Bankruptcy Law

The purpose of the Federal Bankruptcy Act is to provide a debtor with a fresh start. At Rego Law, we practice all facets of personal bankruptcy and individual debtor relief proceedings from Chapter 13 wage earner plans and Chapter 7 liquidation proceedings to negotiated workouts. Contact us to learn more about bankruptcy law in Bristol, RI, and for a free initial phone consultation to discuss your financial situation

Glossary of Terms:

Bankruptcy Trustee: A person appointed by the court to oversee the case of a person or business that has filed for bankruptcy. In a consumer Chapter 7 case, the trustee’s role is to gather the debtor’s nonexempt property, liquidate it, and distribute it proportionally to their creditors. In a Chapter 13 case, the trustee’s role is to receive the debtor’s monthly payments and distribute them proportionally to their creditors.
Bankruptcy: A legal proceeding that relieves you of the responsibility of paying your debts or provides you with protection while attempting to repay your debts. There are two types of bankruptcies: Chapter 7 liquidation, in which your debts are wiped out (discharged), and Chapter 13 reorganization, in which you provide the court with a plan for how you intend to repay your debts. Reorganization bankruptcy for consumers with an extraordinary amount of debt and for businesses is called Chapter 11.

Chapter 13 Bankruptcy: The reorganization bankruptcy for consumers, in which you partially or fully repay your debts. In Chapter 13 bankruptcy, you keep your property and use your income to pay all or a portion of the debts over 3 to 5 years. The minimum amount you must pay is roughly equal to the value of your nonexempt property. In addition, you must pledge your disposable net income — after subtracting reasonable expenses — for the period during which you are making payments. At the end of the three-to-five-year period, the balance of what you owe on most debts is erased.

Chapter 7 Bankruptcy: The most familiar type of bankruptcy, in which many or all of your debts are wiped out completely in exchange for giving up your nonexempt property. Chapter 7 bankruptcy takes from 3 to 6 months and commonly requires only one trip to the courthouse.

Deed in Lieu (of Foreclosure): A means of escaping an overly burdensome mortgage. If a homeowner can’t make the mortgage payments and can’t find a buyer for the house, many lenders will accept ownership of the property in place of the money owed on the mortgage. Even if the lender doesn’t agree to accept the property, the homeowner can prepare a quitclaim deed that unilaterally transfers the homeowner’s property rights to the lender.

Dischargeable Debts: Debts that can be erased by going through bankruptcy. Most debts incurred prior to declaring bankruptcy are dischargeable, including back rent, credit card bills, and medical bills.

Foreclosure: The forced sale of real estate to pay off a loan on which the owner of the property has defaulted.

Homestead Declaration: A form filed with the county recorder’s office to put on record your right to a homestead exemption. In most states, the homestead exemption is automatic – that is, you are not required to record a homestead declaration to claim the homestead exemption. A few states do require such a recording, however.