Chapter 7 bankruptcy gives debtors who are facing serious financial hardship the ability to wipe the slate clean and enjoy a fresh start. Also known as a liquidation bankruptcy, Chapter 7 is the fastest, easiest and most common type of bankruptcy case. It might be your best debt relief option.
If you don’t have the means to pay your bills the Law Office of Davis & Jones, P.C. can help you find a solution. We’ve been working with people who are overburdened with debt since 1995. Our legal team has guided more than 20,000 Utah residents through the bankruptcy filing process. Let us put our extensive experience to work for you and you can look forward to a better tomorrow.
You can start marching down the road to debt relief today. Contact our Salt Lake City or St. George office to schedule a free consultation with a bankruptcy lawyer. Read on to learn the ins and outs of filing a Chapter 7 case.
Qualifying for Chapter 7 Bankruptcy
To be eligible for Chapter 7 bankruptcy you must pass the means test. The test is designed to identify whether you have enough income to pay at least a portion of your debts through a Chapter 13 bankruptcy repayment plan.
The means test has two parts. First comes a comparison of your income to the state median, which is currently $64,806 for a oneperson household and $93,474 for a four person household . If the amount you earn falls under that total, you should be able to file Chapter 7 case.
If your household income is greater than the Utah median household income level, you’ll proceed to the second part of the means test. After deducting the allowable expenses from your earnings, your disposable income may very well be low enough to qualify for Chapter 7 – that’s the case for few Utah debtors. If it isn’t low enough, a seasoned bankruptcy attorney can explain your options.
Eliminate Debt for a Fresh Start
Filing a Chapter 7 case can work to eliminate many types of debts. This type of bankruptcy could be to your benefit if you’re struggling to pay any of the following:
- Medical bills
- Credit card debt
- Personal loans
- Past-due utility bills
- Unpaid rent
- Repossession deficiency balances
- Promissory notes
- Payday and internet loans
Chapter 7 bankruptcy doesn’t erase all types of debt. Some financial obligations – including child support, alimony, criminal fines, back taxes, court fees and, in most cases, student loans – are typically nondischargeable. In other words, those debts will survive the bankruptcy.
Utah Chapter 7 Bankruptcy Exemptions
The reason Chapter 7 is called a liquidation bankruptcy is because the debtor’s assets are liquidated, or sold off, in order to pay creditors. However, that doesn’t necessarily mean you’ll lose your belongings if you file a Chapter 7 claim.
In Utah, debtors can protect at least some of their property by taking advantage of the state exemptions. These include:
- A homestead exemption to protect up to $42,700 of the equity in your primary residence ($85,400 for joint Debtors who are both owners of the home)
- An exemption of up to $5,100 in real estate property other than your primary residence
- A motor vehicle exemption of up to $3,000 in equity of a car, truck, SUV, van or motorcycle
- A tools of the trade exemption that covers up to $5,000 of the equity in items used in your principal profession or business
A number of other exemptions are allowable in a Utah Chapter 7 case. The amounts of some exemptions may increase if you file for bankruptcy with your spouse. To avoid the unnecessary loss of any of your property, you may want to consult with an experienced bankruptcy attorney.
The Chapter 7 Bankruptcy Filing Process
Working with a good bankruptcy lawyer, can make the filing process easier and less stressful. With an attorney guiding you, the route to debt relief will be a smoother one.
Still, you may find it helpful to understand what it takes to resolve your debts through Chapter 7 bankruptcy. Here’s a look at the steps in a typical case:
- Completion of a mandatory credit counseling course
- Preparation of the bankruptcy petition, statements and schedules
- Filing the necessary paperwork with the Utah bankruptcy court
- Attending the meeting of creditors to answer the trustee’s and creditors’ questions
- Completion of the required debtor’s education course
- A period of time for the Trustee to liquidate and administer available assets
- Discharge of eligible debts and the official closing of the bankruptcy case
If you fail to take the courses at the right time, miss the mark on your bankruptcy paperwork or make any other misstep, your case could end without a discharge. For that reason, many Utah debtors prefer to work with a qualified bankruptcy lawyer.
Should You Consider Chapter 7 Bankruptcy?
Are your creditors unwilling to give you time to catch up on your bills? Do your debts far surpass your income and assets? Filing for Chapter 7 could be the right way to hit the reset button on your finances. Meeting with a local bankruptcy attorney is a smart decision to explore your options.
A legal professional who specializes in debt relief – like the bankruptcy lawyers at the Law Office of Davis & Jones, P.C. – can explain all of your options and offer personalized advice on how to get on track for a more favorable financial future. We offer affordable bankruptcy services. If you’re worried about home foreclosure, car repossession or wage garnishments, or if you want to stop debt collectors, we’ll provide the help you need.
The Law Office of Davis & Jones, P.C., represents clients in Salt Lake City, along the Wasatch Front and throughout the surrounding Utah communities as well as in the St. George area. We have decades of experience in both Chapter 7 and Chapter 13 filings. Our legal team handles bankruptcy for individuals and bankruptcy for small businesses. Turn to us, and we’ll make every effort to ensure that you’re released from your financial burdens.
Our bankruptcy lawyers offer complimentary consultations, as well. We’d be happy to evaluate your situation and advise you on how to proceed. To discuss debt relief and Chapter 7 bankruptcy with a highly skilled attorney, contact our Salt Lake City or St. George offices or reach out to us online and schedule a free consultation today.