How to Avoid Bankruptcy in Rhode Island

Avoiding bankruptcy in Rhode Island can be done with the help of competent professional advice and a strict commitment to debt management. Lawyers.com reports that causes of bankruptcy in Rhode Island are the same as in other states. A job loss or illness can create a financial crisis, especially if you were already overextended on credit. Seeking alternatives to bankruptcy can help you avoid ruining your credit while rebuilding your finances.

Instructions

1

Review your rights under the terms of the Rhode Island Fair Debt Collections Act. This act mirrors the federal government's Fair Debt Collections Practices Act and regulates what debt collectors can and cannot do when they attempt to collect from you. Some people begin considering bankruptcy as a debt management option simply because of constant harassment from collection agents. Knowing what agents can and cannot do can help you manage your stress as you try to avoid bankruptcy. Become knowledgeable about your rights in Rhode Island by reviewing the state statute on debt collection.

2

Schedule a meeting with a government-certified credit counselor in Rhode Island. Counselors approved by the U.S. Department of Housing and Urban Development are experts in debt management, including programs designed to avoid bankruptcy. Approved agencies, such as The Urban League of Rhode Island in Providence, and Money Management International in Warwick, can offer a free assessment of your financial situation and offer alternatives to bankruptcy. Find a counselor in Rhode Island by checking the HUD website.

3

Take a complete list of your debts and expenses to the meeting with the credit counselor. Have her look for ways to avoid bankruptcy, including reducing or eliminating discretionary spending so that you will have more money to pay your creditors. If that isn't enough, discuss other options, including debt management plans that you can direct yourself, debt management plans directed by the credit counseling agency or debt settlement through a debt settlement company.

4

Choose the bankruptcy avoidance strategy that you are most comfortable with. Self-directed debt management requires you to contact each of your creditors and seek lower monthly payments as you explain your financial problems and attempt to avoid bankruptcy. Take a matter-of-fact stance with creditors and debt collectors. Tell them you must work something out or you will file for bankruptcy, and they will receive much less, potentially. Credit counseling agencies in Rhode Island will handle this for you for a monthly fee. The agencies will require you to send in a lump sum payment each month that covers your bills, along with a management fee. You must agree to stay in the program for four years as the agency works with you and your creditors on a plan to pay them while helping you avoid bankruptcy.