When people first sit down to talk about Chapter 7 bankruptcy, the question I hear most often is: “Am I going to lose my house? My car? Everything I own?”
The answer, in most cases, is no. But to understand why, I want you to imagine something.
Picture two boxes sitting in a room. One along the left wall, one along the right. They’re different sizes—one might be deeper than the other, wider than the other, because each one holds different amounts. Each box has labels on it: furniture, jewelry, clothing, money in the bank, wildcard exemption, real estate, life insurance policies. Everything the law says you can protect.
Now imagine Chapter 7 bankruptcy as a cleaver. It comes into that room and cuts off everything that sticks out of the boxes. Everything that fits inside stays. Everything that doesn’t fit—that’s what the trustee gets.
My job, as your attorney, is to figure out which box to use and how to pack your stuff into it as strategically as possible so you keep as much as you can.
Here’s how it actually works.
When you file Chapter 7, your assets technically become part of the bankruptcy estate. But the law recognizes you need certain things to survive and function. So both Rhode Island and federal law allow you to “exempt” specific property. That exempted property is untouchable—the trustee can’t liquidate it, creditors can’t reach it.
The key part? In Rhode Island, you get to choose. You can use Rhode Island exemptions or federal exemptions, whichever box protects more of your stuff. That flexibility is huge.
Let me give you some examples of how these boxes work.
Take the homestead exemption—the amount of equity in your primary residence that’s protected. Rhode Island’s homestead exemption is $550,000 for an owner-occupied residence. That’s a very solid exemption, and honestly, in thirty years of practice, it’s covered almost everybody who’s sat down with me wanting to file. But Rhode Island provides much more than just the homestead. There’s also exemption protection for your vehicle, household furnishings and goods, jewelry, clothing, and a significant amount in bank accounts. You also get protection for life insurance policies and retirement accounts in many cases.
Here’s why this matters: if you have a house with equity within that $550,000 homestead exemption, plus a car, some savings, and normal household items, you’re covered. The cleaver doesn’t find anything sticking out.
Now, what about the wildcard exemption? This is where the federal box becomes interesting. The federal exemption gives you a wildcard pool of money you can apply to anything. But here’s the key feature: if you don’t use the federal homestead exemption (which is much smaller at around $18,600), you can add that unused homestead amount to your wildcard. So instead of just a basic wildcard amount, you get wildcard plus the federal homestead exemption combined. That creates flexibility if homestead protection isn’t your priority.
One more important thing about exemption amounts: these numbers are per filer. If you’re married and filing jointly, you generally double all the exemptions. So if the wildcard is $12,000 per person, a married couple gets $24,000 combined. That’s a generalization—it depends on the specific exemption—but it’s a good framework to understand how it scales.
Now, here’s something critical that I need to be direct about.
I’m not a private investigator. I’m not being paid to tell you what you own, and I’m not being paid to track down every person or entity you owe money to. That’s on you. You need to tell me what you own and what you owe—completely and accurately.
It’s extremely important that you list every creditor, every person or entity you owe money to, anywhere on the planet. Every single one goes on the petition. Some people ask me, “Can I just rely on my credit report?” The answer is no. There are three main credit bureaus, and yes, you’re entitled to a free copy every year. But credit reports are incomplete. People get missed. If you rely solely on a credit report, you’re probably going to lose creditors—meaning they won’t be discharged, and you’ll still owe them after bankruptcy. That defeats the purpose.
Use the credit report as a backup tool, a reference point. But your primary source is you sitting down and thinking through every debt—old credit cards, medical bills, family loans, business debts, everything. If there’s any doubt about whether you owe someone, disclose it. The trustee and the court can sort it out, but you can’t accidentally forget to list someone and then claim surprise later.
When you tell me your furniture is worth five grand because that’s what you paid for it seven years ago, that number doesn’t help. What matters is what someone would give you for it in a private sale today. Think Facebook Marketplace, Craigslist, a yard sale. If you had to sell it fast and needed cash, what would you actually get? That’s the real value.
Same thing with jewelry. A lot of people give me an appraised value, especially if it’s been appraised for insurance purposes. Here’s the reality: appraised values are often extremely high and unrealistic. They’re based on retail replacement value, not what you’d actually receive if you sold it. What matters is what a pawn shop would offer you in a cash buy, or what a private party would pay. That’s your box number.
The bottom line is this: if you file Chapter 7 in Rhode Island, there’s a very good chance you keep your house, your car, your retirement accounts, and your personal property. Most Chapter 7 cases here are “no-asset” cases—the cleaver doesn’t find anything sticking out of the boxes because we’ve chosen the right box and packed it strategically.
The key is understanding your boxes, being honest about what you own and who you owe, and valuing everything realistically so I can fit everything in and make sure nobody gets missed.
If you’re thinking about Chapter 7 and have questions about what you’d keep or what you owe, let’s talk. Call us for a free consultation and we’ll figure out which box works best for you.
