There are many contributing factors that are associated with financial troubles. The most common reasons include heavy debt, divorce, illness, home foreclosure, or loss of a job.
In fact, the average credit card debt in Utah is a whopping $5,056 per person. In addition, foreclosure rates are also as staggering, one out of every 2,540 UT homes is currently in foreclosure.
If you find yourself struggling with similar situations, then you are probably battling other personal issues that come with being in debt. The fear of losing your car, house or your money can drain a person emotionally & physically. You have probably even considered Declaring Bankruptcy .
If you are thinking “Can I File Bankruptcy?” you are undoubtedly not alone. Close to a million people file bankruptcy each year in the US. Bankruptcy is a means provided by the US Government to help struggling Americans find relief from overwhelming debt. You may want to check your eligibility for bankruptcy if it’s best for you.
What Is Bankruptcy?
Bankruptcy gives people the freedom to get out from underneath considerable debt while still working with lenders in a legal capacity. It is started by a person filing a Petition with their nearest bankruptcy court. The Petition can be filed by a person or married couples jointly. When the bankruptcy is complete, the filer will ‘exit’ and will have a chance for a fresh start on their finances.
Throughout the bankruptcy, a trustee is appointed to oversee the deatils of the case. His or her responsibilities differ and depend on whether the person has filed for Chapter 13 or Chapter 7 bankruptcy.
Did you know that Utah ranks #5 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 468 out of every 100,000 residents.
What Is The Difference Between Chapter 7 And Chapter 13?
People in Utah, who claim bankruptcy, will elect to file under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code. Want to know the difference? Look below for more information
The trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding, In exchange for dissolving all past due debts.
Debtors that were listed on the bankruptcy filing will be repaid with the proceeds collected during liquidation
A Chapter 13 Bankruptcy plan is reserved for people who have the means to pay some of their debts through a restructuring. You will be allowed to retain your valuable assets over a 3- to 5-year time frame.
In order to decide which chapter a person will file, they will have to assess their ability to repay using the Bankruptcy Means Test.
What Is A Bankruptcy Means Test?
The objective of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It takes into account your:
- income and expenses
- household size and composition
- debt-to-income ratio
If you do not qualify for Chapter 7 bankruptcy, you will be able to file for Chapter 13, as above-described.
What Are Bankruptcy Exemptions?
The federal bankruptcy exemptions are a list of exclusions by Congress that are available to filers in specific states. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.
- Real property, mobile home or water rights up to $5,000 if the property is not debtor’s primary personal residence; up to $30,000 if the property is debtor’s primary personal residence. Proceeds of sale exempt for 1 year.
- Before the attempted sale of home, a homestead declaration must be filed.
- Sale proceeds exempt for one year.
- Clothing, except furs and jewelry; refrigerator, freezer, stove, microwave oven, washer, dryer, and sewing machine; health aids; food to last 12 months; beds and bedding; carpets; artwork done by, or depicting, a family member; burial plot; personal injury recoveries for yourself or a person you depend upon; wrongful death recoveries for a person you depended upon.
- Motor vehicle up to $5,000; sofas, chairs, and related furnishings for one household up to $1,000; dining and kitchen tables and chairs for one household up to $1,000; animals, books, and musical instruments up to $1,000; heirlooms or other items of sentimental value up to $1,000.
- One shotgun, one handgun, one shoulder arm; 1,000 rounds of ammunition for each of the foregoing.
- Proceeds for damaged personal property.
- Earnings to the lesser of (1) 75% of disposable income, or (2) 37 times the federal minimum wage per week.
- Unpaid earnings due as of the bankruptcy filing date in an amount equal to 1/24 of the median Utah annual income if paid more than once per month and 1/12 if paid monthly.
- Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
- IRAS and Roth IRAs to $1,283,025.
- Public employees.
- ERISA-qualified benefits, Keoghs, IRAs, and Roth IRAs if the contributions have been made and benefits have accrued more than 1 year before filing for bankruptcy.
- Any pension or annuity needed for support.
- Workers’ compensation.
- General assistance.
- Occupational disease disability benefits.
- Crime victims’ compensation.
- Unemployment compensation.
- Veterans’ benefits.
Tools of Trade
- National Guard members’ military property.
- Tools, books, and implements of trade up to $5,000.
Alimony and Child Support
- Child support and alimony needed for support.
- Fraternal benefit society benefits.
- Disability, illness, medical or hospital benefits.
- Life insurance proceeds if beneficiary is insured’s spouse or other dependent, needed for support.
- Life insurance policy cash surrender value excluding payments that were made on the contract within the prior year.
- Hospital, medical and surgical benefits.
- Business partnership property.
Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.
Filing Bankruptcy Alone vs. Filing With An Attorney
You are not required by law to hire a lawyer to declare bankruptcy. People are allowed to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Going it alone is not recommended.
Filing Bankruptcy without an Attorney
A basic Chapter 7 case that doesn’t have a lot of debtors or assets may be easy to manage on your own.
A basic bankruptcy that doesn’t require an attorney might look like:.
- Your income is below the state median;
- You have no property;
- Your debts will be considered dis-chargeable.
Working With An Attorney
Generally speaking, it is usually in one’s best interest to work with a bankruptcy attorney. A bankruptcy attorney is there to represent you and not the creditors.
An attorney is also accustomed with exemption laws. Plus, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.
While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.
What Does Bankruptcy Include?
Once you file for bankruptcy in UT, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.
In any event, Bankruptcy will be able to include:
- credit card debt
- protection from eviction
- avoidance of foreclosure
- utility bills
- medical expenses
Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.
Final Thoughts And Considerations On Filing For Bankruptcy In Utah
As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.
Bankruptcy Courts In UtahFrank E. Moss United States Courthouse
350 South Main Street
Salt Lake City,UT 84101
Utah Bankruptcy Court
Additional Utah Resources
Foreclosure Help Program
Disability SSDI Benefits