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Bankruptcy Utah

Which Bankruptcy is Best for Me
Bankruptcy Utah

Bankruptcy is a legal way to get rid of most of your current debt, stop harassment from creditors, and start fresh. It is a federal court procedure. You will file documents with the bankruptcy court and wait for their approval. Then, you will either have debts dismissed or agree to a repayment plan. Bankruptcy is a court proceeding where you tell a judge you can’t pay your debts. The judge and court trustee look through your assets and liabilities (aka what you own and what you owe) to decide whether to discharge (or cancel) some of your debts. If the court finds that you really have no means to pay back your debt, you’ll go through the official process of declaring bankruptcy.

Chapter 13 Bankruptcy

Chapter 13 is a bankruptcy method for individuals where the court approves a plan for you to repay some or all of your debts over three to five years. You get to keep your assets and you’re given time to bring your mortgage up to date. You agree to a monthly payment plan and have to follow a strict budget monitored by the court. (There’s no privacy in bankruptcy.) People can file for Chapter 13 bankruptcy if their unsecured debt is less than $419,275 and their secured debt is less than $1,257,850.2

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the most common type for individuals. In this case, the court sells all your assets with some exceptions so you can pay back as much debt as possible. The remaining unpaid debt is usually erased. You could lose your home (or the equity you’ve put into it) and your car in the process, depending on what the court decides. There’s no set amount of debt you need to qualify the court just has to decide you don’t make enough money to pay off your debt.

Chapter 11 Bankruptcy

Usually just for businesses, Chapter 11 creates a plan for how the business will still run while paying off all their debt.

Chapter 12 Bankruptcy

Chapter 12 bankruptcy allows farmers and fishermen to get on a payment plan for their debts to avoid foreclosure on their property.

Chapter 15 Bankruptcy

International bankruptcy cases are handled in Chapter 15.

Chapter 9 Bankruptcy

Chapter 9 bankruptcy is a repayment plan for towns, cities, schools and the like to pay back their debt. For specific information about bankruptcy laws in your area, visit your state court website. There you’ll find info on the process and where to find help in your area.

How to File for Bankruptcy

1. Figure out which type of bankruptcy to file for.
2. Gather and organize the necessary documents.
3. Take a credit counseling course.
4. Fill out your bankruptcy paperwork.
5. Make sure you have your fees (for an attorney and filing).
6. Print your bankruptcy paperwork.
7. File your bankruptcy paperwork.
8. Send all the necessary documents to your bankruptcy trustee (the person appointed by the court to handle your case).
9. Meet with this trustee in a 341 meeting (or a meeting of the creditors).
10. Take a debtor education course.
11. Finish the bankruptcy process (which varies based on the type of bankruptcy you filed for)
12. Rebuild your life and know you can rise from this situation!

What Documents Do You Need to File for Bankruptcy?

There’s a heck of a lot of paperwork and forms and documents involved in bankruptcy, but let’s talk about what you need to gather up at the start:
• Tax returns for the past two years (for Chapter 7) or four years (for Chapter 13)
• Income documents (such as pay stubs from the past six months, your past two W-2s, and proof of any extra income sources like rental properties or Social Security)
• Mortgage information (like an appraisal, mortgage payment statements, and maybe the deed of trust and proof of home insurance)
• Vehicle information (such as proof of your vehicle’s value, any car loan statements, and maybe a copy of your registration and proof of car insurance)
• Retirement information
• Bank account statements
• Identification (meaning your valid photo ID and proof of your Social Security number)
• Other documentation showing any other debts or expenses, like alimony or child support

What Happens if You Declare Bankruptcy?

If you declare bankruptcy, creditors have to stop any effort to collect money from you, at least temporarily.

Most creditors can’t write, call or sue you after you’ve filed. But even if you declare bankruptcy, the courts can require you to pay back certain debts. Each bankruptcy case is unique, and only a court can decide the details of your own bankruptcy.

What Does Bankruptcy Cover?

Bankruptcy can stop foreclosure on your home, repossession of property, or garnishment of your wages. (Garnishment is when the court orders part of your paycheck to be sent directly to your creditor without you ever seeing the money). Bankruptcy cancels many but not all of your debts.

What Is Not Covered by Bankruptcy?

• Student loans
• Government debts like taxes, fines or penalties
• Child support and alimony
• Expensive items purchased right before filing bankruptcy, like cars, boats or jewelry

What Are the Consequences of Declaring Bankruptcy?

Bankruptcy takes a huge emotional toll on a person. It ranks up there with divorce, loss of a loved one, and business failure. Beyond the emotional impact, here are other effects of declaring bankruptcy:

Your bankruptcy becomes public domain. This means your name and other personal information will appear in court records for the public to access. That’s right . . . Potential employers, banks, clients and businesses can access the details of your bankruptcy.

Filing Bankruptcy Is Expensive.

Filing fees for Chapter 13 bankruptcy will cost around $310 plus attorney fees, which can be anywhere from $3,000 to $3,000. For a Chapter 7 bankruptcy, you’ll shell out $335 for filing fees and $1,500 to $3,000 for an attorney. Buying a home can be more complicated after a bankruptcy. Unless you pay cash for a home, it could take one to four years before you qualify for a mortgage loan.

Bankruptcy affects your credit score.

We aren’t pro-credit scores, but it’s important for you to know a bankruptcy dings your FICO. Hard. And that ding lingers. Chapter 13 bankruptcies stay on your credit report for about seven years, and Chapter 7 stays on there for 10 years.

Bankruptcy doesn’t clear all debts.

We’ve touched on this some, but declaring bankruptcy doesn’t make all your problems go away—and it doesn’t even make all your debt go away. Most student loans, alimony, child support, any reaffirmed debt, unpaid taxes, government debts or court fines aren’t cleared in a bankruptcy.

Should You Declare Bankruptcy?

Listen. We’ve said it before, and we’ll say it again: Bankruptcy should be your very last option. Check out all the alternatives (aka how to avoid bankruptcy) below. Try each and every one. If nothing works, and you’re still so overwhelmingly underwater that you simply cannot swim—then and only then do you declare bankruptcy.

What Are Alternatives to Filing for Bankruptcy

Before you even start gathering up that giant pile of documents you need to file for bankruptcy, go through this list of alternatives:

Get on a budget.

Budgeting may seem intimidating, but it’s just a plan for your money. And if you’re planning to get out of debt and avoid bankruptcy, you can’t do it without a budget. You need to see exactly what money you have coming in and where all of it is going. Once you see what your money is doing, you can start telling it what you want it to do. And what you want is to have more money freed up to pay off that debt. That means cutting extras and spending less money. That means learning tips on how to save money on everything. That means being super intentional with every single dollar you make and spend. When you’re making a budget that will work for you right now, where do you start? What’s the main stuff you need to focus on covering? Start with what we call your Four Walls: food, utilities, shelter and transportation. These are the main essentials.

Keep everyone fed, the lights on, a roof over your heads, and gas in the car to get to work. If these Four Walls are only things you can pay for while you’re getting out of debt, that’s called survival mode, and that may be what you need to jump into right now.

Talk to a financial coach.

You don’t have to walk this alone. Get with a financial coach and talk about your situation. They aren’t here to judge—they’re here to help. A financial coach can help you figure out a personalized plan of action for your specific situation. And yes, talking about money can be terrifying, but if you declare bankruptcy, your financial privacy will be out the window immediately. Opening up to a trustworthy financial coach now can help you avoid having to open up to a whole courtroom of people in bankruptcy.

Create extra income.

Another way to avoid bankruptcy is to bring in more money. Get yourself a side hustles. There are plenty of ways to work extra hours that fit into your schedule, and also plenty of work-from-home jobs that will keep you from spending extra drive time or gas money. You’ll be busy. But this is for a season and if you’re on the verge of bankruptcy, you’re at war right now. A war against your debt. The good news is, you know who wins. Even if you try every single alternative on this list and still can’t fight off bankruptcy, you are not defeated.

Chapter 7 Bankruptcy Timeline

The Chapter 7 bankruptcy process has many steps. Your obligation includes gathering information required by the court and the trustee, taking a credit counseling course, paying a filing fee, which sets the court process in motion, attending a “meeting with creditors,” and more. The judge could discharge your debt once all that happens.

Most cases follow the same basic timeline.

Normally, the process takes about four months. “Once you file your Chapter 7 bankruptcy, the meeting of creditors with the Chapter 7 trustee is approximately 30-45 days later. Then, the court waits 60 days to see if any creditors object to your Chapter 7 bankruptcy. If no objection, it takes about another 15 days to close out the case and get your Chapter 7 discharge of debt.”

• Gathering Information: Gathering documents that the court requires can be time-consuming, but it’s the most important part of the process. The trustee will want your last two years of income tax returns, six months of proof of income (generally paystubs if you are working) and three months of bank account statements. You also need to figure out what you own and how much it’s worth, as well as how much you spend and on what for when it comes time to file forms. More on that shortly.
• Credit Counseling Course: Those filing bankruptcy must take a credit counseling course 180 days or less before filing. The courses are provided by agencies that are approved by the U.S. Trustee Program office. The judge won’t accept the filing without a certificate showing you took the course. The point of the counseling is to make sure filing Chapter 7 bankruptcy is your only option. If the credit counseling agency develops a repayment plan for you, you’re required to file it with your other information for the court, whether you agree with the plan or not.
• Filling out Forms: Once you’re ready to file, you get a packet that includes 23 federal forms to fill out, and often some specific to your state as well. The most important federal form is the “voluntary petition,” Form 101, in which you describe why you’re filing, what you’ve done to improve your finances (including take the credit counseling course), and more. This is the form that gets the ball rolling on the bankruptcy court process. Other forms ask you to list your assets, divide them into exempt and nonexempt, separate your secured and unsecured debt, list contracts and leases (including things like your cell phone service contract), assess your income and more. If you’ve hired an attorney, they can fill out the forms for you. If not, they can take hours to complete. If they aren’t completed to the court’s satisfaction, it will delay your filing.
• Paying the Filing Fee: When you file for bankruptcy, you have to pay a bankruptcy fee, which is $335. The court process doesn’t begin until it’s paid. If the judge allows you to pay in installments, the final installment must be paid before the court handles your case.

Meeting of Creditors

The bankruptcy trustee assigned to you by the court will meet with you, in a 341 hearing, usually referred to as the “meeting of creditors.” While your creditors are invited, they don’t generally attend. The meeting usually takes about 10 minutes and requires much of the same paperwork you used to file for bankruptcy. The trustee will request the documentation from you beforehand, and, again, the quicker you provide them, the faster the process will go. The trustee will go over everything with you and determine how much your creditors will be paid. The trustee has 30 days after the meeting to object to an exemption that you’ve requested, and creditors have 60 days to object to the debt discharge. You have a deadline 45 days to determine what will happen to your secured debt, like your car payments or mortgage.

Free Initial Consultation with Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506
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