One of the most seemingly complex mysteries to unravel for many homeowners in Utah is the process of filing for bankruptcy. After all, when faced with the prospect of starting your life all over again, the last thing you need to worry about are legal clauses and nuances.
While your own particular circumstances may necessitate legal counseling, for many Utah residents declaring bankruptcy is a fairly straightforward process. They need either: a.) reorganize a payment plan to better accommodate changes in both their lifestyle and resources, or b.) simply liquidate their assets altogether and start life afresh. There are debts they can no longer afford to keep up with and, when all other avenues have proved futile, simply need an immediate solution. And forms for both Chapter 7 and Chapter 13 bankruptcy in the state of Utah are relatively easy to understand and complete.
But for other situations, a qualified bankruptcy attorney can not only help explain both the process and available options, but sometimes convert nonexempt property into exempt property under state and federal law. This is particularly helpful if you’re able to claim equity in your home under Utah’s homestead exemption laws, which explicitly state a claimant is free from forced sale or levy of a property if the equity in a home is under $30,000 ($60,000 if filing for bankruptcy jointly) for a primary residence or under $5,000 ($10,000 if filing jointly) for any secondary property.
If you’re a Utah resident who’s concerned about the value of additional legal advice when filing for bankruptcy, here’s what you might need to know.
What Should I Do Prior To Filing Bankruptcy In Utah?
The Federal 2005 Bankruptcy Act requires all individual debtors who file bankruptcy to undergo credit counseling within six months prior to filing. In addition, claimants must complete a debtor education course prior to their bankruptcy discharge (3-4 months for Chapter 7 bankruptcy and typically 3-5 years for Chapter 13.) Please click here for a list of state approved credit counseling agencies or here for a list of debtor approved agencies in Utah.
Eligibility For Bankruptcy In Utah
Whether you choose to file individually or through an attorney, you will not only need to complete the scheduled applications and forms alongside processing fees (a waivable fee of $335 for Chapter 7 and a non-waivable fee of $310 for Chapter 13), but you may have to undergo what’s known as a “means test” if you’re filing for Chapter 7 bankruptcy. This is used primarily for individuals claiming Chapter 7 whose median income is above state level—which is $72,805 for a 4 person family in Utah. If after monthly or annual deductions and expenses, your income level is still too high for Chapter 7 you must by default file for Chapter 13.
This can present a dilemma for many individuals. On the one hand, the need to liquidate all debts may be critical; but their income (minus deductions) is simply too high to qualify for Chapter 7 bankruptcy. On the other hand, they can no longer afford to keep up with any debt whatsoever—even after restructuring a payment plan through Chapter 13 filing. This is sometimes where a bankruptcy attorney can come in handy. They can not only review the means test with you (which can actually be a fairly lengthy and grueling process) but also advise you on which assets may be exempted from eligibility from both Chapter 7 and Chapter 13 filing.
Self Filing For Bankruptcy In Utah
The process of self filing for bankruptcy without an attorney is known as pro se filing, and has become increasingly popular in recent years; particularly among individuals who choose to restructure through Chapter 13 bankruptcy. But more and more individuals seeking Chapter 7 bankruptcy are also deciding to file pro se when warranted.
One thing to keep in mind about claiming exemptions in Utah is that while you are given a choice of items to claim as exempt by both federal statute and state, they can not be combined. You can only choose one list of exemptions. Federal exemptions include:
- Up to $25,150 of equity from your principal place of residence
- Up to $1,325 of equity on any property and up to $12,575 from any unused homestead
- Up to $4,000 for your motor vehicle
- Up to $1,700 for jewelry
- Up to $625 per individual item with a $13,400 aggregate value on household goods, furnishings, appliances, clothes, books, animals, crops and musical instruments
- Up to $13,400 of life insurance
- Up to $25,150 of personal injury claims
- Up to $1,362,800 aggregate value of funds in retirement accounts
Bankruptcy exemptions in Utah can include:
- Up to $30,000 of equity from your principal place of residence ($60,000 if filing for bankruptcy jointly with a spouse)
- Up to $5,000 from a secondary residence ($10,000 if filing jointly)
- Up to $5,000 for any motor vehicle
- Up to $1,000 total of animals, books, and musical instruments
- Up to $1,000 total of furniture
- Up to $1,283,025 of funds in tax exempt retirement accounts
However, under Utah law, creditors can levy against exempt property of any kind, except unemployment benefits in instances of:
- Alimony and child support
- Unpaid earnings of up to one month’s compensation or the full-time equivalent of one month’s compensation for personal services of an employee
- State or local taxes
- Mechanic’s liens and assessments
Filing With A Bankruptcy Attorney In Utah
As the partial list of state exemptions above shows, there’s some leeway as to what Utah residents can claim as exempt (please review the following link for a complete list of assets under the Utah Exemptions Act.) However, a qualified bankruptcy attorney will not only be able to advise you on which assets can be converted or sold to maximize exemption status, but can also argue on your behalf should any disagreements with creditors and trustees arise.
If you’re filing for Chapter 7 bankruptcy, your court-appointed trustee will schedule a meeting within 40 days of filing, and may have questions you lack the ability to answer to your benefit or request documentation you’re unavailable to provide..While trustees frequently can provide voluntary solutions to avoid further action, their function is to serve creditors; not claimants. A bankruptcy attorney, on the other hand, is in your employ to optimize your bankruptcy hearing on your behalf. If your case is particularly complicated, you may heed well from seeking their services—even at a cost.
One alternative that some Utah residents have found useful is to file for bankruptcy through a bankruptcy preparation service. While these are limited in scope and can not offer qualified legal counsel, they take care of much of the unnecessary grunt work of filing and frequently allow for customized solutions for detailed error checking and recommendations. If you’re not confident enough to prepare your own paperwork, there’s numerous options both physical and online which can help you for a nominal cost.
Have no doubt that filing for bankruptcy can be a time consuming process; particularly in Utah, which has entirely different exemptions from both federal statutes as well as other states. If you are in a bankruptcy situation we can help at GaryBuysHouses. We buy homes “as is”. Whatever situation you are in reach out to us here and in 10 minutes or less we will give you a fair cash offer for your home or property. We have a professional legal team standing by to make the whole process run smoothly for you.