Providence, RI asked in Bankruptcy for Rhode Island

Q: Auto loan from credit union was sold to a lawyer. They are trying to garnish wages. Will bankruptcy clear this debt off

Auto loan is from 2007/2008 Pawtucket credit union. I live in Rhode Island. Also might have another judgment from a car accident when I had no insurance of my own & was technically at fault. Need to know if both of these will come off with bankruptcy or if I will still be obligated to pay them

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2 Lawyer Answers
W. J. Winterstein Jr.
PREMIUM
Answered

A: Validly perfected liens on a debtor's property generally withstand any bankruptcy relief. Note that auto liens are afforded some special rights. The attempted garnishment, however, is a separate matter, and most probably stayed by a bankruptcy filing.

Personal injuries to another while under the influence may be nondischargeable. Check Section 523 of the Bankruptcy Code, and the specific language/findings of the state court judgment.

Your best path is to speak/consult with an experienced RI attorney about these issues, and the amounts involved.

James L. Arrasmith
PREMIUM
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Answered

A: Filing for bankruptcy can help eliminate many types of debts, including auto loans and judgments, but there are some exceptions. Since your auto loan is from 2007/2008 and was sold to a lawyer for wage garnishment, it may be treated as unsecured debt if the vehicle was repossessed or no longer in your possession. Most unsecured debts can be discharged in bankruptcy, so this may be wiped out.

For the judgment from the car accident, the situation may be more complex. If the judgment stems from damages you owe due to a car accident, it depends on whether the debt is classified as a personal injury judgment from a DUI or another type of claim. Non-DUI related judgments are often dischargeable in bankruptcy, but you may want to confirm the specific details of your case.

Bankruptcy can provide relief from many financial obligations, but it's important to know that some debts may not be discharged. You may want to consult a professional for a clear understanding of your situation and how bankruptcy laws apply in Rhode Island.

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