Are you considering filing for bankruptcy in Utah? If so, it’s likely you feel stressed and overwhelmed. Before filing for bankruptcy, make sure you understand your options so you can make the right choice for your situation. In this blog post, we’ll provide an overview of the bankruptcy process in Utah so that you can decide whether or not bankruptcy is a good option for you.
What Is Bankruptcy?
Bankruptcy discharges debts, enabling debtors to get a fresh start. The bankruptcy process halts all collection activities, including wage garnishment, foreclosure, and repossession. Therefore, creditors can’t collect your debt.
Reasons to Consider Filing for Bankruptcy
There are several reasons why you might consider declaring bankruptcy. Bankruptcy is commonly caused by high debt levels, difficulties paying back loans, or excessive use of credit cards.
Other reasons to consider bankruptcy include:
- Being harassed by creditors
- Being delinquent on debt payments
- Being threatened with home foreclosure
An experienced bankruptcy lawyer can help you in any of these situations.
Alternatives to Bankruptcy
Declaring bankruptcy can be a difficult decision. Before making any big financial decision, it is important to know your options.
Credit counseling and debt settlement are promising alternatives to bankruptcy. It is always a good idea to consult a financial advisor before making any major decisions.
Debt consolidation can reduce interest costs and speed up debt repayment. Finally, it is always a good idea to attempt negotiations with creditors. No matter how difficult it may be, a successful agreement can prevent bankruptcy.
The Types of Bankruptcy for Individuals
There are two types of bankruptcy that individuals can file in Utah: Chapter 7 and Chapter 13.
Chapter 7
Chapter 7 bankruptcy, or liquidation bankruptcy, eliminates certain types of debt. Since creditors do not get paid, most people choose this option because it is cheap and quick. This type of bankruptcy, however, is better suited to people without many assets, as it may result in the loss of luxury assets. Moreover, if you file when delinquent, you will not be able to catch up on delinquent mortgage or car payments through payment plans.
Chapter 13
In contrast, Chapter 13 provides debtors with three to five years to repay their debts. In contrast to Chapter 7, Chapter 13 bankruptcy lets you keep all your assets and avoid foreclosure. Creditors can also negotiate a payment plan if the debt cannot be discharged.
How to File for Bankruptcy in Utah
If you are considering filing for bankruptcy in Utah without an attorney, you should know how the process works. Below are the steps to follow.
- Gather Your Utah Bankruptcy Documents: This includes copies of your tax returns for the past two years and your last 60 paycheck stubs.
- Sign Up for a Credit Counseling Course: Find course information here.
- Fill Out the Bankruptcy Forms: You can download the forms free through USCOURTS.gov.
- Pay the Filing Fee: You must pay $338 to file for bankruptcy under Chapter 7. If you earn less than 150% of the poverty guidelines and cannot afford the filing fee, you can request a fee waiver.
- Print the Bankruptcy Forms: Use black ink to print all forms on white, 8.5″ x 11″ paper.
- File the Forms With the UtahBankruptcy Court: Individual filers cannot utilize the electronic filing system in the Utah bankruptcy court. The court requires that you file your petition in person at the Salt Lake City court or send it by mail.
- Mail Documents to Your Trustee: After filing for bankruptcy, you will be assigned a trustee.
- Take Another Course: Take a debtor education course within 60 days after the 341 meeting.
- Attend Your 341 Meeting: Your creditors will attend this meeting and ask questions.
What Happens After Bankruptcy?
Bankruptcy forgives most unsecured debts, so you won’t have to pay them back. However, bankruptcy cannot be used to forgive student loans, child support, or alimony. There are some cases when bankruptcy filings result in the forfeiture of property as well.
How Does Bankruptcy Affect My Credit?
If you file for bankruptcy, the effects can last for seven to ten years on your credit score. This may make it difficult for you to obtain further loans or credit lines.
Rebuilding Your Credit Score Post Bankruptcy
While bankruptcy adversely affects your credit score, there are a few steps you can take to rebuild it gradually:
- Applying for a small loan.
- Making on-time payments.
- Getting a secured credit card.
- Keeping a good payment history.
- Keeping your credit report free of errors.
- Becoming an authorized credit card user.
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