Chapter 7 Bankruptcy 

 

Southern Utah Chapter 7 Bankruptcy Attorney

The United States Bankruptcy Code is designed to protect an overwhelmed debtor and give him a fresh start.

Chapter 7 of the Bankruptcy Code, also known as liquidation bankruptcy, is designed to relieve a debtor of all non-exempt assets in the process of discharging all non-priority debts.  In other words, a debtor can discharge almost all debts, excluding, for example, most taxes, student loans, and domestic support obligations, but must turn over all non-exempt assets to the bankruptcy Trustee to sell and distribute to the debtor’s creditors.

Although the Bankruptcy Code is federal law, it relies on each state’s exemption laws to determine what property can be retained by a debtor.  Utah’s exemptions laws allow a debtor to retain, for example, food storage, household furnishings, personal jewelry and heirlooms, work tools, retirement accounts, vehicle equity up to $2,500 ($5,000 for a couple), and home equity up to $20,000 ($40,000 for a couple).

The bankruptcy process begins with filling out and filing a petition with the Bankruptcy Court.  Schedules are included with the petition which details the debtor’s debts, assets, exemptions, income, and expenses.  It is absolutely imperative the debtor is completely honest in filling out these schedules.  Part of the bankruptcy Trustee’s job is to investigate a debtor’s claims and seek out hidden or concealed assets.  A Trustee actually receives a portion of anything he finds and therefore has a strong incentive to investigate a debtor’s schedules thoroughly.  Also, being untruthful on the schedules is a federal crime that can lead to prosecution and federal prison if convicted.

Before a debtor files bankruptcy, he can convert the non-exempt property into exempt property.  This requires careful planning to ensure the debtor can keep as much of his property as possible.  Also, at the time of filing, exemptions must be specifically claimed on the debtor’s schedules, otherwise, they will not be applied, and otherwise, the exempt property may be lost.

As part of the bankruptcy process a debtor is required to take two debtor courses, one prior to filing and one after filing the bankruptcy petition.  Conveniently, these courses can be taken online.  On the day of filing, an automatic stay goes into effect which requires all creditors to cease any collection activity.  This includes staying any lawsuits against the debtor, collection actions, phone calls, or other contacts regarding the debt.

Approximately 60 days after filing, a creditor’s meeting, called a 341 Hearing, will be held.  This is an opportunity for the Trustee and any creditors that desire to attend, to ask the debtor questions under oath.  Generally, any questions asked will regard the debtor’s income, assets, and any issues they find with the bankruptcy petition.  After the hearing, the Trustee can request further information if he desires.

If problems are found with the bankruptcy petition, the debtor may be allowed to amend his filing to correct them.  However, if these problems are severe or amount to a violation of the Bankruptcy Code, the Trustee may dismiss the bankruptcy and possibly bar any refiling.

After the Trustee investigates the debtor’s petition, sells any non-exempt assets, and distributes the proceeds to the debtor’s creditors, he can order a discharge of all remaining dischargeable debts and thereby successfully close the bankruptcy.  This also imposes a permanent stay preventing any creditors from ever attempting to collect the discharged debts again.

Immediate Benefits of Chapter 7 Bankruptcy

Chapter 7 bankruptcy can offer numerous benefits, but these must be considered while also looking at possible disadvantages and whether you may qualify in the first place. When you come to Ruesch & Reever for bankruptcy guidance, all of these matters will be addressed before you file.

Chapter 7 bankruptcy has the power to:

  • Stop creditor harassment
  • Stop foreclosure
  • Stop collection lawsuits
  • Stop wage garnishments

As you can see, seeking bankruptcy protection is a complex process.  The attorneys at Ruesch & Reeve PLLC have helped debtors in all types of situations Call today and see what we can do for you.  

Read more about Chapter 13 Bankruptcy

Bankruptcy Myths

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

  (see Utah Code §§78B-5-50378B-5-50578B-5-50678B-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 Code78B-5-503(2)(a)(i));

I have worked with Ruesch and Reeve on several projects over the last year. The staff always picks up the phone, answers questions, and responds quickly to email. Scheduling time with an attorney was a snap! And I was impressed with the analytical approach and knowledge they presented while working with me..

Troy Kump

Handled our paperwork with profession, and care. Explained anything we had a question on. Great staff, and a very beautiful place.

Sarah rodriguez

Ryan is incredible to work with. Very honest, capable, and personable. They get results and actually care about their customers they are few and far between.

Johnny Hanna

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