether you are eligible for Chapter 7 or Chapter 13 bankruptcy is determined by a process known as the means test. To be eligible for Chapter 7 bankruptcy, a person must demonstrate that their disposable income (income after mandatory deductions) is insufficient to cover their debts. If you do not pass the means test, you will likely qualify for Chapter 13 bankruptcy. When filing for bankruptcy in Rhode Island, your income will be compared to the Rhode Island median income. If your income is lower than the median income, you are generally eligible for Chapter 7 bankruptcy. If, however, your income is greater than the median income, you may still qualify for Chapter 7 bankruptcy, but you will need to calculate your disposable income by subtracting allowed expenses from your income. If your disposable income is too high, you may not qualify for Chapter 7 bankruptcy and will likely need to look into Chapter 13 bankruptcy. Chapter 13 bankruptcy is available to people who have a regular income. With Chapter 13 bankruptcy, you will be required to propose a repayment plan that is approved by the court. In this repayment plan, a portion of your disposable income over a three to five-year period will be used to pay back creditors. If you are considering filing for bankruptcy in Rhode Island, it is important to consult with an experienced bankruptcy attorney to determine which type of bankruptcy will best suit your needs and if you are eligible.

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How do I know if I am eligible for Chapter 7 or Chapter 13 bankruptcy?

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