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Chapter 13 Utah Bankruptcy Attorney

Below is an overview of the Chapter 13 bankruptcy process.

The issues below are presented in summary fashion without

consideration of your specific situation and are presented in

more detail at the time of your initial consultation and throughout

our representation of you.

Step 1 – Is Chapter 13 right for me?

Unlike a Chapter 7 bankruptcy where debts are wiped out in fairly short order in exchange for giving up non-exempt property, in a Chapter 13 bankruptcy you get to keep all your property, but you must make payments to creditors over the course of three to five years. The amount paid to creditors is determined by a plan you submit to the court and is at least the value of the property you would be required to give up were you to file a Utah Chapter 7 bankruptcy. Chapter 13 can be effective for someone facing a foreclosure because it gives you three to five years to catch up on mortgage payment arrearages. The catch is you have to be able to make your regular mortgage payment plus be able to pay Chapter 13 plan payments each month. Chapter 13 can also help you keep a car you are upside down in by stripping off of the vehicle debt any amount that exceeds the fair market value of the vehicle. This is called a cram-down. It is also possible in Chapter 13 to strip off certain liens on your home. For example, if your second mortgage is unsecured because the value of your home is less than or equal to the debt for your first mortgage, then the second mortgage can be reclassified as an unsecured creditor and will only receive an amount equal to what other unsecured creditors will receive under your plan. For those that make more than the median income in Utah and who can’t qualify for a Utah Chapter 7 bankruptcy, then Chapter 13 can be a good option. Note: as of March 15, 2011, the median income in Utah is as follows: a one person household is $50,635; two person is $56,126; three person is $61,944; four person is $69,834; with an additional $7500 added for each person over four. For more information on whether you can qualify for a Chapter 7 bankruptcy try one of our means test calculators.

Step 2 – Pre-filing Steps

Before a bankruptcy case is filed certain steps must be undertaken. Once you retain our office we help you to provide all of the information required by the bankruptcy court. At the outset you receive from our office a detailed, but easy to understand letter laying out all the steps you need to take in order to help your attorney represent you in your bankruptcy case. You complete a comprehensive bankruptcy questionnaire detailing your 1) basic identifying information, 2) real property, 3) personal property assets, 4) creditors, 5) executory contract such as leases, 6) a detailed statement of your monthly income, 7) a detailed statement of your monthly expenses as they will be after the bankruptcy, and 8) a statement of your financial affairs. In some cases, you may be experiencing harassment from creditors. If that is the case, we write letters on your behalf to such creditors so that the harassment is stopped. Once you have completed the questionnaire we go to work in preparing the bankruptcy petition and schedules. We prepare your Chapter 13 repayment plan, which sets forth how much you will pay creditors over the three to five year period. Your plan must propose to pay 1) 100% for administrative claims (filing fee, trustee commission, and attorney fee); 2) 100% for priority claims such as many tax debts and child or spousal support debts; 3) 100% for the amount you are behind on any mortgage if you intend to keep the property; 4) 100% for other secured property you intend to keep; and 5) an amount to unsecured creditors as determined by the length of your plan, the total value of your nonexempt property, and the monthly disposable income you have available. Generally, if you make more than the median income for your household size then you must propose a five year plan. Before we file, you will need to complete a pre-bankruptcy debt counseling course as required by the bankruptcy code. We suggest using either Cricket Debt Counseling or for an even cheaper alternative, http://www.consumerbankruptcycounseling.info/. After we have reviewed your information and prepared the paperwork we meet with you to go over all the paperwork with you, answer any questions, and make any necessary corrections, additions, or deletions. Once you have reviewed the paperwork and agree that it is accurate, you sign the paperwork and our office files the paperwork electronically with the Utah Bankruptcy Court.

If your situation involves an emergency, such as an imminent foreclosure or other immediate legal action by a creditor, then a bankruptcy filing can usually be done the same day of your initial consultation with our office. In an emergency matter, we help you file the minimum required paperwork to open a case and then file the remaining paperwork within fourteen days. You will also need to complete required pre-bankruptcy counseling within fourteen days.

The filing fee for Chapter 13 is $274, although this can be paid in installments with the court’s permission.

Step 3 – The Meeting of the Creditors

About 20 to 40 days after your bankruptcy petition is filed you will attend the 341a Meeting of Creditors. The Chapter 13 bankruptcy trustee conducts the meeting. Our office will also send a copy of your most recent tax return as is required prior to the 341a meeting (review our blog post "Unfiled tax returns and bankruptcy"). These meetings often cause fear within bankruptcy filers. However, the majority of the time the meeting lasts a mere five to fifteen minutes, does not involve grueling questioning, and only involves questioning by the bankruptcy trustee as creditors do not normally attend (R.C. Willey, the Utah State Tax commission and secured creditors often attend). You are first put under oath and then the meeting begins by you providing the trustee with the following: 1) proof of social security number; 2) proof of identity usually with a driver's license; 3) copies of all bank accounts showing a balance on the date of bankruptcy filing; 4) a pay stub received after filing; 5) a copy of the most recent property tax assessment for any real property you own; 6) if you own a business or are self-employed: a) a profit/loss statement and b) a business questionnaire; 7) proof of charitable contributions made within 60 days of filing; and 8) a domestic support obligation (DSO) questionnaire if you have a domestic support obligation. You will also need to have filed or file within a short time of the meeting any tax returns you haven’t filed in the four years before filing bankruptcy (see our blog post "Unfiled Tax Returns and Bankruptcy"). Prior to the meeting of the creditors our clients receive a letter detailing the questions usually asked by the trustee so they are well prepared. The trustee may request further documentation to be provided after the creditor's meeting, which we will help you provide. Your Chapter 13 plan may also need to be amended based on feedback from the trustee. Your first plan payment is due at the first scheduled meeting of the creditors and on the 25th of each month thereafter.

Step 4 – Confirmation of Your Chapter 13 Plan

The one required court appearance in a Chapter 13 case is the confirmation hearing. In this hearing you appear before a bankruptcy judge. The plan can either be confirmed at that time, or a continuance may be allowed if more works needs to be done to your plan. The hearing usually lasts for just a couple of minutes. Other court appearance might be required such as: 1) confirmation hearing after a plan amendment; 2) to determine the value of an asset; 3) responding to a motion objecting to discharge of a particular debt; 4) to get an order from a judge that a lien is eliminated on a certain piece of property; and 5) to reaffirm a debt that you want to keep after the bankruptcy. Our office represents you at these and other hearings that may be required.

Step 5 – Carrying Out the Plan

You make plan payments to the trustee each month. The plan may provide that some creditors are paid directly and those payments are also made according to the plan. If you miss plan payments you can arrange with the trustee to make them up or if necessary a motion to abate the payments can be filed seeking for the court to tack on the payments to the end of the plan. If you become unable to make plan payments you can convert your case to a Chapter 7 or in some cases obtain a hardship discharge. If the above options do not workout then the case could be dismissed. If your case is dismissed you will still owe creditors.

Before you make your last plan payment you must take a financial management course. Once this is done, our office will file the required certification with the court. If you fail to complete the course, then you won’t get a discharge of your debts.

Step 6 – Discharge

After your last plan payment is made and you have certified that you have remained current on any domestic support obligations all debts that can be are discharged. You still owe for debts that cannot be discharged. Non-dischargeable debts in a Chapter 13 case include: debts you failed to list, court fines and restitution, child and spousal support, student loans (most of the time), recent back taxes, taxes for which you did not file a return, judgments for malicious or willful acts, personal injuries or death caused by your driving under the influence, and if a creditor objects and a court agrees debts involving your fraud and debts for luxuries incurred close to the bankruptcy filing.

Contact the Weekes Law for a no obligation initial consultation at 801.203.3525 or fill out our form to find out if a Chapter 13 bankruptcy is right for you.