Residents of Utah -- do you have enough credit card and medical bills piled up to fill the Great Salt Lake? Do you wish that, if you laid all of your bills end to end, they wouldn’t stretch from the Four Corners on up to Arches National Park? Are you sick and tired of being harassed by debt collectors, and worrying about when you’re going to be hit with garnishments?
Well, stop worrying and consider filing for a Chapter 7 bankruptcy. Chapter 7, also called a straight or liquid bankruptcy–wipes out your debts, leaving you with a clean record, less stress, and the ability to enjoy your life once again.
Step Away From the Bonneville Salt Flats and File for Bankruptcy, Chapter 7
Now that you’ve taken the first step and have decided to file for a Chapter 7 bankruptcy, you need to find a Utah bankruptcy attorney. A bankruptcy attorney can examine your budget, your assets, and your debts and help you decide if bankruptcy is the right option for you.
When you first meet with your Utah bankruptcy attorney, you’ll need to bring specific information with you. This information is crucial for the qualifying process, and is needed for you official Chapter 7 bankruptcy petition. Here’s what you’ll need:
- Titles and deeds to your vehicles, house and any other property
- A list of your debts.
- Your last six month’s worth of paystubs and bank statements.
- Last year’s filed tax return (and your spouse’s return, as well)
- A list of all of your possessions, including electronics, furniture and jewelry
- Bank statements and information on any owned stocks and bonds or certificates of deposit
Qualification for Utah Residents
Residents must qualify for Chapter 7 bankruptcy before they file. There are two ways to do so; you can check the chart below to see if your income falls within the limits depending on the size of your family, or pass the means test. This test was implemented by the Bankruptcy Reform Act in 2005. Its purpose is to mathematically determine your worthiness for bankruptcy. If your debts are excessive, then you may qualify to file for a Chapter 7 bankruptcy, if they are not, then you may be able to file for a Chapter 13 bankruptcy.
The income limits for Utah residents are:
- Family of 1 - $50,635
- Family of 2 - $56,126
- Family of 3 - $61,944
- Family of 4 - $69,834
- Family bigger than 4 - add $7,500 for each person
After You Qualify, the Rest is Easy
Once your Chapter 7 bankruptcy petition has been filled out, it can’t be filed until you’ve taken a credit counseling course by an approved debt education company. One needs to be taken before you file your petition, and then another certificate needs to be submitted after your hearing but before your discharge. After you receive your certificate of completion, then your Chapter 7 petition is then filed electronically with your local bankruptcy court. You won’t have field calls from your creditors any more after filing. Your attorney should be able to handle all communication between you and your creditors.
Once your Chapter 7 bankruptcy is approved by the judge and you are declared bankrupt, you’ll be free of debts like medical bills, old tax liens, credit card bills and other miscellaneous debts. However, there are some debts that a Chapter 7 bankruptcy can’t take care of. They include:
- Student loans
- Recently filed tax debts
- Liens
- Alimony
- Child Support
- Certain court judgments
- Money owed from illegal activities and ill-gotten gains
It’s important to discuss all of your financial issues with your bankruptcy attorney. If you withhold information, you could be charged with fraud, and end up paying your debt along with additional fines and fees.
What about My Home and My Possessions?
A popular myth about bankruptcy involves losing all of your possessions and assets. Years ago more individuals who filed for bankruptcy lost all of their assets when they filed Chapter 7. Thanks to the Bankruptcy Reform Act that was passed in October 2005, debtors now are able to claim a certain portion of their debts as exempt. While these amounts can change from time to time, a list of what people may keep when filing bankruptcy in Utah includes:
- Home exemption: $20,000 in value is exempt for single filers. Amount doubles for joint filers.
- Other property: Up to $5,000 in value.
- Wages: 75% of all earned but unpaid wages are exempt.
- Vehicle: $2,500 in value is exempt.
- Personal items including heirlooms: $500
- Household items – includes 100% of clothing, appliances, bedding and artwork. Also the following:
- Household furnishings - $500
- Kitchen furnishings - $500
- Pets, books and instruments - $500
- Tools of trade and other professional items – $3,500
- Benefits – includes 100% of the following exemptions:
- Fraternal Benefit Society benefits
- Worker's compensation benefits
- Unemployment compensation benefits
- Benefits payable under Utah State Retirement Act
- Benefits payable for medical, surgical or hospital care
- Veteran’s benefits
- Federal civil service disability and death benefits
- Interests of and retirement benefits payable to an alternate payee debtor under a QDRO
- Pensions:
- 100% Interests in pension or profit sharing plans--Foreign Service employees
- 100% Medal of Honor exemption (special pensions for persons on Army, Navy, Air Force or Coast Guard Medal of Honor roll)
- 100% Veterans Administration benefits (includes pensions, life insurance and disability benefits)
- 100% Interests in pension or profit sharing plans--CIA Employees
- Other miscellaneous benefits:
- 100% Child support
- 100% Alimony or separate maintenance payments
- 100% Life insurance proceeds
- 100% Certain retirement accounts defined by the Internal Revenue Code
- 100% Railroad unemployment insurance
Are you unsure about your financial future because you struggle with debt? A bankruptcy attorney can give you the financial advice you need about ridding yourself of credit cards and other old bills completely. Call a Chapter 7 attorney today to discover how you can feel as free and light as a bird.
Utah Bankruptcy Courts
Tenth Circuit Bankruptcy Appellate Panel
Frank E. Moss United States Courthouse
350 South Main Street
Salt Lake City, Utah 84101
Phone: (801) 524-6687
Frank E. MOss United States Courthouse
350 South Main Street
Salt Lake City, Utah 84101
Phone: (801) 524-6687