If you’re experiencing serious financial difficulties, declaring bankruptcy may be the best option for you to wipe the slate clean and get a fresh start. To ensure that it is the right decision for you, there are four questions you should ask yourself before scheduling a meeting with a bankruptcy attorney.
- Will all my debts be cleared?
While bankruptcy will give most debtors a new financial beginning, this isn’t the case with everyone. Some debts can’t be included in a bankruptcy, such as child and spousal support payments, fines, and criminal restitution. Student loan debts can only be discharged under rare circumstances, so if the greater balance of your debt burden consists of student loans, you may want to explore other options.
- Can I afford to go bankrupt?
As strange as it sounds, you have to pay to go bankrupt. This can pose a problem if you are already struggling with debt. There are filing costs, attorney fees, and other expenses. Many bankruptcy attorneys are willing to work with you regarding fees, but before you make the decision to file, review your ability to support such a move financially.
- Should I file Chapter 7 or Chapter 13?
Utah debtors have two categories of personal bankruptcy to choose from: Chapter 7 and Chapter 13.
Chapter 7 discharges all non-exempt debt, but requires you to surrender all assets (except exempt ones) to your trustee for sale, with the proceeds being distributed to your creditors. To qualify for Chapter 7, you must pass a means test, which is based on your monthly income minus approved expenses. The more disposable income you have, the less likely you are to be eligible to file for Chapter 7.
If your income is steady and you have assets you don’t want to lose, Chapter 13 may be a better option. With Chapter 13, you set up a three to five year repayment plan and, if all payments are made as scheduled, the debts will be discharged.
- What property can I keep?
In Utah you are permitted to exempt up to $30,000 of the equity in your primary residence and $5,000 for other real estate. You can also exempt up to $5,000 of equity in a motor vehicle, as well as household goods, tools of the trade, and wages up to a certain value. Pensions and 401(k) retirement accounts are also not subject to seizure.
Filing for bankruptcy in Utah can prepare you for a better financial future, but the process can be complicated. Call the bankruptcy attorneys at Arnold, Wadsworth & Coggins today at (801) 903-2616 to learn more about the different bankruptcy chapters and determine which approach would best suit your situation.
