Chapter 9 Bankruptcy
Southern Utah Chapter 9 Bankruptcy Attorney
Nate Reeve is a seasoned bankruptcy attorney here at Ruesch & Reeve PLLC, he has years of experience and has filed thousands of bankruptcy cases in Utah. From effectively providing insight regarding your rights, helping you understand the basics, and protecting your rights through the entire process giving our clients the very best advice and peace of mind during this difficult time.
Is Bankruptcy Right for Me?
Deciding whether to file for bankruptcy and what type of bankruptcy, will depend on your financial circumstances and goals. There are three types of bankruptcy we explore with each client during our initial consultation. Chapter 7 offers a way to discharge and eliminate debt but may require the surrender of some assets. Chapter 13 (for individuals) and Chapter 11 (for businesses) involve the reorganization and repayment of debt under the protection of the bankruptcy court.
Chapter 9 Bankruptcy – Municipal Bankruptcy
Purpose of Municipal Bankruptcy
The purpose of chapter 9 is to provide a financially-distressed municipality protection from its creditors while it develops and negotiates a plan for adjusting its debts. Reorganization of the debts of a municipality is typically accomplished either by extending debt maturities, reducing the amount of principal or interest, or refinancing the debt by obtaining a new loan.
Although similar to other chapters in some respects, chapter 9 is significantly different in that there is no provision in the law for liquidation of the assets of the municipality and distribution of the proceeds to creditors. Such a liquidation or dissolution would undoubtedly violate the Tenth Amendment to the Constitution and the reservation to the states of sovereignty over their internal affairs. Indeed, due to the severe limitations placed upon the power of the bankruptcy court in chapter 9 cases (required by the Tenth Amendment and the Supreme Court’s decisions in cases upholding municipal bankruptcy legislation), the bankruptcy court generally is not as active in managing a municipal bankruptcy case as it is in corporate reorganizations under chapter 11. The functions of the bankruptcy court in chapter 9 cases are generally limited to approving the petition (if the debtor is eligible), confirming a plan of debt adjustment, and ensuring implementation of the plan. As a practical matter, however, the municipality may consent to have the court exercise jurisdiction in many of the traditional areas of court oversight in bankruptcy, in order to obtain the protection of court orders and eliminate the need for multiple forums to decide issues.
Only a “municipality” may file for relief under chapter 9. 11 U.S.C. § 109(c). The term “municipality” is defined in the Bankruptcy Code as a “political subdivision or public agency or instrumentality of a State.” 11 U.S.C. § 101(40). The definition is broad enough to include cities, counties, townships, school districts, and public improvement districts. It also includes revenue-producing bodies that provide services which are paid for by users rather than by general taxes, such as bridge authorities, highway authorities, and gas authorities.
Section 109(c) of the Bankruptcy Codes sets forth four additional eligibility requirements for chapter 9:
- the municipality must be specifically authorized to be a debtor by state law or by a governmental officer or organization empowered by State law to authorize the municipality to be a debtor;
- the municipality must be insolvent, as defined in 11 U.S.C. § 101(32)(C);
- the municipality must desire to effect a plan to adjust its debts; and
- the municipality must either:
- obtain the agreement of creditors holding at least a majority in amount of the claims of each class that the debtor intends to impair under a plan in a case under chapter 9;
- negotiate in good faith with creditors and fail to obtain the agreement of creditors holding at least a majority in amount of the claims of each class that the debtor intends to impair under a plan;
- be unable to negotiate with creditors because such negotiation is impracticable; or
- reasonably believe that a creditor may attempt to obtain a preference.
Ruesch & Reeve PLLC can guide you through your bankruptcy options so that you know every advantage and disadvantage of bankruptcy when deciding if bankruptcy is right for you.
With 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 think 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
- Burial plot for you or anyone in your family; ;
- Health aids that are reasonably necessary ;
- Public Benefits such as General Assistance, Social Security, Disability, Unemployment, Worker’s Compensation, ;
- Benefits used for medical, surgical, or hospital care for you and your dependents ;
- Veterans Benefits ;
- Child Support ;
- Alimony and separate maintenance ;
- Money or assets in a Qualified Domestic Relations Order (QDRO) ;
- One clothes washer & dryer, refrigerator & freezer, stove & microwave, and sewing machine ;
- All Carpets in use at your house ;
- Food and other provisions sufficient for 12 months for you and your family ;
- Clothing that is reasonably necessary (not including jewelry or fur coats) ;
- Beds and bedding for you and your immediate family ;
- Artwork depicting or produced by you or immediate family (unless such artwork is held as part of a trade or business) ;
- 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 ;
- Cash value of Life insurance policy ;
- Pensions, IRA, 401(K) plans and retirement plans ;
- Sofas, chairs, and related furnishings reasonably necessary for one household, up to a total value of $500 ;
- Dining and kitchen tables and chairs reasonably necessary for one household, up to $500 per debtor ;
- Animals, books, and musical instruments, up to a total value of $500 ;
- Heirlooms or other items of “particular sentimental value” up to a total value of $500 ;
- Implements, professional books, or tools of your trade, all having a total value not exceeding $3,500 ;
- Motor vehicle (1) not exceeding $2,500 in value, used primarily for daily transportation, and not used for recreational purposes ;
- Cars with equity up to $2,500 ;
- House or primary personal residence with equity up to $20,000 per debtor ;
- Real property that is not primary personal residence with equity up to $5,000 per debtor ;
The law office of Ruesch& Reeve is hands down the best law firm in town. They were very friendly, gave me all the details on how they would handle my situation which made me feel secure in how they were going to handle my situation.
Nate Reeve and his staff helped my husband and I through the bankruptcy process in the most caring and professional manner. He prepared us for every phase and was available when we had questions.
A great and trustworthy company. Definitely recommend. Ruesch and Reeve explained all the steps very clearly and communication is always quick and concise.