Utah Bankruptcy FAQs: Answers to Common Questions

Filing for bankruptcy can be a daunting process, especially in a state like Utah where residents may have specific queries about the procedure. Below, we answer some of the most common questions surrounding bankruptcy in Utah to provide clarity and guidance.

1. What are the different types of bankruptcy available in Utah?

In Utah, individuals can primarily file for Chapter 7 or Chapter 13 bankruptcy. Chapter 7, also known as liquidation bankruptcy, allows for the discharge of most unsecured debts, such as credit card debt and medical bills. Chapter 13, on the other hand, is designed for individuals with a regular income, enabling them to create a repayment plan to pay back creditors over three to five years.

2. What is the means test?

The means test is a tool used to determine eligibility for Chapter 7 bankruptcy. It assesses your income against the median income for a similar household in Utah. If your income is below this threshold, you may qualify for Chapter 7. If it is above, you may have to consider filing for Chapter 13 instead.

3. How long does the bankruptcy process take in Utah?

The duration of the bankruptcy process in Utah can vary. Generally, Chapter 7 cases may take about four to six months from the filing date to the discharge of debts. In contrast, Chapter 13 cases can last three to five years, depending on the repayment plan agreed upon with creditors.

4. What debts can I discharge in bankruptcy?

Many debts can be discharged in bankruptcy, including credit card debts, medical bills, personal loans, and some types of tax debts. However, certain debts, like student loans, child support, and most tax obligations, are typically not dischargeable.

5. Will filing for bankruptcy affect my credit score?

Yes, filing for bankruptcy will impact your credit score, as it remains on your credit report for up to 10 years for Chapter 7 and up to 7 years for Chapter 13. However, many individuals find that their credit scores improve after bankruptcy due to the reduction in debt and the fresh financial start it provides.

6. Can I keep my property if I file for bankruptcy?

Yes, in many cases, you can retain essential property when filing for bankruptcy. Utah has specific exemptions that allow you to keep certain assets, including your primary residence (up to a certain equity limit), a vehicle, personal belongings, and retirement accounts. Working with a qualified bankruptcy attorney can help you understand what you can preserve.

7. Do I need a lawyer to file for bankruptcy in Utah?

While it's possible to file for bankruptcy without an attorney, seeking professional legal advice is highly recommended. Navigating the bankruptcy process can be complex, and an experienced attorney can help ensure that all paperwork is completed correctly and that you are fully informed of your options.

8. What is the cost of filing for bankruptcy in Utah?

The costs associated with filing for bankruptcy can vary based on the type of bankruptcy you choose. Generally, you can expect to pay court filing fees, which currently amount to around $338 for Chapter 7 and $313 for Chapter 13. Additionally, attorney fees may range from a few hundred to several thousand dollars, depending on your case's complexity.

9. How does bankruptcy affect my co-signers?

When you file for bankruptcy, any co-signers on your loans may be affected. If you discharge a debt in bankruptcy, your co-signer will still be liable for the debt. This means they will be responsible for repaying the loan if you do not, which can lead to complications in your relationship and financial standing.

10. Can I file for bankruptcy more than once?

You can file for bankruptcy more than once; however, there are limits on how soon you can file again. For Chapter 7 bankruptcy, you must wait eight years after your last discharge to file again, while for Chapter 13, you must wait two years. Understanding the rules governing multiple filings is crucial for long-term financial planning.

By being informed about these frequently asked questions, individuals considering bankruptcy in Utah can approach the process with greater understanding and confidence. It's advisable to consult with a knowledgeable bankruptcy attorney to navigate this challenging time effectively.