If you are a Southern Utah resident in need for a Utah bankruptcy attorney, Ruesch & Reeve can help. Financial hardships can be difficult on you and your family, whether it be a loss of a business or a job, a divorce, disability or just a lack of proper financial management.
Instead of living with the stress of extensive debt and dealing with creditors, it’s best to get help as soon as possible from Tony G. Jones, a bankruptcy attorney at Ruesch & Reeve. He has over 20 years of bankruptcy case experience in southern Utah that allows him to provide his clients with practical insight and explain the basics they need to know and protect their rights through the entire process.
What is bankruptcy?
Bankruptcy is a recourse for an individual or business when they believe they do not have the ability to pay off their debts. A judge and court trustee will examine their assets and liabilities. Bankruptcy was created to give debtors a second chance to maintain their finances, whether they fell into debt due to bad decisions or bad luck. You can find a Utah bankruptcy attorney at Ruesch & Reeve to help you overcome your financial situation.
Oftentimes, it is individuals – not businesses – who file for bankruptcy. The most common reasons individuals file for bankruptcy are for mortgages, credit card debt, auto loans, or student loans.
Of the 774,940 bankruptcy cases filed in 2019, 97% were filed by individuals, the remainder filed by businesses. The median income for those who filed Chapter 7 bankruptcies was $31,284, and the median income for Chapter 13 bankruptcies was $41,532.
Myths about bankruptcy
Myth #1: I will lose everything I own, including my car and house
False. Under the Chapter 7 bankruptcy code, the debtor will be relieved of all non-priority debts in exchange for all non-exempt assets transferred to the bankruptcy trustee who will sell and distribute to the debtor’s creditors.
Bankruptcy is governed by federal law, so the rules and procedures are generally identical state by state. However, each state will have different exemption laws that will keep certain properties outside of bankruptcy. Utah’s exemption laws allow a debtor to retain food storage, household furnishings, personal jewelry, 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).
You may also keep assets like your car and home under the Chapter 13 bankruptcy code. Under a Chapter 13, a debtor can keep most of their assets in exchange for creating and abiding by a three or five-year payment plan. The bankruptcy Trustee will oversee the plan and distribute a portion of the payments to each of the debtor’s creditors. To qualify for a Chapter 13 bankruptcy, the debtor must show proof of current income, and their combined debt must not exceed a certain amount.
Myth #2: Everyone will think I’m a bad person if I file for bankruptcy
False. Bankruptcy is not a punishment to make people feel bad about themselves; it is a way to give debtors a second chance with their finances. No one will know you filed for bankruptcy unless they specifically search for your bankruptcy in the public record.
Myth #3: With new laws, it’s not worth it to file for bankruptcy
False. Utah law allows debtors to file for bankruptcy through Chapter 7 and Chapter 13 bankruptcy laws. Each chapter has different qualifications to be able to file. You can ask your Utah bankruptcy attorney any questions you have about the different bankruptcy types you can file and determine which one would be best for your situation.
Myth #4: I need to have a large amount of debt to qualify for bankruptcy
False. If you are thinking about filing for bankruptcy, it is not necessary to hold a lot of debt. What matters for bankruptcy is whether your debt overwhelms your disposable income.
Myth #5: It will take 7-10 years for my credit to recover from bankruptcy
False. You can start rebuilding your credit immediately after filing. Even with bankruptcy showing up for 10 years, your credit can recover in as little as 18 months.
Myth #6: Creditors can still garnish my wages after I file for bankruptcy
False. According to Chapter 7 bankruptcy, any wages you earn after filing are yours to keep. Under Chapter 13 bankruptcy, a payment plan is set up to pay the debt under a certain amount of time. Under a Chapter 13, part of your earnings will go to paying off these debts.
Why declare bankruptcy?
When you have gotten so deep into debt that you’re asking yourself “Should I file for bankruptcy?”, consider if you can realistically pay off your debts in the next five years. If you can’t, it may be time to declare bankruptcy.
Bankruptcy is an option for people who lost their jobs during the COVID-19 pandemic to get back on track with their finances. With bills to pay and no foreseeable job opportunities, it is understandable for people to file for bankruptcy.
If you are going through a similar situation, filing for bankruptcy can be a safe and legal choice. If you do not qualify for bankruptcy, there are other options for debt relief. Alternatives can include a debt management program, a debt consolidation loan, or debt settlement.
A Utah bankruptcy attorney with Ruesch & Reeve can go over your situation to assist you in deciding which plan will be best for you in filing for bankruptcy.
How to file
Bankruptcy is a legal process, so while it is recommended to receive help from an attorney, it can be filed individually. The costs of bankruptcy include legal fees and filing fees.
You will need to follow these steps when filing for bankruptcy:
- Compile your financial records, which include a list of your debts, assets, income, and expenses.
- Get credit counseling within 180 days before filing; this is required of you before you file for bankruptcy
- File the petition. This is the best time to hire a bankruptcy lawyer. It’s best to have a lawyer through this process because they understand federal and state bankruptcy laws and know how to apply them to your case.
- Meet with creditors. If your petition is accepted, your case will be assigned to a bankruptcy trustee who will set up a meeting with your creditors where they can ask you or the trustee questions about your case.