Individuals can file a bankruptcy under Chapter 7, 12, or 13 of the U.S. Bankruptcy Code. Chapter 12 is for family farmers or family fisherman. Most individuals file under either Chapter 7 or Chapter 13.
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Chapter 7, also referred to as a liquidation bankruptcy, involves discharging all debts except those that are prohibited from a discharge such as student loans and most taxes. You can use our Chapter 7 eligibility calculators to help you see if you will qualify to file a Chapter 7 bankruptcy case in Utah. find out if you will All of the Chapter 7 filer’s property becomes property of the bankruptcy court, however, in the typical case, either all or a large proportion of property is exempt and is retained by the bankruptcy filer. At the end of a basic case, typically 4 to 5 months, all dischargeable debts are wiped out. It is also possible to reaffirm secured debts for personal property if, for example, you want to keep a vehicle after the bankruptcy you are still making payments on. In some cases it is possible to keep a residential property. For a more detailed outline of the steps in a Chapter 7 case see our page on filing a Chapter 7 bankruptcy.
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Chapter 13, also referred to as a payment plan bankruptcy, involves making payments to your creditors over the course of a three to five year payment plan. You must have a steady source of income and agree to pay part of your income to your creditors. The bankruptcy trustee and court must approve your plan. This type of bankruptcy is often useful for those who want to catch up on a mortgage arrearage. For a more detailed outline of the steps in Chapter 13 see our page on Chapter 13 bankruptcy filing.
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Seeking a modification is a very popular means to remedy a pending foreclosure. However, when that and other solutions fail bankruptcy can help and in some cases your home can be preserved. In Chapter 7, if you are up to date on your payments and your equity in your residence does not exceed $20K for a single filer ($40K for joint filers) you may be able to keep your home after bankruptcy. If you are behind on your payments however, then filing Chapter 7 bankruptcy will likely result in the loss of your home. In that event you can consider Chapter 13. In Chapter 13, the debtor can propose to pay the mortgage arrearage over the course of the three to five year plan. The key to success in Chapter 13 is having a sufficient and steady enough income to make plan payments and to make arrearage payments. In the case of non-residential real property, the analysis is similar except the equity exemption amount is $5K for a single filer ($10K for joint filers). The non-residential property exemption is only available if the residential property exemption is not used.
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Have you had your bank account garnished or is a creditor garnishing your wages? Bankruptcy stops most garnishments upon filing. Garnishments for child support and tax debts may continue even after filing bankruptcy. If your bank account has already been garnished, recovery of the garnished amount is possible if the garnishment occurred within 90 days of filing bankruptcy and an exemption is available to exempt the money in bankruptcy.
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Undoubtedly, many considering bankruptcy have already experienced the frustration of dealing with harassing phone calls of creditors at home and work and threatening letters. Creditors and debt collectors are governed by several different laws in dealing with consumers and in collecting debts. The Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA), and Utah Code, Title 12 are some of the laws which protect consumers from abusive practices. Debt collectors are prohibited from engaging in the following practices:
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Falsely threatening to refer your matter to an attorney, harm your credit rating, repossess or garnish assets
Falsely threatening to refer your matter to an attorney, harm your credit rating, repossess or garnish assets •Use or threat of violence
Use or threat of violence•Use of obscene or profane language
Use of obscene or profane language•Publish a list of persons who allegedly refuse to pay debts, other than to credit bureaus
Publish a list of persons who allegedly refuse to pay debts, other than to credit bureaus•Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number
Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number•Contact you before 8 a.m. or after 9 p.m. without your consent or at any other time or place, which is unusual or known to be inconvenient
Contact you before 8 a.m. or after 9 p.m. without your consent or at any other time or place, which is unusual or known to be inconvenient•Contact you if you are represented by an attorney
Contact you if you are represented by an attorney•Contact you at work after you have said that calls at work are not allowed
Contact you at work after you have said that calls at work are not allowed•Contact third parties without your consent such as relatives or neighbors other than to find out a debtors address and phone number
Contact third parties without your consent such as relatives or neighbors other than to find out a debtors address and phone number•If someone believes that they do not owe the money, and have notified the debt collector, the collector may not attempt contact again until they obtain and provide proof of the debt
If someone believes that they do not owe the money, and have notified the debt collector, the collector may not attempt contact again until they obtain and provide proof of the debtWeekes Law office will help you regain peace of mind by contacting creditors on your behalf to end the onslaught of phone calls. Our office will also provide you with tools in identifying violations of the law by creditors and assess legal remedies to go after abusive creditors.
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Bankruptcy is an effective solution for dealing with overwhelming debt, but it is not the only solution. Sometimes persons who have an initial consultation with our office discover that bankruptcy is not the right option or at least not at the time. Mortgage modification, negotiation of a debt settlement, and credit counseling through a non-profit organization are some non-bankruptcy options that can be considered. There are many scammers in this area seeking to take your money through false promises. Seek out credit counseling from a reputable organization such as the National Foundation for Credit Counseling. You can also seek out self-help options such as the BYU Marriot School’s website with free online financial management lessons and tools. Make sure to check out the credit card repayment excel spreadsheet. During your initial consultation we will discuss your situation and assess which option, bankruptcy or otherwise, will work for you.
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Have you recently been served with a summons and complaint dealing with a debt? Depending on the nature of the suit, bankruptcy can stop such law suits from going forward immediately upon filing.
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You may have heard that you can’t get rid of tax debts by filing bankruptcy. While that is often true, it is possible to discharge certain tax debts in bankruptcy. One of our recent clients discharged her state tax debts from several years ago. The key is when the tax debts were assessed. If you haven’t filed your taxes, the clock doesn’t start running until you file your taxes. When filing bankruptcy you will need to file taxes for any year in which you have not filed. Keep in mind that even if your taxes can be discharged ay tax liens survive the bankruptcy, but generally only to the extent of the value of your property at the time you filed bankruptcy. Our initial consultation will thoroughly explore whether your tax debts are dischargeable.
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1)Do consult with an experienced bankruptcy attorney to discuss whether bankruptcy is right for you and to assist you with the bankruptcy process.
Do consult with an experienced bankruptcy attorney to discuss whether bankruptcy is right for you and to assist you with the bankruptcy process.2)Do continue making payments on any asset you intend to keep.
Do continue making payments on any asset you intend to keep.3)Do reduce your tax withholding taking care not to reduce it so much that you end up with a large tax bill. In bankruptcy, tax refunds are often taken by the bankruptcy trustee. See our blog post: "Will the Bankruptcy Trustee Take My Tax Refund?"
Do reduce your tax withholding taking care not to reduce it so much that you end up with a large tax bill. In bankruptcy, tax refunds are often taken by the bankruptcy trustee. See our blog post: "Will the Bankruptcy Trustee Take My Tax Refund?"5)Do file taxes for any years in which you have not filed.
Do file taxes for any years in which you have not filed.6)Don’t borrow money from your retirement account (401K, IRA, ERISA) to pay creditors. In addition, to the penalties incurred for such withdrawals, you are depleting an asset that is exempt in bankruptcy.
Don’t borrow money from your retirement account (401K, IRA, ERISA) to pay creditors. In addition, to the penalties incurred for such withdrawals, you are depleting an asset that is exempt in bankruptcy.7)Don’t borrow money on your home to pay unsecured debt. Unsecured debt is almost always dischargeable, but a second mortgage may need to be paid despite the bankruptcy if you intend to keep your home.
Don’t borrow money on your home to pay unsecured debt. Unsecured debt is almost always dischargeable, but a second mortgage may need to be paid despite the bankruptcy if you intend to keep your home.8)Don’t pay $600 or more to insiders such as relatives or business associates within one year before filing your bankruptcy. Under the law the bankruptcy trustee can recover such payments.
Don’t pay $600 or more to insiders such as relatives or business associates within one year before filing your bankruptcy. Under the law the bankruptcy trustee can recover such payments.9)Don’t put property into someone else’s name to prevent creditors or the bankruptcy trustee from getting it. Doing so can result in a denial of a bankruptcy discharge and the trustee can recover the property in any case.
Don’t put property into someone else’s name to prevent creditors or the bankruptcy trustee from getting it. Doing so can result in a denial of a bankruptcy discharge and the trustee can recover the property in any case.10)Don’t use your credit cards.
Don’t use your credit cards.11)Don’t take credit card cash advances, use convenience checks, or do balance transfers.
Don’t take credit card cash advances, use convenience checks, or do balance transfers.12)Don’t file until after receiving a pending tax refund or inheritance (consult an attorney).
Don’t file until after receiving a pending tax refund or inheritance (consult an attorney).13)Don’t gamble.
Don’t gamble.14)Don’t hide assets or debts.
Don’t hide assets or debts.15)Don’t fail to list debts to family or friends.
Don’t fail to list debts to family or friends.16)Don’t borrow money
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NOTICE: the information provided above is a basic introduction to the various issues discussed and is not intended to be legal advice. Please schedule your initial consultation to discuss these issues in depth and to see how these topics apply to your specific situation.
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Russell B. Weeks is a Utah bankruptcy attorney serving clients throughout the state of Utah including the cities of Salt Lake City, Bountiful, Kaysville, Layton, Farmington, Midvale, Holliday, Taylorsville, Tooele, West Jordan, West Valley City, Murray, Sandy, Vernal, Provo, Park City, Heber, Ogden and Orem, and also the communities in Salt Lake County, Davis County, Utah County, Summit County, Morgan County, Wasatch County, Daggett County, and Tooele County.
© 2011Weekes Law, PLLC.
A Utah Bankruptcy Attorney
503 West 2600 South, Suite 200
Bountiful, UT 84010
(801) 513-1290
Weekes Law, PLLC.| 503 West 2600 South, Suite 200 | Bountiful, Utah 84010 | Tel 801.203.3525 | Email
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