How Much Is The Filing Fee In A Chapter 7 Case?

Chapter 7 Bankruptcy Law

As of December 30, 2021, the chapter 7 Voluntary Petition for Bankruptcy filing fee in Utah is $338.00.
Chapter 7 is known as the “liquidation bankruptcy’’ because it discharges most of your unsecured debt. That includes credit card debt, medical bills and personal loans. It’s the quickest, simplest and most common type of bankruptcy. According to the American Bankruptcy Institute (ABI), 63% of the 774,940 bankruptcy cases filed were Chapter 7. An even more encouraging bankruptcy statistic: 94.3% of Chapter 7 filings had their debts discharged, meaning forgiven.
You must pass a “means test’’ to qualify for Chapter 7 filing. The bankruptcy means test examines financial records, including income, expenses, secured and unsecured debt to determine if your disposable income is below the median income (50% lower, 50% higher) for your state. The means test income level varies from state to state. You might be forced to sell any non-exempt assets, though several online sites claim that 96% of Chapter 7 filings are “no asset” cases, meaning there is not enough equity or value in the property for a trustee to sell it and pay off creditors.

Debts That Can and Can’t Be Discharged in Chapter 7 Bankruptcy

Chapter 7 should dismiss most of the debts you owe, but there are some hard-and-fast debts that can’t be discharged in Chapter 7.
The list of non-dischargeable debts includes:
• Child support
• Alimony
• Tax liens
• Court fees and penalties
• Personal injury debts owed due to an accident while you were intoxicated
The list of items that can be discharged in a Chapter 7 bankruptcy include:
• Credit card debt
• Medical bills
• Personal loans
• Mortgage or automobile loans that you can no longer pay
• Income tax debt
• Student loans — must prove undue hardship
• HOA fees — if you surrender your home or condo
• Any other form of unsecured debt.

When to File Chapter 7 Bankruptcy?

There are several warning signs that you should be considering Chapter 7 bankruptcy. Five strong signs that indicate filing for Chapter 7 may be the right solution include:
 Your debts total more than half your annual income.
 It would take five years (or more) to pay off your debt, even if you took extreme measures.
 Your debt creates stress in essential aspects of your life, such as relationships and your ability to sleep.
 You have little to no disposable income.
 Your monthly income is below the median level in your state.

How to File Chapter 7 Bankruptcy

The most important factor in filing Chapter 7 bankruptcy is finding an experienced bankruptcy attorney. Once you decide on an attorney, you can refer creditors to your lawyer’s office. Filing the petition will trigger an “automatic stay,’’ which means creditors can’t pursue lawsuits, garnish your wages or contact you about your debts. If you’re qualified, it will take 4-6 months to complete the bankruptcy process.

Here are the steps you must take when filing for bankruptcy:

1. To start the process, the debtor must fill out a long series of forms that detail records of assets, liabilities, income, expenses and overall financial standing, plus any existing contracts or leases in the debtor’s name.

2. Pre-bankruptcy credit counseling ($50) is the next required step for debtors filing under Chapter 7. These courses typically are offered by nonprofit credit counseling agencies, which look at your financial situation to determine if there are other avenues (debt management, debt consolidation, debt settlement) that could resolve the issue without having to file bankruptcy.

3. If it’s determined that bankruptcy is your best solution, then you, or your attorney, must take the forms you filled out in Step 1 and file a petition for bankruptcy at the local bankruptcy court.

4. From there, it’s time to reach into your wallet (what’s left of it) and start paying for the process. Some of the bills you must pay include a petition filing ($335), court fees (which vary by state) and attorney fees (the national average for Chapter 7 bankruptcy is $1,250, according to the National Bankruptcy Forum). Bankruptcy involves a lot of paperwork, which becomes public record. Bankruptcy court participants are generally featured in newspapers and online, so there’s a potential loss of financial control and privacy.

5. Once your case has been filed, the court will appoint a bankruptcy trustee to oversee the accuracy of the documents you filed. The trustee will want to see copies of bank statements, paycheck stubs, tax returns, etc. to verify that your documents are accurate.

6. The next step is a meeting with the trustee and creditors, if any creditors decide to pursue the debts you are trying to discharge. The trustee (and possibly the creditors) may have questions about some of the documents you filed and you are required to answer. The trustee has 30 days for objecting to property the debtor wants the right to retain. Other creditors have 90 days from the meeting to file a suit alleging that their debt should not be eliminated in the bankruptcy. It’s possible the trustee will say the Chapter 7 case should have been filed as a Chapter 13.

7. The next step is to make sure that if you made promises about secured debt usually a home or automobile you fulfilled those promises.

8. Then comes a second counseling session called “debtor education.” These also are administered by nonprofit credit counseling agencies who try to teach you ways to handle debt so you don’t wind up back in court again.

9. If all goes well and in the vast majority of cases it does, the judge will discharge your qualified debts and you no longer have a legal obligation to pay them.

Preparing for Chapter 7 Bankruptcy

There’s some protocol to follow in the months before filing for bankruptcy. Failing to follow these instructions could undermine your efforts.

 Don’t Pay Creditors: It seems counterintuitive and you should definitely make routine payments. But any large or unusual payments could be viewed as “preferential transfers.’’ That means one creditor has benefited unfairly over others.

 No New Debt: A new creditor could claim you took out a loan or ran up the balance on a credit card without intending to pay it back. Legally, that’s fraud and it will not be forgiven.

 No Unusual Transactions: Don’t stray from the routine. Don’t transfer titles of cars or homes. Don’t buy luxury goods. Don’t transfer your business or remove your name from it. They can all be classified as fraud.

 Be Truthful: You are required, while filing for bankruptcy, to provide full and complete information. You must disclose any debt, assets, accounts or other financial information. Failure to comply could lead to fraud and potential criminal charges.

 Don’t Touch Retirement Funds: You are generally allowed to keep retirement plans and accounts, so keep them safe while considering bankruptcy and don’t use those funds to pay down debt.

 Use Common Sense: You should not file for bankruptcy if you’re about to receive a large sum of money, such as an inheritance. You could use that money to pay down your debts. Otherwise, if you’re involved in a bankruptcy process, that money could be seized by a court representative to pay your debts.

Pros of Chapter 7

 It will prevent your lenders from aggressive collection action.

 Chapter 7 is easily understood and explained to curiosity-seekers and future lenders. Sure, they might have questions about bankruptcy and how it will affect your credit. But if you talk yourself out of Chapter 7 when it could be the right decision, consider a future of trying to explain your missed debt payments, defaults, repossessions and lawsuits. And yes, all of those will hurt your credit, too.

 You will be forced to be more disciplined financially. If you ever intend to borrow money again, you will need to be frugal and demonstrate responsibility in repaying debt. Even though you might be able to open new lines of credit anywhere from one to three years after filing for bankruptcy, the interest rates will be much higher. Demonstrating ability to pay those debts on time is the only way to get the interest rates down.

 In many states, exemptions will allow you to keep many of the things you own, including more property than you probably need. After you file, you will be able to keep any salary you earn and any property you purchase. Take a look at the chapter 7 home equity exemption to see if your house is at risk.

 Whether you are successful with your chapter 7 bankruptcy or not, you are able to file bankruptcy again after the time limit has passed.

Cons of Chapter 7

 The bankruptcy impact on your credit score. Chapter 7 bankruptcy can remain on your credit report for up to 10 years though if bankruptcy is a viable option, chances are your credit is already tarnished.

 You will lose all of your credit cards.

 You may lose luxury possessions, like a boat or second home, depending on how much equity you have.

 You will need to wait 2-4 years (depending on the type of loan) before you are able to get a mortgage.

 It won’t automatically relieve you of student loan debt or obligations to pay alimony and/or child support.

Chapter 7 Attorney Fees

The attorney fees associated with bankruptcy are entirely up to the individual attorney, and for a Chapter 7 case can range anywhere from $1100 to $2400, generally hovering between $1100 and $1400. Bankruptcy attorney fees are separate from court filing fees, so keep that in mind when you are getting quotes from attorneys and be sure to ask if they have included that other fee. Attorney fees are of course going to be something you think about when looking for a lawyer. Keep in mind, however, that discounted products may not work as well as the original and the same goes for attorneys. Our rates may be a little higher than some others, but we have decades of experience in the field of bankruptcy law and know how to make those laws work best for you.

Chapter 13 Attorney Fees

The attorney fees for a Chapter 13 claim will be different than if you were to file Chapter 7. These fees are actually set by the Utah bankruptcy court, so, unless your case is exceptionally complicated, they will be the same no matter what attorney you choose. Chapter 13 attorney fees vary slightly depending on your income and the kind and amount of debt you are claiming, but it is generally going to run $3,250 to $4,000. The variable that does change depending on the attorney is how much you have to pay up front before your case is filed with the court. How does that make a difference? Here is the scenario: If you have a typical Chapter 13 claim, then your court-set attorney fee will be $3,250. You choose an attorney who charges $900 before filing your case, of which he will use $310 to pay the court fees and put the remaining $590 toward his overall attorney fees, bringing your new balance down to $2660. And what happens to that balance? It gets rolled in with all the other debt you are consolidating and your trustee will pay him out of your monthly payments. Whether they charge more initially or wait and get paid over time after your case, the attorneys make the same amount – it’s all about what you can afford and how you want to pay.

Alternatives to Filing Chapter 7 Bankruptcy

If you are wondering if you should file for bankruptcy, there are many nonprofit consumer credit counseling organizations that have the ability to negotiate more favorable terms with creditors. It’s particularly effective with credit-card companies. The repayment program will be managed expertly and fees could be avoided.
Here are some options:

• Debt Management Plan: Entering into a debt management program can provide relief from interest rates, late fees and penalties from creditors. Under a DMP, which is negotiated by credit counselors, you promise to pay back the full principal over time in an efficiently managed manner. The debt management program provides an organized monthly payment plan. It provides an opportunity to handle the debt more efficiently than trying to sort it out yourself. By keeping the payments on track, it will be good for your credit score.

• Some caveats: There is generally an enrollment and maintenance fee and the DMP is never a guaranteed option. Creditors have no obligation to participate.

• Debt Consolidation— This option reduces interest rates and combines all of your debts into one manageable monthly payment. Under debt consolidation, you take out a loan, which is used to consolidate and pay off all of your other debts. Debt consolidation companies are experienced at acquiring loans and finding the lowest monthly payment. With credit-card loans, the consolidated interest rate can be significantly less than what is being charged on each of your credit cards. A word of caution, though. Be sure to look for a dependable and experienced debt consolidation company (with at least five years of experience). Also, be wary of consolidating several unsecured loans into one secured loan. If you can’t pay back the loan, collateral items at stake typically include your home or car and you could lose one or both!

• Debt Settlement: It’s a lump-sum settlement payment with creditors, although this option is generally a consideration only for people with very poor credit. It allows you to decrease the principal you owe while eventually retiring the debt. In most cases, you will around 50%-75% of the original debt. But it’s important to determine up front whether the company is charging a percentage of the debt as its fee or you could find yourself paying even more. Be aware that debt settlement is damaging to your credit score. Lenders often will report the debt as “settled for less than agreed’’ or “settlement accepted’’ for seven years.

• Personal Loan for Bad Credit: Yes, you can get a personal loan with bad credit, depending on your situation. You can expect high interest rates and should only consider this option if you can truly afford the monthly payment.

Free Initial Consultation with Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

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Bankruptcy Chapter 7

Bankruptcy Chapter 7

Bankruptcy is a federal court process designed to eliminate debts or repay them under the protection of the bankruptcy court. For individuals, most people file either Chapter 7 or Chapter 13, because a court order can call an automatic stay, prohibiting most creditors from hounding you in order to collect what you owe. However, you should consider the costs, both financially and personally, before taking action. If you declare bankruptcy, renting an apartment or buying a house or a car will be extremely difficult because of your credit. In addition, future job opportunities could be compromised, perhaps leading to more financial issues. Many debtors assume that Chapter 7 bankruptcy is better than Chapter 13 bankruptcy because, Chapter 13 bankruptcy requires debtors to repay some debt, whereas Chapter 7 bankruptcy wipes out qualifying debt without a repayment plan. But it isn’t that simple.

For instance, Chapter 7 is quicker, many filers can keep all or most of their property, and filers don’t pay creditors through a three to five years Chapter 13 repayment plan. But not everyone qualifies to file for Chapter 7 bankruptcy and in some cases; Chapter 7 doesn’t provide the help the filer needs. Each bankruptcy chapter has unique tools that help solve distinct problems. For instance, a debtor who’d like to save a home from foreclosure will likely be better off filing for Chapter 13 bankruptcy because Chapter 7 bankruptcy doesn’t have a mechanism that will allow you to keep property when you’ve fallen behind on your payment. However, sometimes Chapter 13 bankruptcy is the only option because a debtor isn’t eligible for Chapter 7 bankruptcy.

Some debtors cannot file for Chapter 7 bankruptcy leaving Chapter 13 bankruptcy as the only option. You cannot file for Chapter 7 bankruptcy if both of the following are true:

• Your current monthly income over the six months before your filing date is more than the median income for a household of your size in your state.

• Your disposable income, after subtracting certain expenses and monthly payments for debts you would have to repay in Chapter 13 bankruptcy, exceeds certain limits set by law. These calculations are referred to as the means test. They determine whether you have the means to repay a certain amount of your debt through a Chapter 13 repayment plan. If you do, you flunk the test and are ineligible for Chapter 7 bankruptcy.
The means test can get fairly complex, and, to make matters worse, uses unique definitions of disposable income, current monthly income, expenses and other important terms, which sometimes operate to make your income seem higher, and your living expenses lower, than they are. Even if you are eligible for Chapter 7 bankruptcy, there are some situations when filing for Chapter 13 bankruptcy might be more advantageous than filing for Chapter 7 bankruptcy.

How the Automatic Stay Works

The automatic stay is an order that’s put in place as soon as you file for bankruptcy. All collection efforts to collect money you owe other than child support and alimony, including calls, letters, and other techniques, must come to an immediate halt. It stops almost anyone who is trying to collect from you.
A few things that a creditor cannot do once the stay is in place include:
• garnishing your wages (taking money out of your paycheck)
• levying on your bank account (instructing the bank to withdraw funds)
• foreclosing on your house
• repossessing your car, or
• Moving forward with a civil lawsuit requesting a money judgment.

In most cases, the automatic stay will protect you throughout your case. But not always. If you’ve filed more than one bankruptcy case within a year, you might not receive as much or any protection. Depending on the number of times you’ve filed during the previous year, the stay could be limited to 30 days (you filed one other matter) or might not apply at all (you filed two or more cases). If you find yourself with this problem and want the protection of the stay, you’ll have to file a motion asking the court to extend it or put it in place. The court will consider doing so if you explain why you filed the previous case and demonstrate that you aren’t gaming the system by repeatedly filing for bankruptcy. Also, it’s common for a creditor to file a motion to lift the automatic stay (a motion to remove the stay order) if, in a Chapter 13 case, you stop making your house payment and the creditor wants to move forward with a foreclosure. If the court grants the request, the judge will withdraw the stay order and allow the creditor to continue with collection efforts.

Advantages of Chapter 7 Bankruptcy

Chapter 7 bankruptcy is an efficient way to get out of debt quickly, and most people would prefer to file this chapter, if possible. Here’s how it works:

• It’s relatively quick: A typical Chapter 7 bankruptcy case takes three to six months to complete.
• No payment plan: Unlike Chapter 13 bankruptcy, a filer doesn’t pay into a three- to five-year repayment plan.
• Many, but not all debts get wiped out: The person filing emerges debt-free except for particular types of debts, such as student loans, recent taxes, and unpaid child support.
• You can protect property: Although you can lose property in Chapter 7 bankruptcy, many filers can keep everything that they own. Bankruptcy lets you keep most necessities, and, if you don’t have much in the way of luxury goods, the chances are that you’ll be able to exempt (protect) all or most of your property.
• You can keep a house or car in some situations. You can also keep your house or car as long as you’re current on the payments, can continue making payments after the bankruptcy case, and can exempt the amount of equity you have in the property.

Chapter 7 works very well for many people, especially those who:=

• own little property
• have credit card balances, medical bills, and personal loans (these debts get wiped out in bankruptcy, and
• Whose family income doesn’t exceed the state median for the same family size.
You’ll take the means test to see if your income qualifies for this chapter. If your income is below the average income for a family of the same size in your state, you’ll automatically qualify. If your income is higher than the median, you’ll have another opportunity to pass. However, if after subtracting allowed expenses, including payments for child support, tax debts, secured debts (such as a mortgage or car loan), you have income left over to make a significant payment to your creditors (called disposable income), you won’t qualify to file for Chapter 7 bankruptcy. Chapter 7 bankruptcy isn’t the best choice for everyone. Chapter 7 won’t help people whose debts won’t get wiped out (discharged), like certain income tax debt, student loans, and domestic support obligations. High-income filers find it hard to qualify. It’s also not a good fit for people who would lose substantial equity in a home or other property if they filed for Chapter 7 bankruptcy, or those facing foreclosure or repossession. For those individuals, Chapter 13 bankruptcy would likely be a better choice.

What Is Disposable Income For Chapter 7 Bankruptcy?

Disposable income is the amount that remains after subtracting allowed bankruptcy expenses from your monthly gross income. Your disposable income will determine whether you qualify to discharge (wipe out) debt in Chapter 7 or Chapter 13 bankruptcy. When you claim your deductions, you’ll be able to use the actual cost of some expenses. For others, such as the allowance for food, clothing, and housing, you’ll use the national and local standards.

Here’s a list of some of the deductions you’ll be allowed to take:
• food and clothing
• housing and utilities
• transportation costs
• taxes
• involuntary payroll deductions
• life insurance
• court-ordered payments, such as family support
• certain education costs
• childcare expenses, and
• Health care costs.
In a Chapter 7 case, you’ll complete the Chapter 7 Means Test Calculation form. You’ll deduct allowed expenses to find your disposable monthly income. Next, you’ll multiply that amount by 60 months. If the figure exceeds the maximum amount currently allowed (which will be listed on the form), you won’t qualify for a discharge. Additionally, you might not qualify if your disposable income is sufficient to pay 25% or more of your unsecured, no priority debt (such as credit card balances, medical bills, and personal loans).
In a Chapter 13 matter, you’ll fill out the Chapter 13 Calculation of Your Disposable Income form. The amount that remains after deducting expenses is your monthly disposable income. You’ll pay that number to your unsecured, non-priority creditors each month over the course of your three- to five-year repayment plan. Because each case is different, determining whether you qualify for bankruptcy can be challenging. When in doubt, contact a knowledgeable bankruptcy attorney.

Here are a few other things filers find challenging about Chapter 13 bankruptcy

• You must complete the entire three- to five-year repayment plan before any qualifying debt balances get wiped out (unless the court lets you off the hook early for hardship reasons).
• If you owe non-dischargeable past due taxes, or support arrearages, you’ll have to pay off the entire balance in your plan (many people don’t have sufficient income to do so).
• To keep a house or car, you’ll need to repay the arrearages over the course of your plan (while continuing to pay your regular monthly payment).
• Many people who file for Chapter 13 bankruptcy don’t complete their plans, so filers run a very real risk that their debts won’t be discharged.

Despite these potential problems, Chapter 13 bankruptcy is a good option for people who have a regular income to pay into a repayment plan, and who would otherwise lose their house to foreclosure or who need time to pay back tax or support arrearages.

The Chapter 7 Bankruptcy Process

You’ll fill out several forms listing your income, assets and debt. You have to list everything, or it might not be erased and may even be considered an act of fraud. You’ll then pay a fee to file a petition for bankruptcy court and a date will be set. The petition automatically prevents creditors from garnishing your wages or suing you. Your creditors will be informed and you’ll receive a court-appointed trustee to oversee the process. About a month after you file, you’ll attend a hearing in which creditors can view your debt and the trustee will arrange to sell off your nonexempt items. Depending on the state you live in, you could lose your second home, second car, stock or bond certificates, certificates of deposit, heirlooms and any valuable collections such as coins or stamps. After that, you will not have to pay dischargeable debt, which includes late rent and utility bills, credit cards, medical bills and documented loans from friends and family. By law, creditors cannot try to collect from the original debt. However, some non-dischargeable debts may still exist, and if creditors deem them fraudulent, you can still be approached by collection agencies. The petition creates a separate, taxable bankruptcy estate consisting of all assets that belonged to you before you filed. Your trustee is responsible for preparing and filing taxes attached to the estate, but you’re responsible for taxes not connected, such as income tax Remember, Chapter 7 stays on your credit for 10 years.

The Chapter 13 Bankruptcy Process

You’re only required to make one monthly payment to your trustee, who will distribute the funds to the various creditors. They are paid based on priority (tax authorities, child support/alimony and administration costs). Lenders are then paid, followed by credit card companies, medical providers, utilities and more. Just like Chapter 7, you’ll fill out the same papers, pay a fee and receive a court-appointed trustee. You have to submit a plan for repayment, which the court can either accept or reject. After you have filled out a form listing your assets and income and set up a confirmation hearing, your trustee will begin making payments to your creditors based on the court-approved repayment schedule. You’ll pay back your debts from your own income, and if some survive after your bankruptcy is closed, you have to keep paying back those debts. The petition does not create a separate taxable estate, so you’ll continue to pay taxes just like you did before you filed.

Chapter 7 Bankruptcy

• Certain assets can be liquidated to pay off outstanding debts.
• Could be completed in as little as three or four months.
• Once complete, no further payments need to be made by the consumer.
• Stays on a credit report for 10 years.
• Income must be less than the median income in your state.

Chapter 13 Bankruptcy

• You’ll receive a court-approved debt repayment plan. The amount you must repay depends on your income and the size of debt.
• There is no liquidation of assets, which means you keep everything, including your home and car, all while making regular payments.
• The entire process can take three to five years to complete.
• Stays on your credit report for seven years.

Requirements when Filing Chapter 7 or Chapter 13

If you’re considering either Chapter 7 or Chapter 13 bankruptcy, there are certain income requirements that must be met. Anyone contemplating Chapter 7 bankruptcy must go through what’s called a means test. This will assess whether you meet the necessary conditions to qualify. The first part of the Means Test is to figure out if your income is below the median income level in the state where you reside. If it is, then you pass and are eligible for Chapter 7 bankruptcy. However, if your income is above the median level, a deeper look into your disposable income is required. If your disposable income equals more than a predetermined amount, the courts will assume you have enough money to at least pay part of your debt and you won’t pass the means test. Anyone who fails the means test will be required to file for Chapter 13 bankruptcy protection.

Free Initial Consultation with Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506
Ascent Law LLC

4.9 stars – based on 67 reviews

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