What can I lose?
Although bankruptcy is under federal law, each state has certain limits on what creditors may take from a debtor during a bankruptcy proceeding. These are called State Exemptions. Many different types of assets are protected up to those limits while others are entirely exempt from the reach of creditors.
Rhode Island has what is known as a Homestead Exemption in the amount of $500,000. This means that the first $500,000 of a debtor’s equity in his or her principal residence is protected under a Chapter 7 filing. For example, if a filer owns a home with a market value of $450,000 and has a mortgage on the property of $250,000, the home would be protected from creditors since the owner’s equity is under the $500,000 limit.
A similar exemption of $12,000 exists for the total value of all motor vehicles in excess of loans against them. There is a $9,600 exemption on household furnishings and a $2,000 exemption for jewelry.
Regarding personal property, State Exemptions exist for all motor vehicles owned by the debtor up to $12,000 total; clothing, furniture, beds and bedding, household goods and supplies up to $9,600 total (spouses may not double); jewelry up to $2,000 total; books up to $300 total; and many others including tax exempt retirement accounts (401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans), IRAs, and Roth IRAs. There is also a wild card exemption in the amount of $6,500.
Due to the magnitude of a bankruptcy filing and the potential for losing assets or having a filing dismissed, it is always advisable to work with a Rhode Island bankruptcy attorney during a bankruptcy filing process.
If you would like more information about filing Bankruptcy consult Attorney Boezi.