Debt Consolidation, Rhode Island

Dealing with too many obligations can be quite stressful, especially when they carry different principal and interest rates. You simply get tired keeping track of how much money you need to meet your monthly payments on these debts. How you wish you could simplify your debt issues and get out of your obligations with ease! Are you stuck in similar debt problems and looking for a solution? Then, debt consolidation is the right answer for you.

Debt consolidation is a debt simplification option, where you replace your existing debts with a single debt that you pay off at a fixed interest rate, spread over a longer period of time.

How does Rhode Island debt consolidation work?

Debt consolidation in Rhode Island works the same as in any other state. You can either consolidate your debts with a debt consolidation loan or you can enroll with a Better Business Bureau accredited debt consolidation company in Rhode Island.

How to consolidate your debts with a debt consolidation loan?

If you want to consolidate your debts with a debt consolidation loan, then you will have to take out a low-interest loan, so you can pay off your present obligations with the funds. After you pay off these debts, you will be left with a single obligation towards the consolidation loan. Since the loan carries low interest, it will reduce your monthly installments on the loan and help you pay it off easily.

Types of Consolidation Loan

A consolidation loan can be secured or unsecured. While secured loans are borrowed against some collateral, unsecured loans do not require any collateral.

If you possess an asset such as a house, car, jewelry or any other valuable property, you can use it as collateral for your secured loan. Since the collateral lowers the interest rate on the loan, secured consolidation loans are preferred to their unsecured counterparts.

If you have substantial equity in your house, you can look for a Home Equity Line of Credit (HELOC) and use the funds to consolidate your existing obligations. The more equity you have, the lower the interest rate and the bigger loan amount you can expect to get.

But if you do not have a valuable asset to use as collateral, there is nothing to worry about. You can still look for a low interest unsecured loan to consolidate your debts.

How can a Rhode Island debt consolidation company help you?

If you think you cannot handle your debt issues on your own, then you can enroll with an established debt consolidation company in Rhode Island.

After signing up, the company will work on your debt issues in the following manner:

• First, the company will take a thorough look at your debt issues and review your financial situation in order to get you enrolled in a program suited to your situation.
• Once you enroll in the debt consolidation program, the company's debt consolidation attorney will send a "cease and desist" and power of attorney letter to your creditors to notify them to stop communicating with you and that your debt issues are being taken care of by the company.
• Thereafter, the company's debt arbitrator will negotiate with your creditors to reduce or waive off penalties and interest on your debts, so new lower interest rates are determined for each of your creditors.
• Applying the new interest rates, the company will create a payment plan that will suit your budget. According to the plan, you will have to make a single monthly payment to the company. Usually, the plan is arranged so most of your money is used for paying the principal and not the interest.
• The company will use your monthly payments to distribute the installments of your creditors. This process will continue until all your creditors are paid off.

Loan that are ideal for Rhode Island Debt Consolidation

If the following loans are giving you trouble every month, then you can consider consolidating them and simplify your obligations:

• Credit Cards Debts
• Private student Loans
• Personal Loans
• Medical bills
• Payday Loans

Whenever you consolidate your credit card debts, you should check out the credit card debt laws in Rhode Island and protect yourself against credit card debt consolidation scams.

How does Rhode Island Debt Consolidation affect your credit score?

If you are looking for a debt relief option that is safe in every aspect, then debt consolidation is the right one for you.

With debt consolidation you can pay down your entire principal and thus expect minimum damage to your credit rating.

When you take out a consolidation loan, your credit score drops for while. But as you start paying off your other obligations your credit score increases again. And later, when you pay off your consolidation loan your credit rating receives a further boost.

What should you avoid when you are in debt consolidation program?

You resort to debt consolidation not only to simplify your debts but also to improve your credit score. So, it is crucial that you keep the following in mind while you are undergoing debt consolidation:

• Do not close your credit card accounts soon after you have paid them off. It might have adverse effects on your credit score.
• Do not take out any new credit cards, while you are in a consolidation program. Frequent applications for credit will open up possibilities for default and that might harm your credit score.
• Make you payments on time, in order to increase your credit score.
• Avoid balance-transfers. If you apply for a new credit card to use the low introductory interest rate, you should make sure that you will be able to repay the balance within the trial period; otherwise your interest rates will increase and you will get deeper into debt problems.

Benefits of Rhode Island Debt Consolidation

You are benefited by Rhode Island debt consolidation in the following ways:

• You pay a fixed amount at a low interest rate.
• Your debts get simplified, requiring you to make a single monthly payment.
• You get rid of creditor harassment.
• Your credit score improves.

Debt Settlement, Rhode Island

Are you facing financial trouble and finding it hard to cover your monthly obligations? Is your outstanding debt figure increasing day by day with the accrual of interest and penalties? Have the debt collectors made your life miserable with repeated collection calls and other collection procedures? If this is what you are experiencing, and you are looking for a way out, then debt settlement is the right option for you.

Debt settlement is a debt reduction program, where your creditor accepts a lower amount from you that is considered full payment of the obligation. It is a great way out for consumers who are neck deep in debt and cannot pay their obligations in full but want to avoid becoming bankrupt.

How does Rhode Island debt settlement work?

Debt settlement in Rhode Island works the same way as in any other state.

You can settle your debts either by negotiating with your creditors by yourself or you can sign up with a Better Business Bureau accredited debt settlement company in Rhode Island.

How should you negotiate with your creditors?

If you are looking for a hassle-free way to settle your debts, then the best thing you can do is negotiate with your creditors directly.

Negotiation is the key to an effective debt settlement program. So it is very important that you negotiate with your creditors logically and reach an amiable settlement. Here are a few guidelines on how you should negotiate with your creditors:

1. Learn about the law: The first thing you should do is learn about the debt settlement laws in Rhode Island before you start negotiating with your creditors.
2. Get in touch with your creditors: Inform your creditors that you are interested in settling your accounts.
3. State the reason for debt settlement: It is very important that your creditors know about the financial hardship you are facing. So, inform them that you are financially strapped and cannot pay the debt in full. Also state that you might have to file for bankruptcy if your proposal is declined. Your creditors know that if you declare bankruptcy, they might lose the entire amount that you owe to them, whereas with debt settlement they will get some of the money owed to them. So, your creditors are likely to agree to your proposal for settlement.
4. Offer a big settlement amount: Offer a large settlement amount to make sure creditors accept your settlement proposal. So, before you set out to negotiate, save up as much as you can in order to offer a good deal. But do not settle for any amount more than 50% of your outstanding debt.
5. Devise a payment plan: Settlement amounts can be paid either in a single payment or in installments. You can negotiate an installment payment plan with your creditor if you cannot afford to pay the full settlement amount in a single payment. A payment plan will help you pay off the settled amount in affordable installments within your budget.
6. Make sure your debts are reported as "settled": After the settlement, make sure your creditors report your accounts to the credit bureaus as "paid" or "settled" so your credit score increases.

How can a Rhode Island debt settlement company help you?

If you are not quite sure about being able to handle the settlement on your own, then you should sign up with a Better Business Bureau accredited debt settlement company in Rhode Island.

When you sign up with a debt settlement company, the company will take up your debt issues and work on them in the following order:

1. First, the company will review your debts and finances and get you enrolled in the right program.
2. When you enroll in a settlement program, the company's debt settlement attorney will send a "cease and desist" and power of attorney letter and notify your creditors to stop all communication with you and that your debt issues are being handled by the company.
3. Then the company will create a trust account in your name, where you will have to deposit a certain amount every month for a lump sum debt settlement.
4. When enough gets saved in your account, the company's debt arbitrator will negotiate with your creditors to fix the actual settlement amount. Experienced debt arbitrators can reduce your payable amount even up to 60% of the outstanding amount.
5. Once the settlement amount is determined, the company will create a payment plan to suit your monthly budget. Settled amounts can either be paid in installments or in a lump-sum.

Duration of the debt settlement process in Rhode Island

Normally the duration of a debt settlement process depends upon several factors, such as the number of debts you are settling, the kind of debt, the total debt amount you are settling, etc. While credit card debt settlements take about 3-9 months, most other debts in Rhode Island take about 1-3 years.

How does Rhode Island debt settlement affect your credit score?

The effect of debt settlement on your credit score depends upon two factors-the delinquency of your accounts and your current credit score.

If you settle your delinquent accounts, your credit report will show them as "paid off"/ "settled" and that will improve your credit rating.

Settlement can be helpful even if you have a fair credit score and your debts are not yet delinquent, but you cannot afford to make further payments on your debts. When you settle your non-delinquent accounts, your credit ratings might get lowered for a while; but on successful completion of the settlement your score will receive a hike, and put you in a better position than someone who is constantly defaulting on their debt payments. So, debt settlement typically makes way to a good credit report and helps you get rid of your obligations faster.

Benefits of Rhode Island Debt Settlement

A Rhode Island debt settlement program helps you with the following benefits:

• You avoid the hazards of bankruptcy.
• You pay just the qualifying amount to clear your obligations
• Harassing collection calls from creditors and debt collectors are stopped.
• Your credit score improves.

Tax Consequences

Debt settlement is a taxable process. Any amount forgiven in a debt settlement program is considered to be taxable income.

On completion of the settlement program, your creditor should report your forgiven amount to the IRS and send you a 1099C form so you can report the forgiven amount on your Federal tax return.

If your creditor does not send you the form, you should notify the IRS about the amount that was forgiven through debt settlement and report it on your tax return.

Bankruptcy, Rhode Island

The very thought of bankruptcy makes most people uneasy, the reasons are the poor credit scores and the social stigma associated with it. You might be knee deep in debt and struggling every moment, yet bankruptcy is the last thing you'd like to opt for. Indeed, bankruptcy should be your last option, but definitely nothing to feel apprehensive about.

In fact, bankruptcy is the wisest option to choose when you find your obligations insurmountable and all the debt relief options fail to get you out of it. It is a legal way to become debt free and give you a fresh chance to rebuild your finances.

How to file for bankruptcy in Rhode Island?

Bankruptcy is defined as the legally declared inability of a debtor to pay down their obligations. It is a court-based procedure governed by the Federal Bankruptcy Code. So the process of bankruptcy filing is same in every state in the US.

You can file for personal bankruptcy either under Chapter 7 or under Chapter 13 of the Federal Bankruptcy Code. Bankruptcy will remain on your credit report for 7 to 10 years depending upon which kind of bankruptcy you file for.

Chapter 7 Bankruptcy

It is the simplest form of bankruptcy where your non-exempt assets are liquidated under the supervision of the court-appointed trustee and the proceeds are used to satisfy your obligations on a priority basis. The debts which cannot be paid off with the proceeds are discharged by the court. So Chapter 7 it is also known as "Liquidation Bankruptcy".

Since Chapter 7 Bankruptcy discharges most of their debts, filers prefer it to Chapter 13. To put a check on uncontrolled Chapter 7 filing, the Federal government has made it mandatory for Chapter 7 filers to undergo a Means Test.

Means Test

The Means Test is basically an evaluation of your income in comparison to the median income for a similar family in your state.

The following is the Median Income for the state of Rhode Island:

If your income is below the income of a comparable family in Rhode Island, then you will be eligible to file for bankruptcy under Chapter 7; otherwise the court will require you to revise your petition and file for bankruptcy under Chapter 13. The Means Test is primarily a means to prevent those filers from filing Chapter 7 Bankruptcy, who can pay off their debts if the debts are reorganized.

Chapter 13 Bankruptcy

If you need debt relief through bankruptcy but want to avoid liquidation, then Chapter 13 Bankruptcy is just what you are looking for.

Chapter 13 Bankruptcy reorganizes your debts and devises a payment plan that helps you pay off your debts within a period of 3 to 5 years. But filing under Chapter 13 will require you to have steady income so you can make payments as per the payment plan.

Exemptions available in Rhode Island Bankruptcy

Since Rhode Island has not opted out of the federal bankruptcy exemptions, it offers two sets of exemptions to the debtors filing for Chapter 7 bankruptcy.

The following are some of the federal exemptions you get in Rhode Island:

• Homestead Act: up to $21,625
• Personal Items: debtor's interest not to exceed $550 in value on any particular item or $11,525 total in household items; debtor's interest not more than $3,450 in value in a car
• Retirement Assets: social security to the amount necessary for support; pensions to the extent they are non-taxable
• Others: all government benefits and most court awarded compensation, $1,075 of any property plus up to $10,125 of any amount of unused homestead exemption

The following are some of the state exemptions available in Rhode Island:

• Homestead Act: Homestead to the value of $300,000 unless the property was acquired within the previous 1,215 days, and then the homestead exemption is limited to $125,000 in home equity under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005; 1 burial plot
• Personal Items: Clothing; Tools of the trade to the value of $1,200; Household furniture and goods to the value of $9,600; Bibles, school books and other family books to the value of $300;  Motor vehicles up to the value of $12,000; Jewelry up to the value of $2,000
• Retirement Assets: IRAs, pensions, annuities, and other plan except court ordered support
• Others: Debts secured by bills of exchange or negotiable promissory notes; Salary or wages from charitable corporation; Salary or wages if previously on relief; Other salary or wages up to the value of $50; Salary and wages of wife and minor children; interest in employee's trust; worker's comp; unemployment com, public assistance

You can choose the scheme best suited to your situation and requirements.

What makes you eligible for the Chapter 7 exemptions in Rhode Island?

You will be eligible for the Rhode Island Chapter 7 bankruptcy exemptions, if you meet the following criteria:

You have been living in Rhode Island for at least 2 years prior to filing for bankruptcy.

OR

If you have not lived in any other state in the previous 2 years but you have spent the majority of the 180 day period preceding the 2 year period in Rhode Island.

If you do not qualify for the Rhode Island exemptions, you will be allowed to use the federal exemptions.

Debts not cancelled by Rhode Island bankruptcy

• Alimony & Child Support
• Recent back Taxes
• Fines owed to federal or Rhode Island government agencies
• Fraudulent debts
• Student Loans
• Purchases of luxury commodities worth more than $550 within 90 days of filing for bankruptcy.
• Recent Cash Advances of $825 borrowed within 70 days of filing

Consult a bankruptcy attorney in Rhode Island

If you have already made up your mind to file for bankruptcy, but do not know how to go about it, then a reputable bankruptcy attorney in Rhode Island can help you. An experienced bankruptcy attorney will help you file your petition, protect your interests in the bankruptcy case, and guide you in regard to the legal course of action. The right place to get hold of an experienced lawyer is an established bankruptcy law firm in Rhode Island.

Payday Loan, Rhode Island

Payday lending is legal in Rhode Island. The state has enacted payday lending laws that regulate both the lenders as well as the borrowers. The payday lenders must abide by the small loan laws prevailing in the state.

The law requires the payday lenders to provide written contracts to borrowers where the total charges as well as the maximum finance charges, fees in the form of an annual percentage rate (APR), and dollar amount must be stated clearly.

The following are some of the regulations that the state of Rhode Island imposes on payday loans:

• Maximum Loan Amount: A borrower is entitled to a maximum $500 as an outstanding payday loan amount.
• Number of Outstanding Loans: A borrower can have only 3 outstanding payday loans at a time. But the aggregate of 3 loans should not exceed $500.
• Loan Terms: Minimum limit is 13 days, while maximum limit is not specified.
• Extension/Rollover: One extension is allowed.
• Fees and Charges: A lender may charge either 15% per check in interest, or $15 per every $100 lent.
• Annual Percentage Rate (APR): The APR for a two-week loan in the amount of $100 is 390%.

If you think your consumer rights have been violated by the payday lenders, or you have been victimized by illegal payday lending practices, then you should consult a consumer rights attorney in Rhode Island right away to protect your rights.

Debt Collection Laws, Rhode Island

Harassment by debt collectors and creditors is the worst menace that bothers consumers. You may owe a large amount to your creditor/debt collector; but the creditor/debt collector cannot harass you in any way. And if you think you are repeatedly facing creditor harassment, then law is by your side to protect you. Rhode Island consumers are protected under the Fair Debt Collection Practices Act (FDCPA) that safeguards every consumer's interest across America. However, to ensure some added protection to the Rhode Island consumers, the state of Rhode Island has enacted special state laws that supplement the FDCPA.

The FDCPA and the Rhode Island law strictly prohibit certain conducts by the debt collectors. Here are some of them:

• Contacting the debtor outside the span of 8 a.m. - 9 p.m. EST.
• Using violent or threatening to use violent means to collect debts.
• Collecting any amount greater than your debt agreement permits.
• Disclosing the debt to a third party.
• Cashing a post-dated check prematurely.
• Using deceptive and abuse means to force the debtor accept collection calls or pay for telegrams.
• Threatening to illegally confiscate the debtor's property.
• Misrepresentation of any sort relating to the debt and debt collection.
• Threatening the debtor with arrest.
• Putting the debt on a "bad debt" list.
• Making false claims of government affiliation and indicating that papers being sent to debtors are court papers and legal documents when they are actually not.
• Trying to collect a debt that has been already paid or discharged in bankruptcy.

Statute of Limitation, Rhode Island

The Statute of Limitations (SOL) for a delinquent debt refers to the time limit the creditor has to file a lawsuit against the debtor. It starts from the day your debt becomes delinquent. The SOL of a particular state is applicable to all contracts made in that state.

The expiration of SOL only prevents a creditor from filing a collections suit against a debtor. But it neither wipes off the debt nor stops a creditor from using any out of court means to collect on the debt.

The following are the Rhode Island Statutes of Limitation for delinquent debts:

How can a consumer rights attorney in Rhode Island help you if your consumer rights are violated?

You can sue an offending debt collector under the FDCPA and Rhode Island law. Violation of debt collection law is a punishable offence and if you win the lawsuit, the offending debt collectors will be required to reimburse you for the damages that you have sustained. Also they will be required to compensate for statutory damages in the amount of $1000.00 for an individual and up to $500,000.00 in a class action and also for the attorney's fees.

If you think your consumer rights have been violated with the illegal debt collection activities then you should immediately consult a debt collection attorney who deals with FDCPA violations in Rhode Island. You can also lodge your complaint with the Federal Trade Commission and with the Rhode Island Attorney General's Office.