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Bankruptcy: Utah

Filing bankruptcy in Utah gives debtors an opportunity to recover from overwhelming debt, and gives creditors an opportunity to recoup some payments based on the worth of the petitioner’s property or future earnings.  17,958 bankruptcies were filed in Utah in 2010, ranking Utah 9th in the nation for the number of bankruptcy filings per capita.  66% of Utah’s bankruptcy petitions in 2010 sought protection under Chapter 7 bankruptcy.

Filing Bankruptcy in Utah

Bankruptcy in Utah is ruled by federal law and bankruptcy cases are filed in the US Bankruptcy Courts in Ogden and Salt Lake City.  Utah law excludes petitioners from using exemptions listed in the U.S. bankruptcy code, in its place the requiring the use of Utah bankruptcy exemptions. With the counsel of a bankruptcy attorney Utah petitioners can learn what personal property they are permitted to keep in bankruptcy, and what must be sold.

Chapter 7 Bankruptcy, Utah

Chapter 7 bankruptcies in Utah account for the majority of the state’s bankruptcy filings. Chapter 7 is best suited to debtors who don’t have a substantial amount of assets, such as significant investments or equity in a home, as a Bankruptcy Trustee may liquidate personal property that is not protected by Utah’s bankruptcy exemptions. Liquidation occurs when the Trustee converts personal assets to cash to distribute to creditors. Utah’s Chapter 7 bankruptcy law allows petitioners to keep some essential property; the exempt assets are off-limits to creditors seeking repayment.

The vast majority of Chapter 7 cases are “no-asset” cases where no property is taken.

Utah Bankruptcy Exemptions

Utah’s state laws list detailed property exemptions that allow petitioners to maintain certain personal property and assets so that debtors can move forward from bankruptcy in a position of recovery, not insolvency.  Bankruptcy in Utah allows petitioners to choose exemptions from only the state list.

Personal property exemption amounts change, so it is imperative that petitioners speak with a knowledgeable Utah bankruptcy attorney to discover how bankruptcy will impact their financial circumstances.  Utah bankruptcy exemptions include:

Utah Homestead Exemption

  • Must file homestead declaration before attempted sale of home
  • Sale proceeds exempt for 1 year
  • $20,000 total: Real property and mobile home or water rights, if primary residence; $5,000 if not primary residence (Husband and wife may double)

Utah Personal Property Exemption

  • $2,500 total: Motor vehicle
  • $500 total: Animals, books and musical instruments
  • $500 total: Heirlooms
  • $500 total: Dining and kitchen tables and chairs
  • $500 total: Sofas, chairs and related furnishings
  • Health aids
  • Food to last 12 months
  • Clothing (not furs or jewelry)
  • Bed, bedding and carpets
  • Refrigerator, freezer, microwave, stove, washer and dryer and sewing machine
  • Artwork depicting, or created by, a family member
  • Proceeds for sold, lost or damaged exempt property
  • Personal injury, wrongful death recoveries for you or person you depended on
  • Burial plot

Utah Tools of Trade Exemption

  • Military property, National Guard member
  • $3,500 total: Implements, books and tools of trade

Utah Wage Garnishment Exemption

  • 75% of disposable weekly earnings or 30 times the federal hourly minimum wage, whichever is more (Low-income debtors may qualify for more)

Utah Public Benefits Exemption

  • General assistance
  • Workers’ and Unemployment compensation
  • Occupational disease disability benefits
  • Veterans’ benefits
  • Crime victims’ compensation

Utah Insurance Exemption

  • Disability, illness, medical, surgical or hospital benefits
  • Fraternal benefit society benefits
  • Life insurance proceeds if beneficiary is insured’s spouse or dependent, as needed for support
  • Life insurance policy contracts, proceeds and avails excluding payments made on contract one year prior to filing

Utah Pensions and Retirement Savings Exemption

  • Public employees
  • ERISA-qualified benefits, IRAs and Keoghs (accrued benefits and contributions made at lease 1 year before filing)

Utah Miscellaneous Exemption

  • Child support and Alimony needed for support

Chapter 13 Bankruptcy, Utah

In 2010, ­34% of debtors filed for protection under Chapter 13 bankruptcy laws in Utah.  When a petitioner files Chapter 13 bankruptcy in Utah, a court-appointed Trustee becomes responsible for restructuring debts and implementing a 3-5 year repayment plan, by which creditors are repaid using the debtor’s future earnings.  Chapter 13 petitioners in Utah keep most – or all – of their property.

How to File Bankruptcy in Utah

An important consideration for petitioners filing for bankruptcy protection is whether or not the debtor qualifies for key property exemptions. The goal of petitioning for bankruptcy is for the debtor to keep major assets and for their debts to qualify for discharge.  Because every case is different, a Utah bankruptcy attorney can review a debtor’s personal circumstances and advise whether Chapter 7 or Chapter 13 bankruptcy is a feasible solution to their financial problems.

Bankruptcy Attorney: Utah

It is essential that bankruptcy petitioners are aware of their rights and obligations as debtors.  A Utah bankruptcy attorney can apply the letter of federal laws and state exemptions to the financial circumstances of each client who contemplates bankruptcy protection.  Because personal bankruptcy cases can be technically complicated and emotionally wearing, an expert Utah bankruptcy attorney can address concerns related to the legal impact of debts and bankruptcy and recommend a solution to potentially lessen financial and emotional stress.