Are You Facing Foreclosure?

Are You Facing Foreclosure?

If you are not able to keep up with your mortgage payments, the prospect of foreclosure and with it losing your home can be daunting. Still, foreclosure is a rigorous legal process, and you have certain rights based on state law along with the mortgage documents you signed. Knowing your rights can help you navigate the foreclosure process as smoothly as possible, or even avoid it if your lender violated any foreclosure requirements.

What Is Foreclosure?

Foreclosure is the legal process that allows lenders to recover the balance owed on a defaulted loan by taking ownership of and selling the mortgaged property as collateral. Nonpayment is what usually triggers default, but it can also happen if a borrower does not meet certain other terms in the mortgage contract.

Loss Mitigation Rights

Your loan servicer is the company that handles your mortgage account, and it may or may not be the company that either issued or currently owns the loan. The loan servicer is required to contact you (or try to do so) by phone to talk about “loss mitigation” no later than 36 days after your first missed payment and within 36 days of any subsequent missed payments. Loss mitigation is the process by which you and your lender work together to try and avoid foreclosure. Within 45 days of a missed payment, your servicer must notify you in writing about your loss mitigation options and refer you to someone who can help you try to avoid foreclosure. In general, your servicer cannot start to foreclose until you are at least 120 days behind on your payments.

Right to a Breach Letter

Mortgage contracts typically have a clause that obligates lenders to send a written notice called a “breach letter” to tell you when you are in default. The breach letter must include:
• Details about the default and its causes
• What you need to do to cure the default and reinstate the loan
• The date by which you must cure the default (usually at least 30 days from the date you receive the notice)
• Notice that failure to cure the default on time will lead to the sale of the property
To cure the default and avoid foreclosure you must pay the full past due amount by the date shown in the breach letter, along with any back interest, late fees, and penalties. If you do not and you have not worked out some other option—foreclosure proceedings will likely begin. In general, you must be behind on payments for at least 120 days before a foreclosure can start, so your lender will likely send a breach letter close to the 90th day of the delinquency.

Notice of the Foreclosure

You are entitled to notice of a pending foreclosure no matter which state you live in. If it’s a judicial foreclosure, you’ll get a complaint and summons letting you know that a foreclosure has begun. If it’s a non-judicial foreclosure, you may receive two notices:

1. Notice of default (NOD). Depending on state law, a non-judicial foreclosure starts when a notice of default is recorded at the county office. The NOD serves as public notice that you are in default. It contains details about the borrowers, lender, trustee, property, default, action required to cure the default, and a statement that if the default is not cured by the stated deadline, the lender will sell the property at a public sale.

2. Notice of sale (NOS). The notice of sale might be mailed to you, published in a local newspaper, posted on the property, and recorded in the county land records. It includes details about the property, a statement that the property will be sold at a public auction, and information about the foreclosure sale. If you do not receive an appropriate notice under your state’s laws, you may have a defense to the foreclosure. While that does not necessarily mean you could avoid the foreclosure, it may force the servicer to issue a new notice and start the foreclosure process from scratch. That could potentially give you enough time to get caught up on payments or sort out another option.

Right to Reinstate

Depending on state law, you may be able to stop a foreclosure if you make a lump-sum payment to get up to date on your loan, including any fees and expenses. In Utah, there is no right to reinstate after the foreclosure sale is completed. After that, you resume your regular payments. In general, you must reinstate the loan by a particular deadline, such as by 5:00 p.m. on the last business day before the property sale is scheduled. Your mortgage contract may also give you the right to reinstate. Check your mortgage or deed of trust for a section known as the reinstatement clause, titled as “Borrower’s Right to Reinstate After Acceleration” (or similar language) to find out if and how you can reinstate your loan. If you do not have a right to reinstate through state law or your mortgage contract, the lender may allow you to reinstate after considering your request. If the lender refuses, you can ask a court to allow the reinstatement. In general, a judge would rather avoid foreclosure if you have the cash to get current on your loan.

Right of Redemption

All states let borrowers pay off debt (including fees and expenses) and “redeem” their property before a foreclosure sale, and some states even allow borrowers to buy back the property after the foreclosure sale. To redeem the property, you pay the full balance due before the foreclosure sale or reimburse the person or entity that bought the property at the foreclosure sale, depending on the situation. In Utah, the only time you have a right of redemption is during the 90-day window after the Notice of Default has been recorded with the County Recorder’s office. After that, your right is gone. Call us to discuss options at that point.

Right to Foreclosure Mediation

Some states, counties, and cities give property owners facing foreclosure the right to partake in mediation. In foreclosure mediation, you meet with your lender (or servicer) and an impartial mediator to discuss options likes a loan modification, short sale, repayment plan, or deed in lieu of foreclosure.

Right to Challenge the Foreclosure

No matter where you live, you have the right to challenge the foreclosure in court. If it’s a judicial foreclosure, you can just participate in the existing foreclosure lawsuit. If it’s a non-judicial foreclosure, however, you must file your own lawsuit. In general, it may make sense to challenge the foreclosure if you think the servicer made a mistake or violated the law.

Right to a Surplus

If the property sells at a foreclosure sale for more than you owe (including any fees, expenses, and liens on the property), you are entitled to the excess proceeds—called a surplus. Of course, depending on state law, if the foreclosure sale does not cover your debt, you may be on the hook for a deficiency judgment.7

Fair Debt Collection Practices Act Validation Letter

The Fair Debt Collection Practices Act (FDCPA) is a federal law that covers when, how, and how often third-party debt collectors can contact debtors. FDCPA may apply to foreclosures, but it depends on whether it’s judicial or non-judicial:
• Judicial foreclosures. In general, judicial foreclosures are viewed as being subject to FDCPA because creditors can get deficiency judgments.
• Non-judicial foreclosures. The FDCPA does not apply to firms pursuing non-judicial foreclosures under a unanimous decision.
• When FDCPA applies, your mortgage servicer must send you an FDCPA validation notice that includes:
• How much you owe, including interest, late charges, attorney fees, and other charges
• The name of the creditor
• A statement that explains that, unless you dispute the validity of the debt within 30 days of receiving the letter, the debt will be assumed to be valid
• A statement that, if you notify the debt collector in writing within the 30-day period to dispute the debt, the debt collector will get written verification of the debt and send you a copy
• A statement that the debt collector will provide you with the name and address of the original creditor, if it’s different from the current one, if you request it within the 30-day period
Bank account garnishment means that a debt collector has successfully sued to have money taken out of your bank account. This happens if you haven’t repaid debts such as a medical bill or unpaid taxes. Your bank isn’t required to notify you of an account garnishment unless the withdrawal overdraws your balance. Depending on where you live, you may have certain rights and protections against having your bank account garnished.

Bank account garnishment means that a collection agency is legally allowed to remove money from your account to repay an outstanding debt, and is usually a last resort that creditors turn to when debtors repeatedly ignore requests to pay back what they owe. Loan companies won’t take the costly legal steps required to garnish a debtor’s bank account unless their mailed notices and phone calls have failed to settle the debt.

According to the law, a creditor needs to win a judgment in order to garnish your account. In other words, the lender must file a lawsuit, which requires an attorney to deliver notice to both the borrower and the court. To begin withdrawing funds from a debtor’s account, the creditor needs an order or writ of garnishment, signed by a court official. The Internal Revenue Service (IRS) is the only creditor that can garnish money from bank accounts without a judgment.

Having your bank account garnished is different from having your wages garnished. A court-ordered wage garnishment requires your employer to withhold a certain amount of your paycheck and send it to your creditor. Since the deduction takes place before your paycheck is cashed, this means that your bank plays no role in a wage garnishment. In rare cases, it’s possible for creditors to garnish both your wages and your bank account at the same time.

Can Your Bank Account Be Garnished Without Notice?

Once a garnishment is approved in court, the creditor will notify you before contacting your bank to begin the actual garnishment. However, the bank itself has no legal obligation to inform you when money is withdrawn due to an account garnishment. However, you may receive an automated overdraft notification if the garnished amount is greater than your available account balance. The notification of garnishment should come from your creditor and not your bank. After your bank is notified, it will need to follow the court order before honoring any other transactions you have scheduled. Federal law states that individuals who receive federal benefits will have their last two months’ worth of deposits reviewed to see which ones are exempt. If you believe that your bank account may be garnished, notify your bank of these transactions to ensure those funds are properly exempted. When a creditor garnishes your bank account, money that isn’t exempt from garnishment will be frozen and seized. Some banks may also charge non-sufficient fund (NSF) fees if the creditor attempts to withdraw more money than you have. Even if you have overdraft protection, the bank may be legally obligated to fulfill the transaction until the garnishment is satisfied. Some banks also charge a separate additional garnishment. Depending on where you live, account garnishment doesn’t necessarily mean the loss of your entire balance. State laws on bank garnishment vary, but most states impose a garnishment limit based on a percentage of your disposable income. This ensures that debtors will keep enough money to meet their living expenses. Certain types of income are specifically protected against garnishment. For example, direct deposits from federal benefits such as Social Security—are protected to some degree in every state.

To lift the garnishment, you can try to contact the collection agency to negotiate alternative payment options. You may be able to lower interest payments, reduce the amount you owe, or make partial payments for a certain amount of time. However, you’ll have more bargaining power if you reach out to your creditor before a judgment is made. It’s in your best interest to prevent an account garnishment from happening in the first place. You can challenge the judgment in cases where the garnishment is made in error, is improperly executed, or presents a serious financial threat to you. If you decide to challenge the garnishment, seek help from an attorney and act quickly since you may only have up to five business days. If you can’t afford an attorney, search for legal aid offices that offer services for free or at a reduced rate.

Filing for bankruptcy can stop a garnishment, but this should be considered as a last resort. When you declare bankruptcy, an injunction goes into effect that stops most collectors from calling, sending letters, or filing lawsuits and garnishments. The creditor filing the suit against you can ask the court to lift the injunction, but only under very special circumstances, but this doesn’t mean discharging your debt. You may still owe money after a bankruptcy.

What Is Repossession?

In repossession, a bank or leasing company takes a vehicle away from a borrower who is behind on payments, often without warning. Lenders might send a driver to collect the car, or they may take it away with a tow truck. In some cases, lenders can disable your car by remote control so you can’t drive it until you clear things up. Borrowers typically receive notification that they’re behind on payments, and lenders must inform borrowers about the consequences. But lenders might not tell you exactly when they’re coming for the vehicle.

When Is Repossession Allowed?

To borrow money or lease a car, you have to agree to specific terms. For example, you agree to make monthly payments on time and keep adequate insurance on the vehicle. If you don’t meet those requirements, the bank (or leasing company) has the right to take the car.

Resulting Problems

In addition to losing the car, your credit will suffer, and you’ll probably owe significant fees. Repossession, whether you eventually get the car back or not, shows up on your credit reports for seven years and can lead to lower credit scores. We’ll discuss those problems in more detail below.

Your Rights

Your lender might have the right to take your car, but you also have rights.

Private Property

Lenders can repossess a vehicle that is parked on private property, but state laws generally restrict them from “breaching the peace” while doing so. For example, repossession agents cannot damage your property to get access to a vehicle. They typically cannot destroy locks to get into your garage, nor can they use (or threaten to use) physical force when taking your car.

Sales Price

If your car is taken and sold, the lender needs to sell it for a “commercially reasonable” price.3 It doesn’t need to be the highest price possible, but the lender must make an effort to get fair market value out of the car. Why? The sales proceeds will go toward paying off your debt, so it would be unfair to repossess the vehicle and “give it away” to somebody else.


Things don’t necessarily end after repossession. If your lender sells your car, the sales proceeds go toward your loan balance. In many cases, the car sells for less than you owe, so your loan is still not paid off. The amount you owe after the vehicle sells is called a deficiency. In addition to your loan balance, you also have to pay for costs related to repossession. Charges can include expenses for sending a repossession agent, storing the vehicle, preparing the vehicle for sale, and more. Those costs are all added to your deficiency balance. If you can’t pay the balance, expect your lender to send your account to a collection agency. At that point, you can negotiate a settlement, pay nothing, or set up a repayment plan. In some cases, your debt will be forgiven or charged off (possibly resulting in tax liability for forgiven debt).

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

Recent Posts

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

Litigation Dispute Resolution

Optimize Your Asset Protection

Salt Lake City Lawyers

Family Law Child Support

Estate Planning Attorney Bluffdale Utah

Ascent Law St. George Utah Office

Ascent Law Ogden Utah Office

Is It Hard To File Chapter 7 In Utah?

Is It Hard To File Chapter 7 In Utah

In the event that your circumstance is desperate, and your salary isn’t even enough to cover the nuts and bolts, you can request that the court forgo the $335 charge for documenting Chapter 7 in Utah. To not be shocked if the court denies your application for an expense waiver, first ensure that your family unit salary is under 150% of the government destitution rules, as that is a flat out prerequisite to acquire a charge waiver for your Utah bankruptcy. The initial step of the procedure is to gather the records you should finish the structures and experience the procedure. Everybody seeking financial protection in Utah needs to furnish the court with a total rundown of the majority of their lenders with state-of-the-art addresses for everybody, so the court can send a notice of your Utah bankruptcy to your them immediately. Notwithstanding gathering this data from your bills and accumulation sees you may as of now be getting via the post office, you ought to get a duplicate of your credit report. You will likewise require your latest government personal expense form and the most recent a half year of check stubs to appropriately compute your salary. At long last, since you’ll need to make a rundown of your costs for the court, your bank proclamations are a decent expansion to your record accumulation, as they can help in finding your real month to month costs in the prior months documenting a Chapter 7 bankruptcy in Utah.

The credit guiding course is a necessity everybody seeking financial protection in Utah needs to satisfy before their case can be formally documented with the court. Congress needed to ensure that people know about the majority of their alternatives before choosing to look for bankruptcy assurance. You don’t need to stress over taking it around the same time that you record your Utah bankruptcy – truth be told – you should make a point to prepare and take it a long time before at that point in order to keep away from any very late entanglements. Since the endorsement of fulfillment you will be issued is substantial for 180 days, it’s ideal to put aside a peaceful couple of hours one end of the week to complete this. A great many people exploit the way that the course can be finished on the web, from the solace of their home. Regardless of whether you pick an online alternative, or take the class face to face, it is significant that you take this course from an organization that is explicitly affirmed, by the Office of the United States Trustee, to offer this course to people petitioning for financial protection in Utah. The bankruptcy structures are the reports that are given to the court when you record your Chapter 7 bankruptcy in Utah. So as to make the procedure progressively streamlined and guarantee that everybody is completely mindful of all revelation prerequisites, the structures are the equivalent for everybody documenting Chapter 7 in Utah.

In the event that you employ an attorney, they will finish the structures dependent on the data and documentation you give to their office. On the off chance that you don’t have a legal counselor you can get to the majority of the structures you have to finish for nothing web based, including this 49-page guidance manual to direct you. Seeking financial protection in Utah forces exacting exposure prerequisites on everybody, so ensure your data is finished before marking this progression off your rundown. Despite the fact that this is bankruptcy court and everybody petitioning for financial protection in Utah is doing as such in light of the fact that they don’t have enough cash to meet their commitments every month, recording a Chapter 7 bankruptcy in Utah incurs a court documenting expense of $335. On the off chance that you are not qualified for a full charge waiver (see above) yet are experiencing serious difficulties pooling this a lot of cash together at the same time, you can request that the court pay the expense in portions, with your first installment of $100 due at the time you document your desk work, or inside 14 days from that point. This is particularly useful if the reason that you are unfit to gather the full charge in advance is a progressing wage garnishment. When your Utah bankruptcy is documented, the garnishment needs to stop, and you will begin getting your full check once more. On the off chance that that isn’t the situation, at that point be cautious with looking for an installment plan, as a solitary missed installment can get your case tossed out. All things considered, and expecting there is no due date to record your case (to stop a dispossession or keep a pay garnishment from beginning), it’s smarter to take the time – regardless of whether it takes the full 4 months the court would give you – to gather the full charge before you head to the town hall to seek financial protection in Utah.

The bankruptcy shapes, once refreshed with the majority of your data, must be documented with the court in paper, as just legal advisors can record Utah bankruptcy cases electronically. In the event that you don’t approach a printer at home, you can locate a neighborhood print shop, or possibly ask a confided in companion or relative with a printer on the off chance that you may utilize theirs. Since every one of the records vital for a Chapter 7 bankruptcy in Utah can surpass 50 pages, it’s most likely best on the off chance that you accompany your own paper on the off chance that you do that, particularly since you are going to need to print out two full duplicates. It is prescribed to print out two duplicates, one for documenting with the court, and one for your very own records, so you know precisely what archives you gave to the court when recording Chapter 7 in Utah. Try not to print the duplicate for the court twofold sided; the agent’s office won’t acknowledge that.

Despite the fact that court is led in both, Salt Lake City and St. George, you can just document the structures for your Chapter 7 bankruptcy in Utah at the Salt Lake City area. You can likewise mail the majority of your desk work to the court if heading out to Salt Lake City is a lot of a weight. In any case, remember that if there is an issue with any of your structures, the real documenting date for your Utah bankruptcy (and with it the beginning of the programmed stay securities) might be later than anticipated. On the off chance that you are setting off to the court face to face to record Chapter 7 in Utah, plan on arriving certainly before 4 o’clock as the agent’s office prevents tolerating administrative work from individuals simply beginning the procedure of at 4 PM. Before you head to the town hall, ensure you have your image ID as that is important to enter the structure, and be set up to go through town hall security on your way in.

After your Chapter 7 bankruptcy in Utah is documented with the court, a case trustee will be appointed to deal with your case. The trustee’s main responsibility is to ensure that the majority of your advantages are appropriately revealed, and any non-absolved property is sold to serve your leasers. No later than 14 days subsequent to documenting Chapter 7 in Utah, you need to give the trustee a duplicate of all check stubs you have gotten in the 60 days before your case was recorded. On the off chance that you don’t have the majority of the check stubs, ensure you present this presentation rather, so the trustee realizes you are not deliberately overlooking this necessity. Furthermore, you need to give the trustee a total duplicate of your government personal expense form for the latest duty year no under 7 days before the date set for your 341 gathering. You will discover the name and contact data for your trustee from an official court see you will get soon after seeking financial protection in Utah. The motivation behind the main credit directing course was to guarantee that people petitioning for financial protection in Utah recognized what their choices were before their case was recorded with the court. The second bankruptcy course must be taken after your Utah bankruptcy has been documented. It expects to teach you about money related administration apparatuses that can enable you to exploit the new beginning you are getting by documenting Chapter 7 in Utah. You can take the course from a similar supplier that you utilized for the principal credit directing course, however just on the off chance that they are in truth affirmed to offer the second course for people in a Chapter 7 bankruptcy in Utah.

When you have fulfilled this necessity, record this declaration with the court to tell the judge that you have finished the course. Since your release won’t be entered without it, it’s significant not to neglect to take bankruptcy course 2 in the wake of petitioning for financial protection in Utah. Your loan bosses’ gathering, or 341 gathering, the same number of people call it dependent on the segment of the bankruptcy code that administers it, will happen around 20 – 40 days after your Utah bankruptcy case has been recorded. Contingent upon where you live, you may not need to head out back to Salt Lake City for this gathering, as there are a number or meeting areas for people seeking financial protection in Utah. The notice that has the contact data for your case trustee will let you know precisely where to go and the court’s site gives headings to the different areas. The gathering itself normally just takes around 5 – 10 minutes and is generally included responding to the trustee’s standard inquiries that everybody recording Chapter 7 in Utah needs to reply. You will be sworn to tell the truth while responding to the trustee’s inquiries and your banks can exploit this, and the way that an official record is being made during the gathering, and ask you inquiries about your budgetary circumstance too. This does not occur frequently, yet it can. When you leave your 341 gathering, you will feel that it wasn’t too awful; the vast majority do. Before you head in, quiet your nerves by getting ready only a tad and recollect that as long as you appear with an adequate type of distinguishing proof, the significant and typically most upsetting part is as of now finished.

When you document for Chapter 7 or Chapter 13 bankruptcy, you should finish a bankruptcy request, various timetables containing point by point data about your accounts, and a few different structures, including an extensive structure known as the “signifies test” (for Chapter 7) and a comparable structure for Chapter 13. There is this test ensures that individuals are not mishandling the Utah bankruptcy laws by recording Chapter 7 in Utah despite the fact that they do be able to pay probably a portion of their obligations. The Utah means test for bankruptcy first contrasts your pay and the middle family unit pay for a family unit of your size in Utah. On the off chance that you are beneath this salary limit, you breeze through the methods test and can push ahead with a Chapter 7 bankruptcy in Utah. In the event that you make more than that, the second piece of methods test count may by the by enable you to fit the bill for Chapter 7 help, in the event that it demonstrates that you don’t be able to pay your leasers. Utah Median Income Standards for Means Test for Cases Filed On or After May 1, 2019:
• 1 family unit member $5,211.25 (monthly amount) $62,535.00 (annually amount)
• 2 family unit member $5,689.08 $68,269.00
• 3 family unit member $6,548.42 $78,581.00
• 4 family unit member $7,402.92 $88,835.00
• 5 family unit member $8,152.92 $97,835.00
• 6 family unit member $8,902.92 $106,835.00
• 7 family unit member $9,652.92 $115,835.00
• 8 family unit member $10,402.92 $124,835.00
• 9 family unit member $11,152.92 $133,835.00
• 10 family unit member $11,902.92 $142,835.00

Free Consultation with Bankruptcy Lawyer

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed over a thousand cases. We can help you now. Come in or call in for your free initial consultation.

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

Recent Posts

ATV Accident Lawyer Lehi Utah

The Attorney’s Role In Commercial Transactions

State Of Utah Grandparents Rights

How Far Back Can Child Support Go?

Salt Lake City Family Law Firm

Are Death Records Public Record?

Chapter 11 vs Chapter 13 Bankruptcy

Chapter 11 vs Chapter 13 Bankruptcy

There are some notable differences between Chapter 11 and Chapter 13 bankruptcy, including eligibility, cost, and the amount of time required to complete the process. Both bankruptcies give debtors the opportunity to stay in business and to restructure their finances.

Barring some limitations, both bankruptcies allow filers to modify their payment terms on secured debts, provide time to sell assets, and eliminate obligations the filer cannot pay over the plan’s term. While both allow the discharging of debts.

Chapter 11 Bankruptcy

Nearly everyone can file for Chapter 11 bankruptcy, including individuals, businesses, partnerships, joint ventures, and limited liability companies (LLCs). There is no specified debt-level limit, nor required income. However, Chapter 11 is the most complex form of bankruptcy and generally the most expensive. Thus, it’s most often used by businesses and not individuals, where companies can use Chapter 11 bankruptcy to restructure their debts and continue operating.

Filing Chapter 11 bankruptcy allows businesses to stay open and continue operating while reworking their financial obligations. Filers are able to put forth a reorganization plan, which can include downsizing and expense reduction plans. Many large businesses have filed Chapter 11 bankruptcy and came out of bankruptcy later to continue operating, including General Motors and Chrysler, which both filed for bankruptcy in 2009.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy can only be filed by individuals with a stable income. Debt limitations are also part of Chapter 13 eligibility, and the limits change regularly. As of 2019, limits are approximately $419,275 in unsecured debt and $1,257,850 in secured debt. Chapter 13 differs from Chapter 7, where individuals can use Chapter 7 to wipe out all their debt entirely. Chapter 7 does have income limits that vary by state.
For Chapter 13, individuals must submit and implement a repayment plan for debts to be paid within three to five years. The filer can generally keep some assets, such as a home. It’s also called a “wage earner’s plan,” where individuals pay a monthly amount to a trustee, who in turn pays the individual’s creditors. The payback to creditors is usually required to be equivalent or better than what they’d receive under other bankruptcy proceedings.

Key Differences

Chapter 13 involves the appointment of a trustee, while with Chapter 11, this is optional and not usually done. The trustee’s role includes reviewing the bankruptcy proposal, making recommendations to the court, and the collection and distribution of creditor payments.

Chapter 11 bankruptcy often has complex and expensive proceedings. There are provisions, however, that help to streamline cases involving small business owners. If a debtor meets all the requirements, there’s no limit to a Chapter 11 plan’s duration, though typical plans are structured for three to five years. The court can extend the time frame of the plan for debtors who need more time to make the required payments.

The approval process for a Chapter 13 bankruptcy is generally much more expedient. There’s a set commitment period, however, of three to five years, during which a debtor must relinquish essentially all disposable income to the appointed trustee for distribution among creditors. The commitment period can be shortened, but never extended.

Both Chapter 11 and Chapter 13 bankruptcy provide a way for people struggling with debt to keep their property while reorganizing their debt. Chapter 11 bankruptcy works well for businesses and individuals whose debt exceeds the Chapter 13 bankruptcy limits. In most cases, Chapter 13 is the better choice for qualifying individuals (and sole proprietors).

Choosing the Right Type of Bankruptcy

In many cases, the type of bankruptcy filed will be contingent on two things: Your income and your assets. Your income is important because it may preclude you from filing a simple Chapter 7 case, and your assets are important because if you have nonexempt property, you might lose it in Chapter 7, but can protect it in Chapter 13.

Here are a few scenarios that explore which bankruptcy strategy would be best:

Unemployed Debtors with Few Assets – Chapter 7

Loss of income combined with a large amount of debt is the number one reason people file for bankruptcy. Compounding factors like divorce, medical emergencies, or the death of a family member are also common. Assume that in this scenario the debtor has no income other than unemployment benefits, does not own a home, and has one car with a loan against it.

In cases like this, a Chapter 7 bankruptcy is the fastest, easiest, and most effective means of getting rid of debt. As a matter of fact, this is the most common bankruptcy case, often called a “no asset” bankruptcy.

Unemployed Homeowners – Upside-Down Mortgage – Chapter 7 or Chapter 13

Homeowners who are experiencing a loss of income also have options under bankruptcy law. For those homeowners whose property value has fallen below the value of the loan against it, Chapter 7 is probably still the best option. Since the value of the home is less than the value of the lien against it, the homeowner has no equity in the bankruptcy estate, so the house is protected from liquidation. A Chapter 7 bankruptcy can quickly relieve them of their obligations to repay unsecured debts, making monthly bills much more manageable.

Unemployed Homeowners – Significant Equity – Chapter 7 or 13

If a homeowner has a significant amount of equity in property, then Chapter 7 may or may not be the best option. If the homeowner’s state exempts a generous amount of home equity, then the home may be safe. But if the state homestead exemption doesn’t cover the equity, the homeowner may lose the home in a Chapter 7 bankruptcy. The homeowner can keep the home in Chapter 13 bankruptcy if he or she keeps current on the mortgage. Keep in mind though, there must be enough income available from the petitioning household to fund a repayment plan.

Employed Homeowners Facing Mortgage Delinquency or Foreclosure – Chapter 13

For homeowners who have fallen behind on mortgage payments, Chapter 13 offers a way to catch up or “cure” past due mortgage payments while simultaneously eliminating some portion of dischargeable debt. This means they can save the home from foreclosure and get rid of a lot of credit card debt, medical debt, and possibly even second and third mortgages or HELOCs. Chapter 7 bankruptcy does not provide a way for homeowners to make up mortgage arrears.


Wealthy Petitioners with a Large Amount of Debt – Chapter 11

Very wealthy debtors often need to file under Chapter 11 due to the debt and income limits of Chapter 7 and Chapter 13 bankruptcies.

What Is Chapter 11 Bankruptcy?

Chapter 11 allows debtors to reorganize their finances–including reducing payments–while keeping assets. Both businesses and individuals can file for Chapter 11 bankruptcy. Once started, most collection efforts will stop as a result of bankruptcy’s automatic stay provision. In a Chapter 11 proceeding, a bankruptcy trustee is not appointed to oversee the case. Instead, the debtor handles most duties handled by a trustee in other chapters.

You’ll create a plan of reorganization which explains how you will repay your debt. Unless your case qualifies as a small business case, the plan must be voted on by your creditors and confirmed by the court in order for it to go forward. (Learn more about the Chapter 11 plan of reorganization.) In a business filing, your dischargeable debt (debt that you are no longer responsible for) will be erased once the court confirms your plan. However, you must still act in accordance with any terms set forth by the plan itself. An individual filing for Chapter 11 won’t get the discharge until you have made all payments under the plan. (Learn more about how Chapter 11 bankruptcy works.)

What Is Chapter 13 Bankruptcy?

In Chapter 13 bankruptcy you keep your property in exchange for paying creditors your disposable income through a three- to five-year repayment plan. Dischargeable debts get erased upon successful plan completion. Many Chapter 13 debtors end up repaying only a small portion of their unsecured debt through the plan, however, it isn’t always the case. The amount of your plan payment will largely depend on your income and the value of your assets. (Learn more about how Chapter 13 bankruptcy works.)

In order to file for Chapter 13, your unsecured debts must be less than $419,275 and your secured debt less than $1,257850 (as of April 1, 2019; $394,725 and $1,184,200 for cases filed after April 2016 but before April 2019). Only individuals (or sole proprietors) can file for Chapter 13 bankruptcy. Corporations and limited liability companies are not eligible because they are considered separate legal entities. (Read about other eligibility requirements for Chapter 13.)

Once filed, the automatic stay will stop any collection efforts against. Also, a trustee will be appointed to oversee your case. If you are a small business debtor, you can continue to run your business, but you must provide periodic financial and operations reports to the trustee.

Eligibility for Chapter 11 or Chapter 13 Bankruptcy

Virtually anyone can file for Chapter 11 bankruptcy, whereas many small businesses are ineligible to file for Chapter 13.

• Chapter 13 eligibility. Chapter 13 is available to individuals with regular income. If you operate your business as a sole proprietorship, you can take advantage of Chapter 13 by filing a petition in your name. Your business debts will be included in your plan. Small companies formed as corporations, partnerships or other entities aren’t eligible for Chapter 13 relief. However, that’s not to say that someone who owns a business can’t file an individual Chapter 13–sometimes it helps. Chapter 13 is also subject to debt limitations, which change periodically. As of April 2019, a filer’s debt can’t exceed $1,257,850 in secured debt and $419,275 in unsecured debt. Learn more about eligibility for Chapter 13 bankruptcy by calling Ascent Law LLC today.

• Chapter 11 eligibility. Almost anyone can file bankruptcy under Chapter 11. Individuals, corporations, partnerships, joint ventures, and limited liability companies are all eligible to be Chapter 11 debtors. There are no debt or income requirements or limitations for filing bankruptcy under Chapter 11.

Why Should I Choose Chapter 11 Over Chapter 13?

Chapter 11 typically makes sense for businesses or individuals who have debt levels that are greater than those allowed in Chapter 13 bankruptcy. Some small business owners can take advantage of streamlined Chapter 11 procedures. To learn more see Nolo’s article Chapter 11 Bankruptcy for Small Business Owners.

Why Should I Choose Chapter 13 Over Chapter 11?

If you qualify to file for Chapter 13 bankruptcy, you’ll likely want to file it rather than a Chapter 11 bankruptcy. Some of the advantages of a Chapter 13 bankruptcy over Chapter 11 include:
Co-Debtor Stay in Chapter 13, But Not in Chapter 11
The protection of the automatic stay in a Chapter 13 bankruptcy extends to codebtors. This means that if you and another person are both liable for an account, loan, or other debt, creditors cannot pursue your codebtor for payment during your bankruptcy case. While collection can resume once your Chapter 13 case is over, this will at least give codebtors a reprieve from collection actions for three to five years. Chapter 11 does not provide the same protection to codebtors.

More Debts Are Wiped Out in Chapter 13

You can wipe out additional debts in Chapter 13 than in Chapter 11 which may mean you will ultimately have less debt to repay. For instance, some of the debts you can discharge in a Chapter 13 bankruptcy (but not in a Chapter 11 bankruptcy) include certain marital debts from divorce or settlement agreements and condominium, cooperative and homeowners association fees incurred after the bankruptcy filing date depending on your jurisdiction.

Hardship Discharge Available in Chapter 13

If circumstances prevent you from complying with your plan, you can request a hardship discharge. If granted, you’ll get a discharge without having to complete your plan (not all types of debts will be wiped out, however). You must meet certain criteria in order to qualify. To learn more, call us about a chapter 13 Hardship Discharge.

A hardship discharge is not available in Chapter 11 bankruptcy. If you cannot complete the terms of your reorganization plan your Chapter 11 case will either be dismissed or converted to a Chapter 7 bankruptcy.

Chapter 13 Is Cheaper Than Chapter 11

Chapter 13 is usually less expensive than Chapter 11. This is because:
• the filing fee for Chapter 13 is less costly
• the Chapter 13 process requires less work, and
• the maximum Chapter 13 plan is five years, as opposed to a lengthier Chapter 11 plan.

Free Consultation with Bankruptcy Lawyer

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. From Chapter 7, 11, 12 to chapter 13, we want to help you. Come in or call in for your free initial consultation.

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

Recent Posts

ATV Accident Lawyer Midway Utah

Does A Small Business Owner Need A Lawyer?

Probate Process

Domestic Assault

Estate Planning And Wills

Commercial Property

When To File For Chapter 7 Bankruptcy?

When To File For Chapter 7 Bankruptcy

Chapter 7 is also called straight bankruptcy or liquidation bankruptcy. It’s the type most people think about when the word “bankruptcy” comes to mind. In a nutshell, the court appoints a trustee to oversee your case. Part of the trustee’s job is to take your assets, sell them and distribute the money to the creditors who file proper claims. The trustee doesn’t take all your property. You’re allowed to keep enough “exempt” property to get a “fresh start.”

Preparing for Chapter 7

Before a case is filed, you’ll have to gather all of your financial records like bank statements, credit card statements, loan documents, and paystubs. You’ll use that information to fill out the bankruptcy petition, schedules, statement of financial affairs, and other documents that will be filed with the court. You can download copies for free from the website maintained by the U.S. Courts. Your attorney will use bankruptcy computer applications to produce them. Broadly, these documents include the voluntary petition for relief, the schedules of assets and liabilities, declarations regarding debtor education, and the statement of financial affairs. These documents require you to open up your financial life to the bankruptcy court. They include a listing of all of your property, debts, creditors, income, expenses, and property transfers, among other things. Once completed, you’ll file it with the clerk of your local bankruptcy court and pay a filing fee. If you’re interested in finding your local court, visit the federal court locator page, choose “Bankruptcy” under “Court Type” and add your location in the bottom box.

Credit Counseling

Almost every individual debtor who wants to file a Chapter 7 case has to participate in a session with an approved credit counselor before the case can be filed. This can be in person, online or over the telephone. The rationale behind this requirement is that some potential debtors don’t know their options. A credit counselor may be able to suggest alternatives that will keep you out of bankruptcy. You can get more information about this requirement on the website for the U.S. Trustee.

How the Means Test Affects Bankruptcy

A debtor must also successfully pass the means test calculation, which is another document that must be completed prior to filing for bankruptcy. This test, which was added to the Bankruptcy Code in 2005, calculates whether you are able to afford, or have the “means” to pay at least a meaningful portion of your debts. The means test compares your income with the median income for your state. If you fail the means test, you can only file Chapter 7 bankruptcy under very specialized exceptions. Your alternative would be to file a Chapter 13 repayment plan case. You can learn more about the means test and the numbers used in the calculation from the U.S. Trustee website.

Meeting of Creditors

After a Chapter 7 bankruptcy is filed, the court will issue a document giving notice of a debtor’s meeting of creditors. This notice is also sent to all of the creditors that are listed within the bankruptcy documents. During the meeting of creditors, the bankruptcy trustee will ask the debtor various questions about the bankruptcy, such as whether all of the information contained within the bankruptcy documents is true and correct. The trustee may ask other questions about a debtor’s financial affairs. If the trustee wishes to investigate the bankruptcy further, they may continue the meeting of creditors on a future date. It is important to note that at the meeting of creditors, as the name suggests, any creditor may appear and ask a debtor questions about his bankruptcy and finances. In reality, however, the only creditors who appear regularly are car creditors (to ask what you intend to do about your car payments) and the IRS (to ask when you’re going to pay back those non-dischargeable taxes).

Seizure of Assets

If you have any nonexempt property, the bankruptcy trustee has the ability to seize and sell the property. Exemptions refer to federal or state statutes that allow you to protect certain types of property when you file bankruptcy. For example, exemptions exist to protect retirement accounts, such as a 401(k) plan. Any assets that the trustee can recover are distributed to creditors. Before most debtors can receive a discharge, they will have to take a course in financial management. This class is likely taught by the same group that you used for the credit counseling. Plan to spend about two hours in person, online, or on the telephone.

Debtor’s Discharge

If the trustee and the creditors do not object to the debtor’s discharge, the bankruptcy court will automatically give the debtor a discharge at some point after the last day to object. The last day to file a complaint objecting to a debtor’s discharge is 60 days after the first session of the meeting of creditors. If no complaint is filed, the discharge is usually entered several days later. The discharge prevents creditors from attempting to collect any debt against you personally that arose prior to the filing of the bankruptcy. Thus, for all intents and purposes, the discharge effectively wipes out debts. However, it is important to note that not all debts are dischargeable, including certain taxes and child or spousal support obligations. Furthermore, a bankruptcy discharge is personal. This means that a creditor can still collect on a discharged debt from a co-debtor that did not file for bankruptcy. A creditor with collateral may also be able to use that collateral to satisfy some of that outstanding debt.

Bankruptcy Myths

Filing for bankruptcy can be a traumatic experience, particularly for people who believe some of the “myths’’ that supposedly surround the process. Some of the myths include:

• Losing Everything: Actually, the majority of Chapter 7 filings are “no-asset cases,” meaning the debtor gives up no possessions. The law allows you to retain basic assets necessary for day-to-day life, like your house, car, computers or other equipment needed for you to work. These are called exemptions. Beyond that, it’s likely that creditors won’t want the possessions that aren’t covered under exemptions.
• Relief from All Debts: As a general rule, debts you are deemed personally responsible for taxes, alimony, child support, student loans – won’t be forgiven. Some consequences can’t be erased.
• Paying off Debts Is a Better Decision: Maybe but maybe not. If your debts are more than 50% of your annual income and you can’t see a way to pay them off within five years bankruptcy is the best choice to achieve a long-term, debt-free life.
• Bankruptcy Is a Personal Failing: It’s not an admission of failure or a character flaw. Filing bankruptcy is a financial remedy, especially if unforeseen events occur in your life. Things like job loss, meltdowns in the real estate market and especially medical emergencies, aren’t easy to predict. The fact is, medical bills account for more than half of the bankruptcies in America.
• Bankruptcy Will Ruin Your Financial Future: Credit will be difficult to obtain. Yes, higher interest rates will be a given for the 10 years the bankruptcy is expected to remain on your credit report. But in time, there is a way back. Many people have prospered after taking the short-term hit that comes with filing for bankruptcy.
Pros and Cons of Filing Chapter 7 Bankruptcy
Deciding to file for Chapter 7 bankruptcy is a big decision that shouldn’t be taken lightly. There are pros and cons, which must be weighed carefully while studying your situation.
• It will prevent your lenders from aggressive collection action.
• Chapter 7 is easily understood and explained to curiosity-seekers and future lenders. Sure, there might have questions about bankruptcy and it will hurt 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 responsible about 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.

• Your credit will take a severe beating. Chapter 7 bankruptcy can remain on your credit report for up to 10 years.
• You will lose all of your credit cards.
• You will lose property that you own if it’s not exempt from sale by the bankruptcy trustee.
• You likely will lose luxury possessions, like a boat or second home.
• It will be nearly impossible to get a mortgage if you don’t already have one.
• It won’t relieve you of student loan debt or obligations to pay alimony and/or child support.
• You can only file under Chapter 7 once every six years, but you can repeatedly turn to a Chapter 13 plan if there are more financial hardships and each filing will appear on your credit report.
• Bankruptcy court could convert your Chapter 7 case to a Chapter 13 bankruptcy. Instead of being free from most debts within four to six months, you might be required to repay your debts over the course of three to five years.

Requirements for Chapter 7 Bankruptcy

Here are five strong signs that indicate you qualify for bankruptcy:
• 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 interferes with other 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.
Under Chapter 7, there is no minimum debt limit (there are stipulations under Chapter 13). Every situation is different, but here are some factors to consider before filing for bankruptcy.
• Types of Debt: If you largely have unsecured debt (credit cards, medical bills, cash advance debts), bankruptcy could offer a respite from creditors.
• Employment: If you are out of work, bankruptcy could help you get rid of some debts and allow you to keep up with a mortgage or car payment.
• Non-Bankruptcy Options: For those with little income and few assets, bankruptcy may be unnecessary. The scenario of being “judgment proof” is when a creditor sues the person for repayment of a debt, but the person is unable to repay it because of limited finances.
• Cost to File Bankruptcy: For Chapter 7, there’s a filing fee, courses for Credit Counseling and Debtor Education and legal fees. Is the bankruptcy cost on par with these fees? If so, it may not provide much financial freedom.
To qualify for a Chapter 7 bankruptcy, the debtor must earn less than the state median income on a monthly basis and submit to a “means test’’ that examines their financial records, including income and expenses, along with secured (mortgages and car loans) and unsecured debt (credit card bills, personal loans, medical expenses). Certain non-essential credit purchases, designated as “luxury items,’’ might remain the debtor’s responsibility, although that can be appealed to the court.

Preparing for 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 benefitted 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 funds 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. Never think you can get away with something sneaky or dishonest. Your bankruptcy lawyer is always a good resource for what you should and shouldn’t do.

Once you qualify to file for Chapter 7 bankruptcy, it will take up to four months to complete the bankruptcy process. The most important factor is finding an experienced and reputable bankruptcy attorney.

Chapter 7 Bankruptcy Lawyers Free Consultation

When you need legal help with a bankruptcy in Utah, please call Ascent Law LLC now at (801) 676-5506. We want to help you now. Come in or call in for your free initial consultation.

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

Recent Posts

Good Resources On Estate Planning Trusts

File Bankruptcy Or Try To Settle?

How Long Does It Take To Get Divorced?

What Is A Trademark?

Slip And Fall Accidents

ATV Accident Lawyer Alpine Utah

Can You Make Too Much Money To File Chapter 7?

Can You Make Too Much Money To File Chapter 7?

Chapter 7 is known as the “liquidation bankruptcy” since it releases the majority of your debt without collateral. That incorporates charge card obligation, doctor’s visit expenses and individual advances. It’s the snappiest, easiest and most normal sort of bankruptcy. Over 63% of the 819,159 bankruptcy cases documented in 2016, were Chapter 7. A much all the more promising bankruptcy measurement: 95.5% of Chapter 7 filings had their obligations released. You should pass a “signifies test” to meet all requirements for Chapter 7 documenting. The methods test analyzes money related records, including pay, costs, verified and debt without collateral. You should qualify under salary constrains that fluctuate by state. There are additionally obligation necessities. Regardless, a few people don’t have enough obligation for bankruptcy. You may be compelled to sell any non-excluded resources, albeit significant resources like home, vehicle, hardware for work, are absolved and can be held. By and large, the Chapter 7 procedure can be finished in three to four months.

Petitioning for financial protection can be a horrible encounter, especially for individuals who trust a portion of the “fantasies” that apparently encompass the procedure. A portion of the legends include:

• Losing Everything — Actually, most of Chapter 7 filings are “no-benefit cases,” which means the indebted person surrenders no assets. The law enables you to hold essential resources fundamental for everyday life, similar to your home, vehicle, PCs or other hardware required for you to work. These are called exceptions. Past that, all things considered, leasers won’t need the assets that aren’t secured under exceptions.

• Help from ALL Debts — when in doubt, obligations you are regarded by and by in charge of – charges, provision, youngster support, understudy credits – won’t be pardoned. A few results can’t be deleted.

• Satisfying Debts Is a Better Decision — Maybe. Be that as it may, perhaps not. On the off chance that your obligations are over half of your yearly salary — and you can’t see an approach to pay them off inside five years — bankruptcy is the best decision to accomplish a long haul, obligation free life.

• Bankruptcy Is a Personal Failing — It’s not an affirmation of disappointment or a character defect. Seeking financial protection is a monetary cure, particularly if unanticipated occasions happen in your life. Things like employment misfortune, emergencies in the land advertise and particularly medicinal crises, aren’t anything but difficult to anticipate. The truth of the matter is, doctor’s visit expenses represent the greater part of the liquidations in America.

• Bankruptcy Will Ruin Your Financial Future — Yes, credit will be hard to get. Indeed, higher loan fees will be a given for the 10 years the bankruptcy is required to stay on your credit report. Be that as it may, in time, there is a path back. Numerous individuals have thrived in the wake of taking the transient hit that accompanies declaring financial insolvency.

Choosing to petition for Chapter 7 bankruptcy is a major choice that shouldn’t be trifled with. There are upsides and downsides, which must be weighed cautiously while concentrating your circumstance.

It will keep your moneylenders from forceful accumulation activity. Chapter 7 is effectively comprehended and disclosed to interest searchers and future loan specialists. Certainly, there might have inquiries regarding bankruptcy and it will hurt your credit. Be that as it may, on the off chance that you work yourself out of Chapter 7 when it could be the correct choice, consider an eventual fate of attempting to clarify your missed obligation installments, defaults, repossessions and claims. Furthermore, truly, those will hurt your credit, as well. You will be compelled to be increasingly restrained monetarily. In the event that you ever plan to obtain cash again, you should be parsimonious and capable about obligation. Despite the fact that you may almost certainly open new credit extensions somewhere in the range of one to three years subsequent to petitioning for financial protection, the loan costs will be a lot higher. Exhibiting capacity to pay those obligations on time is the best way to get the loan costs down. In numerous states, exceptions will enable you to keep a considerable lot of the things you possess, including more property than you most likely need. After you record, you will most likely keep any compensation you acquire and any property you buy.

Your credit will take an extreme beating. Chapter 7 bankruptcy can stay on your credit report for as long as 10 years. You will lose the majority of your charge cards. You will lose property that you possess if it’s not absolved from deal by the bankruptcy trustee. You likely will lose extravagance assets, similar to a vessel or second home. It will be almost difficult to get a home loan on the off chance that you don’t as of now have one. It won’t alleviate you of understudy credit obligation or commitments to pay provision and additionally kid support. You can just record under Chapter 7 once at regular intervals, however you can over and over go to a Chapter 13 plan if there are progressively budgetary hardships and each documenting will show up on your credit report.

Bankruptcy court could change over your Chapter 7 case to a Chapter 13 bankruptcy. Rather than being free from most obligations inside four to a half year, you may be required to reimburse your obligations throughout three to five years. You might think about whether you meet the prerequisites to document a Chapter 7 bankruptcy request. Here are five in number signs that demonstrate you meet all requirements for bankruptcy:

• Your obligations absolute the greater part your yearly salary.
• It would take five years (or more) to satisfy your obligation, regardless of whether you took outrageous measures.
• Your obligation meddles with other basic parts of your life, for example, connections and your capacity to rest.
• You have practically zero extra cash.
• Your month to month pay is underneath the middle dimension in your state.

Since the last significant correction to the Bankruptcy Code in 2005, more shopper account holders are finding that they “make excessively” to petition for Chapter 7 help. Yet, what is excessively? There are various elements to take a gander at concerning salary in Chapter 7 and if all else fails, dependably look for direction from an accomplished bankruptcy lawyer. In the event that Person A might want to document a Chapter 7 bankruptcy Person A should finish the Utah means test. The test possibly applies to higher salary filers which implies that if Person A’s pay is beneath the Utah middle for Person A’s family estimate Person A are absolved from the test and may document a Chapter 7.

In the event that Person A’s salary is higher than the Utah middle Person A should finish the methods test estimation to decide whether Person A can pay back a bit of Person A’s debts without collateral through a Chapter 13 bankruptcy. In the event that Person A’s obligations are not essentially buyer obligations, at that point Person A are excluded from the methods test. Person A are likewise absolved from the methods test on the off chance that Person A are an impaired veteran and caused Person A’s obligation principally during dynamic obligation or playing out a country resistance action.

In the event that Person A’s at present month to month family unit pay is not exactly the Utah middle salary for a family of Person A’s size there is an assumption that Person A breeze through the methods test and are qualified to document a Chapter 7 bankruptcy. Person A’s normal family unit pay is controlled by averaging Person A’s month to month pay in the course of the last six schedule months. In the event that Person A are over the middle pay limit and Person A’s salary has declined throughout the most recent a half year, at that point holding up at least one months may bring Person A’s pay under the middle dimension for Utah. When Person A decide Person A’s normal month to month pay Person A duplicate that by 12 to decide Person A’s yearly pay with the end goal of Utah middle salary test.

• 1 Member Household – $49,347.00
• 2 Member Household – $57,734.00
• 3 Member Household – $65,311.00
• 4 Member Household – $70,176.00
• 5 Member Household – $78,276.00
• 6 Member Household – $86,376.00
• 7 Member Household – $94,476.00
• 8 Member Household – $102,576.00
• 9 Member Household – $110,676.00
• 10 Member Household – $118,776.00

In the event that Person A’s pay is over the Utah middle salary for a family Person A’s size then Person A should finish the methods test by figuring Person A’s pay and cost data Person A should accumulation a portion of the data expected to finish the estimation, for example, Person A’s present month to month pay, from Person A’s very own records Pay incorporates practically all of wellsprings of pay Person A may have including, however not constrained to, business salary, rental pay, intrigued and profits, benefits and retirements plans, sums paid by others for Person A’s family unit costs, and joblessness pay. A great part of the data identified with Person A’s costs depends on national, Utah, and nearby midpoints and measures and originates from the Census Bureau and the Internal Revenue Service.

There are some real costs Person A are permitted to incorporate, for example, commitments Person A are lawfully required to pay and costs essential for wellbeing and welfare. After Person A have gathered all the required data, Person A subtract the majority of Person A’s permitted costs for Utah from Person A’s salary to decide the measure of pay under the bankruptcy law that Person A have accessible to pay Person A’s unbound loan bosses in a Chapter 13 plan. On the off chance that Person A’s all out month to month salary through the span of the following 60 months is under $7,475 then Person A breeze through the methods test and Person A may record a Chapter 7 bankruptcy. On the off chance that it is over $12,475, at that point Person A bomb the methods test and don’t have the choice of documenting Chapter 7. In the event that Person A’s extra cash under the methods test is somewhere in the range of $7,475 and $12,475 then Person A should do advance counts to decide whether Person A have the choice of recording a Chapter 7 case. Remember that since Person A can record a Chapter 7 does not imply that should. For the most part, a Chapter 7 bankruptcy is a superior choice on the off chance that Person A are not endeavoring to keep verified property like home with a home loan yet Person A ought to counsel with a lawyer to decide Person A’s choices and the best course to take.

Numerous indebted individuals don’t understand that despite everything Person A probably won’t meet all requirements for Chapter 7 bankruptcy subsequent to passing the second bit of the methods test. Here’s the reason. The methods test is situated to a limited extent on national and local midpoints for specific costs. In a different piece of Person A’s bankruptcy administrative work, Person A’ll give a rundown of Person A’s genuine costs. In the event that Person A’s genuine costs are considerably less than the methods test, Person A could have more discretionary cashflow than the estimation would propose. Here are two situations to represent: Person A live at home with Person A’s folks and pay no food and lodging, however Person A bring home $2,500 per month from Person A’s activity. On the methods test Person A can deduct a standard sum for sustenance and family costs, however under these conditions, Person A have no genuine nourishment or family costs. The court will utilize Person A’s real extra cash and anticipate that Person A should pay into a Chapter 13 reimbursement arrangement. Person A have an enormous installment for an extravagance thing like a credit to back a timeshare participation. As a verified obligation, Person A can deduct that as a cost on the methods test, however the court will probably exclude it since is anything but a sensible and essential cost, opening up progressively discretionary cashflow.

In the event that Person A bomb the methods test, Person A have three choices:

• Try not to seek financial protection. Person A can decide not to petition for financial protection by any means. Person A can search for choices like arranging lower installments or working with a credit guide on an obligation the executives plan.

• Document Chapter 13 bankruptcy. Person A can document a Chapter 13 bankruptcy case and propose an arrangement to pay Person A’s obligations over a multiyear time frame.

• Defeat the assumption of maltreatment. Person A can record a Chapter 7 case and endeavor to legitimize it to the court. In the event that the court rules against Person A, Person A can in any case convert (move) Person A’s case to Chapter 13 bankruptcy.

• Not every person. For example, business substances and certain individuals from the military are excluded. People whose absolute obligation is basically business (obligation caused while taking part in benefit making exercises) likewise don’t have to meet Chapter 7 means test necessities.

A straightforward method to check whether Person A fit into one of these classes is to peruse the depictions on the official bankruptcy structure Statement of Exemption from Presumption of Abuse Under § 707(b)(2) (Form 122A-1Supp).

Chapter 7 Bankruptcy Attorney Free Consultation

When you need legal help to file a chapter 7 bankruptcy in Utah, please call Ascent Law LLC at (801) 676-5506. We can help you with all kinds of bankruptcy matters.

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

Recent Posts

Lis Pendens In Utah Explained

How Much Will A Loan Modification Reduce My Payment?

DSO Questionnaire In Bankruptcy

Salt Lake Divorce Attorney

Divorce Attorneys Utah

Car Seats Can Be Dangerous

Foreclosure Lawyer South Jordan Utah

An experienced South Jordan foreclosure lawyer can review you case and advise you on your options. You could be a victim of mortgage fraud and an experienced South Jordan foreclosure lawyer can help you fight foreclosure.
Starting in the 1980s, financial institutions began lending credit to subpar creditworthy borrowers, but it was not until the early mid 1990s that subprime lending began to expand at an exponential rate. While many factors contributed to the growth of subprime lending, more than any other reason for the growth was Wall Street investors’ growing interest in subprime securities backed by loans from U.S. homeowners. Considered by many to be one of the greatest innovations in mortgage lending, the securitization of mortgages into mortgage backed securities dramatically changed the mortgage lending industry. Rather than one single bank supplying the money to fund a mortgage, securitization made it possible for multiple investors to fund mortgages. The banks simply supplied access to credit (mortgages, consumer loans, and auto loans), then sold the assets to investors through the securitization markets, allowing them to replenish their cash reserves. Over time, traditional financial institutions such as retail banks became loan originators.

Wall Street’s involvement in subprime lending through the secondary market changed the face of the primary lending industry in several ways. First, the underwriting standards deteriorated as financial institutions no longer had a stake in the loans they originated. As long as the loans originated by mortgage lenders fell within the guidelines set forth by their investors, they were considered good loans. The banks made money from fees they charged the investors for originating, underwriting, and funding the loan. Second, Wall Street’s involvement led to the growing number of mortgage brokers in the industry. The share of mortgage originations by brokers compared to banks also increased.

If a borrower wanted a refinance but did not have sufficient income, they would rely on their broker to get them qualified. The only thing that matters to most borrowers is getting the loan, and they depend on the loan agent to qualify them. It is important to note that the majority of the mortgage transactions during the last decade were refinances, where borrowers wanted to obtain cash from the equity of their homes. This was especially fueled by the year after year appreciation of the housing prices and low interest rates. The initial loan application or Uniform Residential Loan Application signed by the borrower/s contains detailed financial information of the borrower/s. In other words, it was described that borrowers are well aware that their income and/or asset is inflated on the loan application. The important question among various loan originators is how much money is required to get a particular client approved. Loan originators (brokers, processors, and loan officers) have the experience and knowledge necessary to determine the exact requirements of lenders and tailor the loan application and required documents to meet qualification requirements. Since everyone in this transaction benefited (the borrower gets the loan and the remaining parties (loan officer, broker, and lender makes a profit), it is easy to not see a victim. It wasn’t until the housing crash that countless victims of fraud became apparent.

Borrowers and their loan agents share the same goal, which is to obtain a mortgage successfully. Lenders (e.g., underwriters, account managers, and representatives) commonly ignore questionable financial claims or documentations submitted by brokers if the information seems reasonable. A broker may be approved with 30 different lenders, but will primarily use only a handful of lenders who are “willing to work with them.” Alternative mortgage products and low underwriting standards created conditions ripe for crime in legal institutions that might perceive blatant intentional misrepresentations, misstatements, and omissions as nothing more than creative or risky financing.

Alternative mortgage products, such as the popular low doc or no doc loans, commonly known in the industry as stated loans or liar loans, require crafty manipulation on the part of loan agents to qualify borrowers who do not meet lender requirements. The thin line between creative financing and outright criminal fraud is commonly crossed by loan agents who perceive their actions as acceptable in the industry. This is evidenced by many lenders’ circumvention of their responsibilities to thoroughly underwrite a loan when a stated loan is involved. There are various ways to get a client to qualify for a loan – many of which may be creative and led to fraud. For example, a loan agent may claim that funds from a refinance will be used to pay existing debts, and therefore reduce the client’s debt-to-income ratio of the loan. However, once a loan funds, a loan agent may instruct the escrow officer, whom he has an established relationship with, to not pay off the debts and establish falsified payoffs. Another example of the thin line between creative financing and criminality is the line between amounts that is inputted as income on a stated or a liar loan. Many loan agents in the industry presume that they can state any income amount on a loan application, as long as it “makes sense.” As such, loan agents will approach a stated loan by first determining the amount required to qualify and then figuring out ways to make sense of it to the lender. This often involves misrepresentations, falsifications, and fraud. Instead, loan agents should first determine their client’s income and present it to the lender in an honest and truthful manner.

When such practices are condoned within the working environment, and even promoted by their clients, colleagues, and superiors, questions of ethics and legality are easily suppressed.

No or low documentation loans, or stated loans, do not mean state whatever is realistic and whatever the lender will accept. Loan agents are bound by professionalism, ethical conduct, and fiduciary duties to their client to practice responsible financing. In this case, the client should have been instructed by the broker to reduce the loan amount to better suit his or her ability to repay. Whether the loan agent rationalized the act as accepted. within the organizational structure by colleagues or superiors, misrepresentations, such as overstating income or assets, was a crime. The borrowers obtained the home or credit they desired; loan practitioners profited from their tractions; and lenders, along with their investors, got their loans.

In the mortgage industry, the manipulation of borrower information in order to meet the qualifications of a mortgage loan is the most common type of fraud. Most of the time, the acts are very simple in nature and include adjustments to the financial information that the loan agent (a superficial term that applies to all official parties involved in the loan origination process) submits on behalf of the borrower. This may include adjusting income to fit the minimum requirements of the lender, despite being aware that the income is false, or having the appraiser inflate the value of the property, although industry practitioners, brokers, loan officers, and processors, are well aware of lending guidelines and requirements. More importantly, loan originators know exactly what will fly or pass with lenders. For instance, loan agents are well aware of actions that may raise eyebrows and may manipulate information accordingly. A stated income loan application submitted on behalf of a custodian claiming an annual salary of $I00K would raise suspicion. Therefore, to avoid suspicion, loan agents simply manipulate the employment title and income such as changing custodian to senior waste/recycling management officer and restating the income as $80–90K, annually. To compensate for the additional required income, the loan agent may simply create an additional income source by fabricating a fictitious job, such as a part-time home office income source.

Data fabrication involves the creation of false documentation in order to establish source(s) of income and assets. This type of fraud includes creating financial documents, such as W2’s, Verification of Deposits (VOD), Verification of Rent (VOR), or Certified Public Accountant (CPA) letters. Under many circumstances, the loan agent will establish bank statements from an existing account or create false rental income (VOD) from a home the borrower supposedly owns. Another example of this type of fraud includes generating a Letter of Explanation (LOE) to explain information submitted to lenders.

• The general or common process that borrowers go through to get a loan is described below. It is important to note that the following description is generic and not the experiences of all borrowers.

• Loan agents inform their borrower they can get the loan, but it will require that their income and/or assets be stated as a particular amount.

• Borrowers are informed that they qualify or not. If they do not qualify, they are either turned away (unlikely) or explained that certain actions will be necessary by either the loan agent or the borrower to get them “qualified.” For example, if borrowers lack the required assets, they are advised to have a friend or family member deposit a specified amount of funds into the bank and leave it for 2 months, or the loan agent has to establish a false verification of deposit (VOD).

It is common for borrowers to be unaware of the fraudulent acts committed by their loan agents. In certain circumstances, loan agents will not inform their borrower of the disqualifier(s) and questionable act(s) made by the loan agent. This occurs when the disqualifier and the corresponding act to get the loan approved is considered minor.

In most circumstances, loan originators are completely knowledgeable about the accuracy and credibility of the information they submit on behalf of their clients. There are cases where borrowers intentionally submit falsified information to their loan agents to misrepresent both their agent and their lender; however, fraud for profit, as defined in the industry and by the FBI, is uncommon. Loan agents and borrowers both stipulate that it is in their interest to be fully informed of anything important in a loan. Borrowers are required to sign and approve loan applications and documents and loan originators commonly express the importance of being straightforward and honest with their clients. Honesty between loan originators and their clients is good for business. Further, inconsistency of information by either party can raise red flags to a lender and result in a denial of a loan.

The job of the broker office is to gather the required information for a loan application and submit it to the lender on behalf of the borrower. Thus, crimes involving intentional misrepresentation and misstatement are much more common in the broker’s office. Lenders, on the other hand, are responsible for underwriting the application materials in accordance with the law and guidelines set by their investors. A major part of the duties and responsibilities of lenders include looking over application documents and verifying the information. It was not surprising that intentional oversight or acts of concerted ignorance were described as the most common forms of mortgage fraud among employees of financial lenders.

Once the loan file has been submitted to a prospective lender, it is overseen by an account manager or an underwriter. These loan agents are critical to the successful outcome or funding of a loan. Account managers and underwriters account for the majority of work involved in the origination process of the lending phase. Their duties and responsibilities include establishing loan approval conditions and ensuring that prospective loans adhere to lending guidelines. Account managers and underwriters work directly with their brokers, loan officers, and processors on a regular basis, and commonly coach them in structuring a loan or document to make the loan work. They are extremely knowledgeable about their employers’ guidelines and requirements, which makes them a valuable asset to brokers.
More importantly, account managers and underwriters are responsible for approving loan conditions once they have verified the information. For example, a loan approval may be predicated on verification of conditions such as an applicant’s employment and assets. It is common for these loan agents to overlook questionable information or sign off a condition(s) without verification.

Funders and appraisal reviewers also commonly overlook questionable information, such as an appraisal that lacks the required comparisons to justify the value of the property in question.

Having an appraiser willing to work with you is extremely important to a mortgage brokerage office. Most loan transactions are predicated on the value of the property. Appraisers who are conservative valuators can have a difficult time finding business, taking a conservative approach can be disastrous for an appraiser’s career. During the real estate boom, it was simple to justify appraisal values that exceeded the actual value of a property. For example, appraisers could avoid taking pictures that showed damage to the property, or use nearby properties with greater appreciation as comparables. If a garage were converted into a bedroom without a permit, the appraiser would include only an outside picture of the garage. Another common method with which appraisers inflate values is using comps, or comparables, that do not accurately reflect the value of the target property.

Victims of mortgage fraud are often subject to foreclosure for no fault of theirs. If you are a victim of mortgage fraud and facing foreclosure, speak to an experienced South Jordan Utah foreclosure lawyer.

South Jordan Utah Foreclosure Attorney Free Consultation

When you need legal help with a foreclosure in South Jordan Utah, please call Ascent Law LLC 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

Recent Posts

Foreclosure Lawyer Salt Lake City Utah

Utah Law On Tinted Windows

What Is An Irrevocable Trust?

Taxes On Spousal Support

ATV Accident Lawyer Orem Utah

Is A Loan Modification Bad For Your Credit?

Can Bankruptcy Help Creditors?

Yes. In some situations, not in all situations.

Can Bankruptcy Help Creditors

The appointment of a receiver over a borrower’s assets is a powerful tool for the secured creditor when included as a default provision in a well-crafted loan document. Pursuant to Utah law, a receiver “protects and preserves the property” serving as the creditor’s collateral. The law effectively gives the receiver control over the debtor’s property and allows the secured creditor, which sought the appointment, to obtain information regarding the day-to-day usage of its collateral and ensures that payment of net cash flow from the property will be paid to the lender.

Often the borrower will seek to regain control of its business by filing a Chapter 11 bankruptcy petition. The Bankruptcy Code sets forth certain duties and rights for the receiver as a custodian of the debtor’s property once the bankruptcy petition is filed. The Code also creates a procedure for the bankruptcy court to determine whether the receiver should turn over the property to the debtor or continue in “possession, custody or control of the property.”


The Bankruptcy Code makes it clear that once a receiver learns of the bankruptcy case, the receiver is obligated to stop administering the debtor’s property, except to the extent necessary to preserve that property.1Thus, once the bankruptcy petition is filed, the receiver generally has an affirmative duty to return control of the business to the defaulting debtor.

Despite this general requirement mandating the receiver turn over the property to the debtor, the secured creditor may file a motion to allow the receiver to maintain control over the property serving as its collateral. This motion is typically styled as a Motion for Excusal of Turnover by the Receiver.

After reviewing the Motion for Excusal of Turnover by the Receiver and, perhaps, taking evidence, the bankruptcy court will decide whether the interests of the creditors will be better served by leaving the receiver in possession and control of the debtor’s property. In addition, in the rare case in which the debtor is solvent, the bankruptcy court will consider whether the interests of the owners would be better served by permitting the receiver to remain in place.

Therefore, if the creditor is successful in getting a receiver appointed, but the borrower files bankruptcy and tries to regain control of the business and the collateral, the Bankruptcy Code provides a legal basis for the creditor to take prompt action in order to maintain the receiver’s control of the collateral. With this in mind, the Motion for Excusal of Turnover by the Receiver should be filed as quickly as possible after the bankruptcy petition is filed setting forth the reasons the creditors will be better served by the receiver’s continued possession and control of the debtor’s property serving as the collateral.

Our firm has been successful, recently, on several occasions in obtaining these orders protecting the rights and property of lenders in bankruptcy cases. These actions helped provide the lenders with a more positive outcome to the entire bankruptcy case.

Free Consultation with Bankruptcy Lawyer

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have many years of experience in bankruptcy law. We can help you now. Come in or call in for your free initial consultation.

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

Recent Posts

Protect Your Business in Divorce

Bankruptcy Lawyer

Fraudulent Conveyance Explained

Probate Lawyer

Debt Relief

Move Out of the Family House?

Students Eligible for Loan Discharge

Get out of student loan debt free? If you’re a former student of Corinthian Colleges, you might.

The for-profit Corinthian Colleges, which stopped operating in 2015 and displaced more than 10,000 Utah students, was under fire by the U.S. Department of Education after it found the schools made false claims about their post-graduation employment rates and other information between 2010 and 2014. In April 2017, thousands of more Corinthian students in other states were made aware of their potential eligibility for student loan forgiveness.

Students Eligible for Loan Discharge

While the story isn’t new, more students may be getting the financial help they so desperately need. Utah’s attorney general filed a lawsuit against the schools and its subsidiaries (Heald, Everest College, and WyoTech) in 2013 for a predatory scheme targeting low-income students, and the schools were accused of falsely advertising programs that didn’t exist, misleading students about their credits transferring to Cal State, and engaging in illegal debt collection practices.

In 2015, the Department of Education also levied a $30 million fine against Corinthian for inflating job placement numbers, while the Consumer Financial Protection Bureau won a lawsuit that ordered the schools to pay back $500 million in restitution for students. Corinthian sold most of its locations to Zenith Education Group in February 2015, filed for bankruptcy, and ceased operations.

Now, Corinthian Colleges students may be able to wipe away their remaining student loan debt — and get a refund on any loan debt they’ve already paid back. Find out how below.

Am I eligible for a student loan discharge?

Letters recently went out to thousands of students around the country to explain how students could cancel their federal student loans used to attend these schools. About 40 states have arranged for a streamlined process to discharge these loans. The affected programs include those at Heald and Everest/WyoTech, with campuses across the country.

Generally, you may be eligible for federal student loan forgiveness if you either attended a Corinthian school that closed on April 27, 2015, or you believe you were defrauded by the school you attended or it otherwise engaged in actions that violated state law. You must not have finished your program, or transferred your credits to another school.

Two bills currently in Congress also would help veterans who used GI Bill money to pay for attending for-profit schools like Corinthian and ITT Educational Services, the latter of which shut down 14 campuses last year.

How do I get my student loans canceled?

If a former student qualifies, he or she can get their federal student loan canceled and they won’t have to make any additional payments. They’ll also be refunded the payments they already made.

Students who believe the schools lied about their job prospects, credit transfers, or other issues should fill out a discharge application on the Department of Education’s website, You can request a loan forbearance — a temporary stop on your payments or a stop on collections on loans in default — as your claim is being reviewed.

It’s advised for students to continue making payments while their discharge paperwork is being processed, until they’ve been notified by the federal government or their loan provider that the loans have been canceled or are in forbearance for the time being. If you receive an email titled “Borrower Defense Claim,” it is from the Department of Education and includes communication on a full or partial approval of your borrower defense application. After that, you’ll receive additional information confirming that your loans have been discharged.

For more information, check out the State of Utah Department of Justice’s interactive tool to help students learn about their eligibility for student loan relief and their legal rights.

If I didn’t go to Corinthian, how do I get my student loans forgiven?

If you’ve never attended Corinthian Colleges but want to find a way to get rid of your student loans (don’t we all?), be careful of any scams that involve application fees or advance payments. In some situations — such as your job, a disability, or the closure of your school — you may be able to have your student loans forgiven.

It’s important to note that any type of loan forgiveness is only in regards to federal student loans — Direct Loans, Federal Family Education Loan Program (FFEL) Loans, and Perkins Loans — not private loans from a bank or other source. A Borrower Defense Discharge (what most Corinthian Colleges students would apply for) is a type of loan forgiveness called “borrower defense to repayment” and does not apply to Perkins Loans.

The Department of Education has a lot of good FAQs on this topic, but here are a few standout bits of information on types of loan forgiveness, cancellation, or discharge:

Public service jobs and teaching jobs have their own loan forgiveness programs; for example, the Public Service Loan Forgiveness Program forgives the remaining balance of your Direct Loans after you’ve made 120 qualifying monthly payments (or 10 years) while working full-time for a qualifying employer. If you have yet to enroll in college and are considering a job in public service or teaching, make sure to read up on these programs.

A total and permanent disability discharge will wipe out several loans, including Direct Loans, FFEL Loans, and Perkins Loans, as well as no longer require you to complete a Teacher Education Assistance for College and Higher Education (TEACH) Grant service obligation.

A loan discharge in bankruptcy is rare, but possible if the bankruptcy court finds that it would impose undue hardship on you and your dependents if you kept your student loans. Generally, you need to have a severe disability. You must file for either Chapter 7 or Chapter 13 bankruptcy, as well as file a separate action called an adversary proceeding. Several tests are used to determine undue hardship.

Free Consultation with a Utah Bankruptcy Lawyer

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed over a thousand cases. We can help you now. Come in or call in for your free initial consultation.

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

Recent Posts

Things You Need to Know About Divorce

What can I Keep if I file Bankruptcy?

Patent Lawyer

Regulation D 506 Offerings

Child Support Lawyers

Parental Rights and Responsibilities

What Can I Keep if I File Bankruptcy?

Many people mistakenly believe that they will lose everything when they file for Chapter 7 bankruptcy. This is not the case. The Bankruptcy Code allows debtors to claim certain necessary property as off-limits from creditors and the trustee. That property is the debtor’s “exempt property.”

What Can I Keep if I File Bankruptcy

The debtor claims property as exempt in the schedules that are filed to initiate the case. If no objections are filed to the exemptions, they become final 30 days after the meeting of creditors, commonly called the 341 meeting.

Exempt property is not property of the bankruptcy estate. You are free to keep it after bankruptcy when you are free of debt.

In Most Cases, Chapter 7 Filers Keep Their Property

Most Chapter 7 bankruptcy cases are no-asset cases. That means the debtors give up nothing to the trustee. The exemption systems permit debtors to retain the means of day-to-day living, free from the claims of their creditors.

The point of bankruptcy is to get a fresh start and that is only possible if the debtor has something to start with. In addition, used household goods and personal effects have little resale value, and so do not represent a real source of value to repay creditors.

Do federal or state exemptions apply? And which state?

Congress created a set of exemptions in the bankruptcy code but allowed each state to opt-out of those exemptions in favor of state law exemptions. Sixteen states allow debtors to choose between federal and state exemptions. The other 34 states require use of their own exemptions.

You’ll need to consult state law or search National Bankruptcy Forum’s Consumer Laws by State section for the list of specific exemptions available to you. In order to use a state’s exemptions, you must have lived in that state for two years prior to filing. If you haven’t lived there for two years, you must use the exemptions of the state in which you lived for most of the six months prior to the two-year lookback period.

For example, say you were born and raised in North Dakota. On January 1, 2017, you moved to Utah. It’s now May 1, 2018 and you’re filing for bankruptcy. You haven’t lived in Utah for the two years necessary to use the Utah exemptions. So, you have to look back two years to May 1, 2016 and use the exemptions of the state you lived in for the six months prior to that date. Because you lived in North Dakota during the relevant period, you’ll use the North Dakota exemptions.

How Liens Impact Bankruptcy Exemptions

Note that exemption amounts refer to your equity in the asset. If you co-own the asset, only your share of the equity is relevant. If an asset is subject to a mortgage or a lien, your equity is the value of the item after deducting the amount of the lien or liens (the equity).

Imagine that you purchased a home that is currently worth $300,000 and you have an outstanding mortgage loan of $250,000. Your equity in the home is $50,000. If an exemption protects more than $50,000 of equity in your home, creditors can’t touch it. Now imagine you bought the same home but only owe $75,000 on your mortgage loan. In that scenario, you have $225,000 of equity. Unless your state’s exemption protects more than $225,000 of equity, the bankruptcy trustee can sell your home, pay you the amount of the exemption, and give the rest to your creditors.

Generally, the trustee won’t sell an asset if you only have slightly more equity than the exempt amount. They’ll only sell if you have enough nonexempt equity to make a meaningful payment to creditors.

Common Exemptions

Exemptions are meant to ensure that you have the necessary means to live and work. They protect the debtors from creditors who might otherwise seize everything and leave the debtor destitute. While each state has its own exemption rules, there are several major exemptions offered by most states.

Excluded Property

Some assets are completely excluded from the bankruptcy process by federal law. Pension rights and 401(k) plans are not a part of your bankruptcy estate and are safe from creditors. IRAs are also excluded from your bankruptcy estate up to $1 million. Social Security benefits, unemployment benefits, disability benefits, veterans benefits, and alimony or support payments are excluded from the bankruptcy estate. If you have received or are going to receive an award as damages for personal injury, that amount is excluded from the bankruptcy estate, too.

Wage Exemption

Under Chapter 7, the wages you earn after you file for bankruptcy are generally not considered part of your bankruptcy estate. That gives you an opportunity to start saving as soon as you file. Wages that you earned before you filed but didn’t receive until after you file are part of the bankruptcy estate. You may be able to keep wages earned before filing and received after filing if you can prove that you need the money for reasonable and necessary living expenses.

Homestead Exemption

A homestead exemption protects some or all of your equity in your home. Generally, for a homestead exemption to apply, the home must be your primary residence. If you’ve moved to a new state, you can’t claim a homestead exemption unless you’ve owned the home for at least 40 months prior to filing for bankruptcy. If you haven’t owned the home for 40 months, you can only take the federal exemption of $23,675. 11 U.S.C.A. § 522(d)(1).

Auto Exemption

Most states offer an exemption for all or part of your equity in one or more cars. The federal auto exemption is $3,775. 11 U.S.C.A. § 522(d)(2).

Household Goods Exemption

The law wants to protect the items you need to survive. That includes your furniture, clothing, appliances, and medical supplies, among others. Federal law exempts up to $12,250 of household goods, as long as no single item is worth more than $575. There are limits to the household goods exemption; you generally can’t keep multiple televisions, art (unless you created it), recreational vehicles such as boats and ATVs, and similar non-essential items. 11 U.S.C.A. §§ 522(d)(1), 522(f)(4).

Wild Card Exemption

Federal law and many state laws offer a “wild card” exemption. This exemption can cover any property or can be added on to any other exemption. Unfortunately, the wild card doesn’t apply in the state of Utah.  The wild card is a way for you to protect items that are important to you but would otherwise be subject to liquidation. The federal wild card exemption protects up to $1,250 of equity in any property, plus up to $11,850 of the unused portion of the homestead exemption. If you only use part of your homestead exemption, you can apply the unused part to any property up to $11,850. If you don’t claim a homestead exemption, you can protect $13,100 ($1,250 + $11,850) of equity in any property.

Free Consultation with a Bankruptcy Lawyer in Utah

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed over a thousand cases. We can help you now. Come in or call in for your free initial consultation.

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

Recent Posts

Utah Prenuptial Agreements

How to Get a Divorce Online

Lawyer Utah

Things you need to know about Divorce

Utah Custody

Which Bankruptcy is Better for Your Credit?

Can Bankruptcy Fix a Judgment?

A judgment is really just a piece of paper signed by a judge that says you owe a debt. For example, in the event you can’t pay a credit card on time, the bank has no immediate recourse. They can call and write, but they cannot immediately attach your personal assets in satisfaction of what you owe.

Can Bankruptcy Fix a Judgment

A judgment is a legal determination that you owe a debt

Once a judgment has been obtained, the game changes. A creditor then has the green light to use the legal system to try to attach your personal property or garnish your wages (if your state’s laws permit garnishment) in satisfaction of the debt.

How do creditors obtain a judgment?

In order to obtain a judgment, a creditor will usually be required to file a lawsuit seeking payment of past due debts. In the credit card scenario, most borrowers fail to respond to the lawsuit, which allows the bank to win by default. If the borrower never files an answer to the creditor’s complaint, the court will assume the debt is valid and automatically enter judgment for the creditor. Although the process can seem complicated, judgments don’t come falling out of the sky. You must receive notice of a creditor lawsuit in order for a judgment to be entered against you. When a creditor files suit, they must notify you by delivering a summons and a copy of the complaint to your home.  The summons will tell you how long you have to respond before a default judgment will be entered against you. If you receive court documents in the mail that you do not understand, it is always best to pick up the phone and call an attorney to make sure that your rights are protected. Creditors are typically more difficult to negotiate with once they have obtained a judgment because their ability to collect is strengthened.

A judgment puts the public on notice that you owe money

A judgment is a matter of public record, often recorded in the county records where you live. One of the truly unfortunate aspects of the recordation of a judgment, is the fact that it will appear on your credit under the “public records” section of the report. Judgments and bankruptcies will both appear under this section of your credit report and both can do significant damage to your FICO score. In addition to telling the story of your financial history, the judgment tells the world that you owe a debt and that your creditors can look to your personal assets in satisfaction. Notice I say “look to your personal assets.” Unless you have property that is considered nonexempt under your state’s exemption laws, even the creditor armed with a judgment will not be able to take anything from you. Debtors who have no property that is vulnerable to creditors are known as judgment proof.

How long do judgments last?

Although this is a function of state law, most recorded judgments last for a period of 10 years, and creditors are often given the opportunity to seek renewal of the judgment prior to its expiration. This means that although you may be broke today, if you win the lottery tomorrow, your creditor can still enforce its judgment against your winnings.

Does bankruptcy eliminate a judgment?

Filing for bankruptcy will discharge your personal liability for debts, including debts that are owed to judgment creditors. However, if a judgment creditor has placed a lien on your property, filing for bankruptcy will not, in and of itself, remove the lien. While the lien cannot attach to property that you acquire after bankruptcy, it can remain as an encumbrance on property that you owned prior to filing for bankruptcy, such as real estate. In some cases, your bankruptcy lawyer may be able to petition the court to have liens that impair an exemption avoided, but judgments are sticky. The best strategy is to take action before they attach.

Next Steps for Bankruptcy Help

Creditors use judgments to step up their efforts in collecting a debt. Prior to a judgment being entered against you, you will likely receive collection letters, phone calls and eventually a summons in a lawsuit. It is important to take action when you receive documents in the mail that you do not understand, working with an attorney sooner rather than later, can help you protect your credit as well as your assets.

Free Consultation with a Bankruptcy Lawyer

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed over a thousand cases. We can help you now. Come in or call in for your free initial consultation.

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

Recent Posts

Qualify for the Protections of the PACA Trust

Selling Your House in Divorce

Best West Valley City Utah Accident Lawyer

Utah DUI Defense

Salt Lake City Criminal Attorney

No Fault Divorce in Utah