Salt Lake City Bankruptcy FAQ

Frequently Asked Questions

WHAT IS THE MAIN PURPOSE OF BANKRUPTCY?

First and foremost, bankruptcy laws give debtors a fresh start, by discharging (canceling) their debts. In 2005, the bankruptcy laws were overhauled. Congressional intended to require debtors to pay whatever they could reasonably afford to pay towards their debts within a reasonable amount of time. For most people, the congressional overhaul did not change the overall result of a bankruptcy. Even for most debtors over the median income they still only pay a very small percentage to their unsecured creditors.

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SHOULD I FILE BANKRUPTCY?

If any of the following apply in your situation, you might consider bankruptcy:

  • You are behind in mortgage payments or you are in foreclosure or foreclosure is imminent;
  • Your wages have been garnished or your bank account has been attached;
  • You have uncontrollable unsecured debts like credit card bills, hospital or doctor's bills, etc.;
  • Your total debt, excluding your house, is more than you could pay within five years;
  • One or more of your creditors have turned your account over to a collection agency;
  • You are receiving collection calls at home and/or at work;
  • Your payments are more than 30 days behind on any bill;
  • You have lawsuits pending or creditors are threatening lawsuits against you;
  • You have significant medical bills not covered by insurance;
  • You owe income taxes that you are unable to pay;
  • Your personal property has been repossessed or facing imminent repossession.

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WHAT IS THE DIFFERENCE BETWEEN CHAPTER 7, 11, 12 & 13 CASES?

There are four types of bankruptcy available to individuals:

Chapter 7 - Liquidation Plan:

Chapter 7 is a liquidation plan. A trustee is appointed to administer the assets of your "estate." Your estate consists of all your non-exempt assets. An exemption is where the law allows you to keep an asset, such as equity in a vehicle or home, and most furnishings, clothing, etc.. The trustee will sell non-exempt assets to pay your creditors. Unless someone objects, some or all of your debts will be discharged within a few months after the bankruptcy petition is filed. Most Chapter 7 cases are discharged without the Trustee selling any assets. A Trustee will not sell items he deems to be too small to be worth the effort. If there are assets that the Trustee would sell, those assets can be protected by filing a chapter 13.

Chapter 13 - Reorganization Plan

Chapter 13 is for Individual with regular income. There are many reasons someone would want to file a chapter 13 instead of a chapter 7. One of the most common reasons to file a chapter 13 is to stop a foreclosure and allow you to pay the delinquency over the life of a chapter 13 plan. This chapter of the U.S. Bankruptcy Code provides a court-approved method for a person to pay back part of their debt over a period of three to five years. Not all debts have to be paid in a chapter 13. As a matter of fact, most chapter 13 plans pay nothing to unsecured creditors, and their debts are discharged when the plan is complete. Payments under the Chapter 13 Plan are made through a Chapter 13 trustee, and will begin approximately thirty days after the case is filed.

Chapter 12 - Family Farmer

A payment plan or rehabilitation-style case for family farmers and fishermen. This type of bankruptcy is not very common in our area.

Chapter 11 - Reorganization for Businesses and some individuals

A chapter 11 is a more complex rehabilitation-style case used primarily by business debtors, but sometimes by individuals with substantial debts and assets. Chapter 13 is only for individuals but has a statutory limit on the amount of debt a debtor can have. The limits are quite substantial so very few individuals have to rely on a Chapter 11. Chapter 11 does not have a statutory maximum amount of debt that can be addressed.

The two most important types of cases for individual consumers are chapter 7 and chapter 13. Both provide for a discharge of debt and supervision by a trustee. Chapter 7 involves surrendering your non-exempt property to the Trustee (at least in theory) in return for a discharge of your debts. The trustee sells any non-exempt property and pays your creditors. In most cases there are not enough non-exempt assets to make it commercially reasonable to sell the items and as a result the Trustee often abandons that non-exempt property. In chapter 13, you keep your property but must commit to a three- to five-year repayment plan that pays some percentage of your debt to unsecured creditors. Most chapter 13 cases are 0% plans, meaning the unsecured creditors are not paid anything. You then obtain a discharge of most of the debts not paid in the plan. Upon the filing of any type of bankruptcy, virtually all creditors must immediately stop all actions to collect debts including legal actions. This protection is called the "automatic stay."

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WHEN AM I UNDER BANKRUPTCY PROTECTION?

You are under bankruptcy protection as soon as your petition is filed with the Court. The moment a petition is filed there exists an automatic stay, or suspension, of virtually all litigation and other action by creditors against the debtor or the debtor's property. (if you have had more than one previous case dismissed within the last year, that may affect whether you have an automatic stay in this case) In other words, once a petition has been filed, creditors cannot commence or continue foreclosure of liens, execution on judgments, sue you for an owed debt, garnish wages or bank accounts, or any action to repossess property in the hands of the debtor. If a creditor has taken property that has not yet been sold, in most cases they must immediately return that property.

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IS MY BANKRUPTCY CASE PUBLIC INFORMATION?

Yes, bankruptcies are considered a public record. Anyone may call the court and verify if you have filed a bankruptcy. Rarely, however, do people do so unless they were a creditor or somehow otherwise affected by your bankruptcy filing such as being a co-debtor on one of your debts. However, information about a bankruptcy is not published in the paper or otherwise openly given to the public.

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WHAT IS A MEETING OF CREDITORS?

The first meeting of creditors is required under Section 341 of the Bankruptcy Code and the debtor is required to attend. The purpose of the meeting is to enable the appointed trustee and interested creditors to examine the debtor under oath regarding the information that has been filed with the Court. Usually only the Trustee and sometimes secured creditors appear at the Meeting of Creditors. Individual debtors must provide government issued picture identification and proof of social security number to the trustee at the meeting of creditors.

DO I HAVE TO ATTEND?

Yes, failure to attend the Meeting of Creditors may result in dismissal of the bankruptcy case unless you can provide evidence to the Bankruptcy Judge that there was cause out of your control to miss the meeting of creditors. If at all possible, you should attend the Meeting of Creditors because not all reasons are considered good cause by the Bankruptcy Judge.

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ARE ALL OF MY DEBTS DISCHARGED BY THE BANKRUPTCY COURT?

In most cases, yes. There are, however, certain debts that may not be discharged pursuant to Section 523 of the United States Bankruptcy Code. A few examples of nondischargeable debts include some taxes, domestic support obligations, and most school loans. Also, there is a possibility that debts resulting from fraud may not be dischargeable under certain circumstances. Additionally, alimony and child support payments are automatically nondischargeable. We can provide more in-depth analysis of the dischargeability of your debts when you meet with us.

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WILL ALL OF MY CREDITORS BE NOTIFIED OF MY DISCHARGE?

When the case is originally filed our office will file a Creditor Matrix with the Court which lists all of your creditors names and addresses that you provided. The Court will send notices to all creditors listed on that Creditor Matrix. You should be careful to list all of your creditors. If you initially missed one or more creditors there is a time period that they can be added.

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HOW DOES BANKRUPTCY IMMEDIATELY HELP ME?

You will immediately be benefitted by the automatic stay issued by the Court stopping all collection efforts, repossessions, and foreclosures by creditors. In other words, all creditors must stop calling, sending letters or suing you over your debts. In addition, legal actions that have already been filed must stop. Creditors can be sanctioned for violations of the automatic stay.

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DO I NEED TO HAVE AN ATTORNEY?

The United States Bankruptcy Code does not require that you retain an attorney if you are an individual. Businesses must have an attorney to represent their interests in the bankruptcy Court. The decision to file a bankruptcy is a serious one and should only be taken only after serious consideration. While an individual is not required to retain an attorney, the bankruptcy laws are complicated and not easily understood. The Bankruptcy Court Clerk's Office is prohibited by 28 U.S.C. Section 955 from giving legal advice or assisting with the preparation of forms, and the fact that an individual is filing without the benefit of legal counsel does not excuse him/her from knowing the United States Code.

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WHAT INFORMATION DO I NEED TO FILE A BANKRUPTCY?

While it is possible to file an emergency petition without all the required documents, in most cases you will need the following:

  • Home address
  • Proof of your Social Security Number
  • Employer's name and address
  • Salary and wage information (pay stubs or other proof of income) for approximately 7 months is required)
  • A list of the name and address of all of your creditors
  • A list of all your property (for example: real estate, automobiles, boats, furniture, etc.)
  • A list of all your sources of income
  • A list of all your financial accounts (for example: checking and savings accounts, savings bonds, etc.)
  • A list of all your monthly expenses
  • A copy of your federal and state tax returns for the past 2 years.
  • A certificate that you have completed a Credit Counseling Course approved by the U.S. Trustee.

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WILL FILING BANKRUPTCY STOP MY WAGES FROM BEING GARNISHED?

Yes, once you file bankruptcy, you are under protection of the automatic stay. (if you have had two previous cases dismissed within the last year the dismissal may affect whether you have an automatic stay in this case). Our office will immediately notify the garnishing creditor and sheriff that you have filed a bankruptcy petition.

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CAN ENDERTON & MATHEWS, LLC FILE AFTER HOURS?

Enderton & Mathews, LLC files all documents electronically. Therefore, in an emergency, your case can be filed even when the Court is closed. After-hour filing allows for the imposition of an immediate automatic stay in most cases which will stop foreclosure sales and other collection actions that might have occurred before the Court reopens.

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WHAT IS A TRUSTEE?

A trustee is a person who administers your bankruptcy cases. In Utah, there are a number of Chapter 7 Trustees and one Chapter 13 Trustee. A Chapter 7 Trustee will be randomly assigned to your case when the case is filed. The trustee does not represent you or any creditor and cannot give legal advice. Rather, the trustee has independent rights and duties that are set forth in the Bankruptcy Code. In a chapter 7 case, the trustee liquidates the debtor's non-exempt assets and distributes the proceeds to creditors. In most Chapter 7 cases the Trustee will find that any assets that do exist are inconsequential and therefore not worth liquidating. In those cases the Chapter 7 Trustee will simply issue an abandonment of the assets and will not take anything from you. In a chapter 13 case, the trustee administers the payment that you make under your Chapter 13 Plan. The trustee in either chapter will also conduct the first meeting of creditors.

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WHEN WILL I GET MY DISCHARGE?

Individual debtors usually receive their Chapter 7 discharge approximately 60 days after the 341 Meeting of Creditors is held unless a creditor objects in a timely manner or the court orders otherwise. In the normal case where no complaint objecting to the discharge is filed, the debtor will receive a discharge shortly after the 60 days has passed. Chapter 13 discharges are issued after the final payment under the plan has been paid and the trustee has disbursed all funds and made a final accounting. That process usually takes 2-3 months after the final payment is made. Also, is either case, a discharge cannot be issued if you have not filed a certificate that you completed the mandatory Debtor Education Course. It is best if you complete that course as soon as possible after filing.

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HOW DO I GET A COPY OF MY DISCHARGE?

You will receive a copy of your discharge in the mail after it is entered. If you move while your bankruptcy is pending, please make sure that you notify our office of your new address so we can inform the court.

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DO I HAVE TO TAKE A CREDIT COUNSELING COURSE?

The bankruptcy law that became effective on October 17, 2005, requires all individuals with consumer debt to take a credit counseling course before filing. The course is taken over the internet or by telephone and takes about an hour. The certification of completion must be filed with the bankruptcy petition. You can find the information needed to take a credit counseling course here.

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DO I HAVE TO TAKE A DEBTOR EDUCATION COURSE?

The bankruptcy law that became effective on October 17, 2005 requires all individuals to take a debtor education course after your case is filed. The course is taken over the internet or by telephone and takes about two hours. We will provide the information needed to take the course when you file.

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HOW LONG WILL MY BANKRUPTCY REMAIN ON MY CREDIT RECORD?

The Fair Credit Reporting Act, 6 U.S.C. Section 605, is the law that controls credit reporting. The law states that credit reporting agencies may not report a bankruptcy case on a person's credit report after ten years from the date the bankruptcy case is filed. The larger credit reporting agencies belong to an organization called the Associated Credit Bureaus. The Associated Credit Bureau generally removes Chapter 11 and Chapter 13 cases from the credit report after seven years to encourage debtors to file under these chapters. The bankruptcy court has no influence over these reporting policies.

Our Salt Lake City bankruptcy attorneys can provide you with reliable representation throughout your bankruptcy case, including during any and all hearings. We can ensure you are fully prepared and can illustrate why you are filing for bankruptcy.

 

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