Although a small state, Rhode Island saw a major reduction in the volume of bankruptcy cases in light of the new law, and few could have predicted how big the drop off would actually be. In hindsight, however, the change to the bankruptcy laws was so drastic that it makes sense. The following is a brief summary of the most important changes for Rhode Islanders:

1) people who earn more than the median in their state are no longer eligible for Chapter 7 in many cases – this forces more people to pay off their debt on a three to five year payment plan instead in a Chapter 13 bankruptcy. Detailed below is the median income information for Rhode Island:

2-person families: 58,108
3-person families: 63,135
4-person families: 78,189
5-person families: 78,592
6-person families: 76,217
7-or-more-person families: 93,436

2) increased fees for attorneys and courts costs – although the law itself did not mandate that attorney fees increase, it did so by making the filing more complicated and time consuming to practice, which resulted in higher lawyer fees. In addition to court cost increases, there is also the pre-bankruptcy credit counseling requirement, which costs about $100 unless you show a hardship or inability to pay.

More Rhode Islanders Turning To Other Debt Options

With a tougher bankruptcy an increasing number of people in Rhode Island are discovering that it is not worth filing and are pursuing other debt solutions instead. The two most common are credit card counseling and debt settlement. If you are interested at all in learning about ways you can save money on your debt balances, submit a form today for a free consultation from a debt professional.

Feel free to browse our other articles about debt & credit in Rhode Island:

Rhode Island Consumer Credit Counseling Services
Rhode Island Bankruptcy Laws
Rhode Island Debt Collection

Bankruptcy Statistics

2004: 4,068
2005: 5,703
2006: 1,573

Rhode Island witnessed much of the same as every other state in terms of the reduction in total bankruptcy filings from 2005 to 2006. The overall personal bankruptcy filings in 2006 dwindled to 1,573, a 72.4% decrease from the previous year. Behind this trend was the passing of the new law, which made qualifying for Chapter 7 more problematic and less attractive of a bankruptcy option. As a result more people in Rhode Island are using debt repayment solutions that help consolidate your payments and help you get out of debt fast.