How To File Bankruptcy In Utah

Bankruptcy process begins with the filing of a bankruptcy petition, whether it be a Chapter 7 petition, Chapter 13 petition, or another petition under the United States Bankruptcy Code. The filing of the bankruptcy petition creates an automatic stay on your creditors. This means that your creditors can no longer make efforts to collect the debt you owe. Instead, they must go through the bankruptcy courts in order to collect anything.

You Also Are Limited to Working Through the Bankruptcy Court

When you file for a Utah bankruptcy your creditors must work through the bankruptcy court in order to recover anything. You also, however, cannot distribute or sell any of your property without the authority of the bankruptcy court. You cannot give preference to any creditor by giving that creditor property to settle any debt. The U.S. Trustee has the sole power of management of your assets unless held otherwise by the bankruptcy court.

You Must Get Court Approval for Selling Property After Filing Bankruptcy in Utah

Let’s say you have an automobile that you own outright that you want to sell, but you just recently filed a bankruptcy petition. Once you file a bankruptcy petition, and until you have been discharged through order of the bankruptcy court, you cannot sell any property without the court’s approval. Thus, even though you may own that car outright, you cannot sell it without the approval of the court.

Motion and Hearing

In order to get the court’s approval to sell property after filing a bankruptcy petition your attorney, file a motion to get leave to sell the property. The court will then hold a hearing on the motion and decide whether to give you permission to sell the property. Chapter 7 bankruptcy is the only type of bankruptcy that liquidates or gets rid of all of your debts without requiring you to pay anything back. In order to file under Chapter 7, debtors need to meet certain income requirements depending on their family size. In most cases, debtors are able to keep all of their property. Careful planning with your attorney will ensure that you retain most, if not all, your personal property.

Consulting With a Chapter 7 Bankruptcy Attorney in Utah

Chapter 7 bankruptcy is the most common bankruptcy filed. Our Utah bankruptcy attorney will prepare a bankruptcy petition for the bankruptcy court to eliminate your debts. With Chapter 7, debtors will be able to keep most of their personal property. Personal loans, credit cards, medical bills, and other unpaid expenses may be discharged through a Chapter 7 bankruptcy filing. Immediately after you file bankruptcy papers, the federal “automatic stay” will take effect. The automatic stay will provide the debtor protection from all collection activities, including car repossessions, wage garnishment, and home foreclosure sales.

Preparing to File Chapter 7 Bankruptcy in Utah

When you file Chapter 7 bankruptcy in Utah, debtors need to make an inventory of personal property. Green Legal Group will help you determine which property is exempt (debtors can keep) and non-exempt (debtors will surrender).

How Long Will a Bankruptcy Case Take?

Once you file a petition for Chapter 7 bankruptcy, it normally takes about four to six months for your case to be completed. There are several situations that can delay a bankruptcy case including:
• Trustee needs more information. Creditors can ask for more information of documentation, which can delay a case until you acquire the documentation.
• Delays in personal financial management courses. You are required to attend financial management courses to help prevent you from future bankruptcies and financial struggles. If you delay attending financial management courses, it will delay your debt discharge.
• Creditors challenge dischargeability of debt. Creditors can challenge your bankruptcy case if they feel your debt should be wiped out. The court will hold a hearing to discuss the matter, which includes witness testimonies and review of documents.
• Student loan debt discharge. You need to prove to the court that your student loan debt is causing undue hardship if you want to discharge it.

Bankruptcy Exemption

Bankruptcy is the court process in which a debtor’s debts are discharged; meaning, the debtor is no longer legally liable for repaying those debts. Both individuals and businesses may generally file for bankruptcy, and there are different forms of bankruptcy available based on different qualifying criteria. Chapter 7 and Chapter 13 are the two most common forms of bankruptcy. Very simply put, a Chapter 7 bankruptcy involves the debtor selling some of their possessions and assets in order to repay their creditors. Whatever is eligible and remaining is discharged. A Chapter 13 bankruptcy does not involve any asset liquidation; rather, the debtor works with the court and creditors in order to create a restructuring plan. This reduces the monthly debts to a more manageable amount, which the debtor pays to the creditors.

A bankruptcy exemption is what allows a debtor to retain specific property or assets after bankruptcy has been filed. These exemptions are defined by state statute, and cannot be seized or sold in order to satisfy the debts of the person filing for bankruptcy.

In Chapter 7 bankruptcy, exemptions are used to help determine which property the debtor will keep once the bankruptcy discharge has been granted. This is how bankruptcy exemptions protect the debtor’s property after a bankruptcy. Alternatively, in Chapter 13 bankruptcy, exemptions are used to help determine how much the debtor will have to pay to their unsecured creditors. This can mean the difference between having the repayment plan confirmed, and getting knocked out of Chapter 13.

Federal bankruptcy law allows each state to determine which assets a debtor may keep when a bankruptcy case is filed. A state may allow a debtor to choose between federally-created exemptions, or state-created exemptions. Or, a state may limit a debtor to the state-created exemptions only. Additionally, a debtor can only use the exemptions from either the federal or the state, but not both. For debtors filing for bankruptcy in states that provide more than one exemption statute or system, they are allowed to use the exemptions from only one statute.
Some examples of Utah exempt properties include, but may not be limited to:
• Up to $42,700 of the equity in any primary residence, such as a home, mobile home, or any water rights;
• Up to $5,100 in real estate that is not the debtor’s primary residence;
• Various articles of personal property, such as but not limited to:
• Works of art created by a family member;
• Up to $1,000 total in animals, books, and/or musical instruments;
• Burial plots;
• Health aids;
• Enough food to last one year;
• Clothing so long as they are not furs nor jewelry; and
• Education savings plan, up to $200,000.
• Up to $3,000 equity of a motor vehicle;
• Alimony and child support payments;
• Pensions and other similar accounts, as they meet specific criteria;
• Various public benefits, such as crime victims’ compensation and veterans’ benefits;
• Tools of trade, meaning any tools, books, etc that help the debtor earn their living; and
• Various insurance policies and benefits, such as disability benefits.

Utah has opted out of the federal bankruptcy exemptions. What this means is that debtors filing for bankruptcy in Utah must use the aforementioned exemptions, and cannot use the exemptions that are provided by the federal Bankruptcy Code. According to the Utah Exemptions Act, some equity in the debtor’s home is protected. The debtor would need to file a homestead declaration with the county recorder’s office in order to claim the exemption. It is important to note that in Utah, a debtor cannot use the exemption to protect their property from debts associated with:
• Property taxes or assessments;
• Purchase, such as a mortgage;
• Child support payments; and/or
• Liens allowed by mutual contract.

Common Legal Issues with Bankruptcy Exemptions

There are some common legal issues with bankruptcy exemptions. One of the most common would be bankruptcy exemption limits. An exemption limit applies to any equity the debtor has in property, and limits the amount of equity that is exempt. Equity refers to the difference between the fair market value of the property, and the unpaid balance on the property. An example of this would be how a home valued at $500,000 with a loan of $450,000 has an equity value of $50,000. If the state’s homestead exemption is $50,000 or greater, the debtor would be exempt from liquidating the $50,000 equity in the home in order to pay off the debts.

Some states allow married couples to double their exemption limits. Utah is one such state. Filing with “head of household” status or having a specific number of dependents can increase some exemption amounts. Some states allow its senior citizens to have a higher exemption limit on homestead, personal property, or other items. Finally, disability can also raise exemption limits, especially in terms of motor vehicles.

Remedies if I Have a Bankruptcy Exemption Issue in Utah

If you have a bankruptcy exemption issue in Utah, one of the most common remedies is reworking the property or asset to fit within the exemptions provided by the statute. As Utah does not allow an individual to use federal bankruptcy exemptions, you are still allowed to use federal non-bankruptcy exemptions, such as federal retirement and veteran benefit exemptions. If an individual wishes to keep property that is not protected by an exemption, the most helpful remedy for exemption issues will always be facilitating a conversation between the debtor filing for bankruptcy and the creditor. If a repayment plan or something else can be worked out on a property or asset that benefits both parties, then that is the main solution to bankruptcy exemption issues. Finally, as Utah law does not provide a wildcard bankruptcy exemption similar to other states, it is important that property and assets are prepared ahead of time to ensure that as much property and assets are covered by the stated exemptions as possible. Thus, it is important to begin planning for the bankruptcy process well before filing.

Do I Need a Bankruptcy Lawyer?

If you are in Utah and are considering filing for bankruptcy, you should consult with an experienced and local Utah bankruptcy lawyer. Because state laws vary so widely in regard to bankruptcy and exemptions, it is important that you consult with someone in your area as they will be best suited to understanding your state’s specific laws. An experienced bankruptcy attorney can help you adhere to those laws and navigate how they may affect your specific case, as well as protect your legal rights. A bankruptcy attorney will also be able to represent you in court, as needed.

Bankruptcy attorneys are primarily focused on helping their client through the bankruptcy process, from start to finish. They can help you understand which chapter of bankruptcy you should file for, and what exempt property you should keep. Finally, an attorney will also be able to speak to your creditors on your behalf, and help you settle various debts on property or assets that you may wish to retain.

What You Cannot Do Under Bankruptcy Laws

e to make payments towards your debt as one of the benefits of filing bankruptcy is a stay of proceeding. An undischarged bankrupt cannot apply for credit of more than $500 without disclosing that they are an undischarged bankrupt. This means that while you are bankrupt you will not have access to credit. However once you receive your discharge, you can begin immediately to repair your credit.

Bankruptcy Trustee Duties

The Bankruptcy trustee also defines the powers, duties and role of the bankruptcy trustee now called a Licensed Insolvency Trustee. A trustee in bankruptcy is licensed by the Office of the Superintendent of Bankruptcy to carry out the administration of all aspects of a bankruptcy or consumer proposal. They ensure all parties follow all bankruptcy rules so that the process is fair for everyone.

A bankruptcy trustee:
• Performs a Debt Assessment. Bankruptcy is not the solution for everyone. A trustee will meet with you to discuss your situation and advise you of your options.
• Prepares & Files Bankruptcy Forms. A trustee will prepare your Assessment Certificate, Statement of Affairs, Monthly Statement of Income and Expense and Bankruptcy Assignment from information you have provided. Once you sign these forms, the bankruptcy trustee will file these forms with the Office of the Superintendent of Bankruptcy and your bankruptcy begins.
• Deal with Creditors. Once you file for bankruptcy all creditor actions should stop and creditors must deal with the trustee in bankruptcy. The trustee will notify your creditors of your bankruptcy assignment and collect, review & approval all claims.
• Administration Duties. During bankruptcy, a trustee will collect payments, ensure you complete your duties including attending two credit counseling sessions and distribute funds to the creditors.
• Issue Discharge. At the end of your bankruptcy process, your trustee will make an application for your discharge and issue a Certificate of Discharge. This is an important duty as it is your discharge that eliminates your obligation to repay any debts included in bankruptcy.

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!