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Bankruptcy Myths

• With the new laws it’s not worth it to file for bankruptcy.
>False. The new law effective October 2005 allows you to quality for a Chapter 7 bankruptcy if your household income is less than your state’s median, or if you pass a "Means Test" to see if you have qualifying, low disposable income.
• I have to have a large amount of debt before qualifying for bankruptcy.
>False. The question to ask is, "Is my debt load overwhelming compared to the amount of disposable income I currently have?"
• I will lose everything I own including my car and home.
>False. Every state has exemptions which allow you to keep bare necessities. Insert link to info below in red. A place to live and a way to drive to work could be considered bare necessities.
• It will take at least seven to ten years for my credit to recover from bankruptcy.
>False. Even with a bankruptcy showing for up to ten years, you can begin to build credit immediately after filing. The national average shows credit can be recovered in as little as eighteen months.
• Everyone will know I’m a bad person if I file for bankruptcy.
>False. Someone must specifically be searching for your bankruptcy to find it in the public record. Always remember that bankruptcy provides relief. It is not a punishment demanded by your creditors. Law makers enacted laws to allow people to financially have a fresh start.
• After I file for bankruptcy creditors can still garnish my wages.
>False. In Chapter 7 bankruptcies any wages you earn after the filing are yours to keep. Chapter 13 bankruptcy includes a pre-approved plan to pay off debt over a specific amount of time. In this case part of your earnings will be applied to your debts.

The following is a list of property that is generally exempt from seizure or collection under Utah law (see Utah Code 78B-5-503, 78B-5-505, 78B-5-506, 78B-5-508):

• Burial plot for you or anyone in your family; (see Utah Code § 78B-5-505(1)(a)(i));
• Health aids that are reasonably necessary (see Utah Code § 78B-5-505(1)(a)(ii));
• Public Benefits such as General Assistance, Social Security, Disability, Unemployment, Worker’s Compensation, (see Utah Code 78B-5-505(1)(a)(iii));
• Benefits used for medical, surgical, or hospital care for you and your dependents (see Utah Code 78B-5-505(1)(a)(iv));
• Veterans Benefits (see Utah Code 78B-5-505(1)(a)(v));
• Child Support (see Utah Code 78B-5-505(1)(a)(vi));
• Alimony and separate maintenance (see Utah Code 78B-5-505(1)(a)(vii));
• Money or assets in a Qualified Domestic Relations Order (QDRO) (see Utah Code 78B-5-505(1)(a)(xv));
• One clothes washer & dryer, refrigerator & freezer, stove & microwave, and sewing machine (see Utah Code 78B-5-505(1)(a)(viii)(A));
• All Carpets in use at your house (see Utah Code 78B-5-505(1)(a)(viii)(B));
• Food and other provisions sufficient for 12 months for you and your family (see Utah Code 78B-5-505(1)(a)(viii)(C));
• Clothing that is reasonably necessary (not including jewelry or fur coats) (see Utah Code 78B-5-505(1)(a)(viii)(D));
• Beds and bedding for you and your immediate family (see Utah Code 78B-5-505(1)(a)(viii)(E));
• Artwork depicting or produced by you or immediate family (unless such artwork is held as part of a trade or business) (see Utah Code 78B-5-505(1)(a)(ix));
• Insurance proceeds, judgment, or settlement that are compensatory for bodily injury or wrongful death to you or to someone for whom you are or were a dependent (see Utah Code 78B-5-505(1)(a)(x));
• Cash value of Life insurance policy (see Utah Code 78B-5-505(1)(a)(xi),(xii),(xiii));
• Pensions, IRA, 401(K) plans and retirement plans (see Utah Code 78B-5-505(1)(a)(xiv));
• Sofas, chairs, and related furnishings reasonably necessary for one household, up to a total value of $500 (see Utah Code 78B-5-506(1)(a));
• Dining and kitchen tables and chairs reasonably necessary for one household, up to $500 per debtor (see Utah Code 78B-5-506(1)(b));
• Animals, books, and musical instruments, up to a total value of $500 (see Utah Code 78B-5-506(1)(c));
• Heirlooms or other items of “particular sentimental value” up to a total value of $500 (see Utah Code 78B-5-506(1)(d));
• Implements, professional books, or tools of your trade, all having a total value not exceeding $3,500 (see Utah Code 78B-5-506(2));
• Motor vehicle (1) not exceeding $2,500 in value, used primarily for daily transportation, and not used for recreational purposes (see Utah Code 78B-5-506(3)(a)(b));
• Cars with equity up to $2,500 (see Utah Code 78B-5-506(3)(b));
• House or primary personal residence with equity up to $20,000 per debtor (see Utah Code 78B-5-503(2)(a)(ii));
• Real property that is not primary personal residence with equity up to $5,000 per debtor (see Utah Code 78B-5-503(2)(a)(i));