Jory L. Trease
"The Bankruptcy Attorney"
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Frequently Asked Questions
Should I file bankruptcy?
This is a complex question that is difficult to answer directly. The decision to file bankruptcy is a personal one, and should only be made after being fully informed. There are consequences to filing bankruptcy, particularly with your credit; But, if you are unable to pay your debts as they become due, bankruptcy might be the only option. Please contact us to schedule an appointment so we can discuss your situation, and explore your options.

What will happen to my credit if I file?
Upon filing, your credit reports will reflect the bankruptcy, and your credit score will be affected. The bankruptcy will be on your credit report for up to ten years, but this does not mean you will not be able to obtain credit, or rebuild your credit score. Bankruptcy is not the credit stigma it was ten years ago. In fact, some lenders even prefer customers who have filed bankruptcy recently, because their debt to equity ratio will be more favorable, and the lenders know that people can only file Chapter 7 every eight years.

Usually, you can obtain an auto loan within a year after you file, and a home loan after about 2 years from filing. After one to two years, creditors will look at your payment and credit history since the time of filing, and will often extend credit offers with terms just as favorable as those available before bankruptcy. Chances are, if you have been making numerous late payments, or if you haven't been making payments at all, your credit is already being affected negatively. If your car is repossessed, or if your home is foreclosed on, your credit will be seriously impacted.

Bankruptcy can help avoid foreclosure or repossession, and will get you back on track so that no more late or missing payments show up on your credit. With a fresh start, you can begin the process of rebuilding your credit. We offer free, no obligation consultations with our attorneys. Contact us to schedule an appointment or call us at (801) 596-9400. We look forward to meeting with you and discussing your individual situation.

Why should I file with an attorney, instead of using do-it-yourself forms?
The U.S. Trustee for the District of Utah is currently investigating Bankruptcy Petition Preparers, as well as those people who attempt to proceed on a pro se basis (without an Attorney). The government has indicted quite a few people over the past several months for Bankruptcy Crimes; based mostly on the fact that Debtors were not fully informed of the consequences associated with incomplete or inaccurate disclosure on their initial bankruptcy documents. These investigations continue.

If you were flagged for investigation, the U.S. Trustee would require you to complete additional questionnaires and paperwork, and would subject you to more intense questioning from the at the First Meeting of Creditors.

Also, there's always the additional stress and emotion associated with not knowing the legal procedures. You can be sure your creditors will have legal counsel working for them, trying to take advantage of every situation they can. If you have to file, why not make sure you get the most from your Bankruptcy?

These reasons all add up to the fact you would be better prepared if you chose to engage our office instead. Besides, most people find that they pay just as much to do it themselves, as they would if our more qualified attorneys handle the case for them.

What debts can I include?
This question is more frequently couched in terms of, “Can I not list certain debts?” The answer to both questions is that when you file a Bankruptcy, you cannot show preferential treatment to any particular person or Creditor. You must identify all debts you owe at the time of filing the Bankruptcy Petition.

There are certain types of debts that typically will not be discharged in your bankruptcy. Those debts include items such as child support and alimony obligations, criminal fines and restitution, student loans, and recent tax obligations. However, each of these legal issues are quite complex, and in some instances part of the debt may be discharged in bankruptcy. You should take advantage of scheduling a free appointment with our office to discuss your particular circumstances, and allow us to review any questions you have about these type of debts.

Similarly, any debts that are secured in nature (i.e.; you have pledged certain collateral, or you are purchasing certain items over a period of time) need to be treated differently than your typical unsecured debts like medical bills, credit card debts, and loans based solely on your signature. The items that have been pledged as collateral require you to either surrender the items to the Creditor, or you can reaffirm the debt, or you can redeem the obligation by paying the fair market value of the collateral. Reaffirming the debt essentially treats the obligation under the same terms as the original contract, just as though you had not filed bankruptcy against the Creditor. The most difficult part of reaffirming an obligation is that most Creditors require you to become current on the contract before you are permitted to reaffirm. However, in the District of Utah, you are actually afforded a fourth alternative, and that is to simply remain current on the obligation without formally reaffirming the debt. Both alternatives have certain advantages and disadvantages that are case specific, and you should consult our office to discuss these alternatives before you make a final decision regarding your individual debts.

As you can see, the type of debts you owe have a direct impact on many factors related to filing a Bankruptcy Petition. Most often the type of debts you owe will dictate what relief you seek to obtain, and under which Chapter of the Bankruptcy Code you ultimately choose to file. It is for that particular reason that our office offers a free consultation to discuss the options that are available to you, and to “custom fit” your circumstances to the relief that is availed by the U.S. Bankruptcy Code.

Please schedule an appointment to meet with one of our attorneys if you would like to discuss your options in detail. We can let you know which Chapter would work best for your situation, and we can let you know what to expect once you file.

Will I lose my home?
People devote a significant amount of their lives searching for the American dream of owning a home. We strive to protect that interest to the fullest extent possible under the confines of the Bankruptcy Code. Under the laws of the State of Utah, a person is entitled to claim a homestead exemption to protect a limited amount of equity in their principle residence. The amount available under this provision permits a single owner to claim $20,000.00 (and joint owners to claim up to a maximum of $40,000.00). But most people don’t realize that if they do not have sufficient equity in their home; or if they do not have the ability to continue to make timely payments on the same, then their house will be in jeopardy of being lost.

If you have fallen behind on your house payments, due to medical problems or temporary loss of employment, etc., but that situation has now been remedied; then, it is likely filing a Chapter 13 Bankruptcy Petition will enable you to cure the delinquent house payments and allow you to protect your home from foreclosure.

Under the provisions of Chapter 7 of the Bankruptcy Code, upon filing the Bankruptcy Petition, an independent person (the Chapter 7 Trustee) is appointed to review your financial status, and make a determination as to whether there is sufficient equity in your house to warrant selling it in order to pay a portion of your debt. The Chapter 7 Trustee approaches this issue primarily on a mathematical basis. He/She considers the fair market value of your house, less the amount you owe on it, less your applicable homestead exemption claim, less the costs that would be incurred in the marketing of the property (this includes real estate commissions and closing costs). If after deducting all of those relevant amounts, there is still a significant amount of money that would be available to distribute to Creditors, the Chapter 7 Trustee would elect to market the home.

Due to significant importance of this asset, it is most important that you contact our office to schedule an appointment to allow us to consider all of the factors in your case to determine whether or not your home is likely to be considered a concern. At that time, we can discuss the various Chapters in Bankruptcy, and the advantages each provides given your particular circumstances.

Will I lose my car?
Americans have become dependent upon private transportation. Our office recognizes the importance of an automobile to the typical citizen. Unfortunately, the legislature in the State of Utah has only provided very limited protection for this necessity. The laws of the State of Utah provide that an individual is entitled to retain up to $2,500.00 in equity in a motor vehicle. A married couple essentially has a total amount of $5,000.00 that they can designate towards retention of an automobile. In jointly filed cases, it is often a better strategic move to divide the motor vehicle exemption amongst two (2) separate vehicles in order to protect the family’s need to have a means for each wage earner to have sufficient transportation.

It is also necessary to note that even if you have some equity in a vehicle, if you are not capable of making the regular payments under the purchase contract, that car is in jeopardy of being repossessed. Filing a Chapter 7 Bankruptcy may not provide you the protection that you desire to maintain possession of your vehicle(s). On the other hand, filing a Chapter 13 Bankruptcy provides additional relief in which you can pay for the automobile over a period of years rather than having to make a separate monthly payment on the same.

As with other areas within the Bankruptcy realm, protecting your means of transportation often requires pre-bankruptcy planning. Our office can discuss the methods available to best attain your goals regarding your automobiles, once you schedule an appointment to meet with us. In the vast majority of cases, there are alternatives within the Bankruptcy Code that will permit you to retain your vehicle in one manner or another.

Please schedule an appointment to meet with one of our attorneys if you would like to discuss your options in detail. We can let you know which Chapter would work best for your situation, and we can let you know what to expect once you file.

What is the difference between a Chapter 7 and a Chapter 13?
Chapter 7

Chapter 7 bankruptcy is what people usually think of when they think of bankruptcy. Chapter 7 bankruptcy is a liquidation. When you file a Chapter 7 bankruptcy a trustee is assigned to administer your case. The trustee will evaluate your property to determine if anything can be liquidated to pay creditors. Bankruptcy laws allow you to keep certain property from being taken and used by the trustee. We can let you know which items are protected from being taken.

Approximately 2 to 3 months after filing Chapter 7, you will receive a discharge. A discharge eliminates unsecured debt (credit cards, medical bills, etc.), and any deficiency balance owing on property you decide to surrender to your secured creditors (mortgages, auto loans, etc.).

It is possible to retain property that secures debt (homes, cars, furniture, etc.), depending on your payment history with the individual creditors. If you decide to keep certain items, we will arrange for you to continue making payments on the loans secured by those items.

Please keep in mind, some types of debt are not discharged by a Chapter 7 bankruptcy, such as student loans, recent taxes, and alimony or child support.

Chapter 13

A Chapter 13 bankruptcy is also known as a reorganization. People filing Chapter 13 are allowed to keep all of their assets. When you file a Chapter 13 you propose a Plan to re-pay all or a portion of the debt you owe. Plans are required to last from 3 to 5 years. Similar to a Chapter 7, a Trustee is assigned to administer your case in a Chapter 13. The Chapter 13 Trustee is in charge of receiving your monthly Plan payments and distributing funds to your creditors. The amount of your Plan payment will depend upon what you owe, what property you choose to keep, and your net income after paying your living expenses.

Virtually any debt can be included in a Chapter 13, including past back mortgage payments, tax debt, secured debt, student loans and past due alimony or child support payments. A Chapter 13 can prevent your house from being foreclosed on, or your car from being repossessed. Please schedule an appointment to meet with one of our attorneys if you would like to discuss your options in detail. We can let you know which Chapter would work best for your situation, and we can let you know what to expect once you file.

How soon after filing will the collections stop?
Under normal circumstances, once Creditors are aware of your Bankruptcy Petition, they must immediately stop all collection efforts. This includes telephone calls, written correspondence, seizing property, court actions, virtually anything that would be considered an attempt to collect a debt from you. Upon the filing of your Petition in Bankruptcy, the theory is that all collection efforts must immediately cease. This is one of the principle benefits of a Bankruptcy Case; it is referenced as the “automatic stay”. However, this situation is becoming somewhat more complicated with the new legislation known as the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005" (we affectionately refer to it as: the “Bankruptcy Prevention and Consumer Abuse Act of 2005"). Under the new Bankruptcy Legislation, if your Bankruptcy case is the first one you have filed, or you have not filed a previous bankruptcy in over a year, then the collection efforts by your Creditors will still be required to cease immediately. But, if you have filed more than the present Bankruptcy Case within a year, this protection may be limited or not available at all until you petition the Court to impose such a protection. It is unknown at present what factors will be required by the Court to grant this basic protection from your Creditors if you have previously filed another Bankruptcy Petition.

It should however be noted that Creditors are notified of your Bankruptcy Petition by the U.S. Bankruptcy Court noticing center which is located on the East coast of the United States. Often it may take between 7 to 10 days for the Court to dispatch the notices to the various Creditors, so there may be some lag time between your filing the case and the time you stop receiving correspondence from the Creditors. But, in the case of telephone calls, you can either verbally notify the Creditors of your commencement of a Bankruptcy Petition, or you can simply refer them to our office once you have filed. For this reason, it is always best for you to contact our office a few days after you have signed your Bankruptcy documents so you can obtain the Case Number that has been assigned by the Court to provide to your Creditors in the event that they contact you prior to receiving formal notification from the Court.

It is always best for you to keep a notebook close to your telephone, so you can make a notes of the date, time, and representatives name for the Creditor that you provide verbal notification of your Bankruptcy Case. If any further efforts occur from that Creditor, the Court will take appropriate measures to assure the Creditor does not violate your Bankruptcy rights by continuing collection efforts once they have notification of the Bankruptcy.

Furthermore, if you have a Court date that has been scheduled prior to the filing of the Bankruptcy Petition, you should plan on attending the Court date to provide the Court with your Bankruptcy Case number. Frequently Court Clerks (and some State Court Judges) are not familiar with the protection that is afforded by starting a Bankruptcy Case. Likewise, notices that are dispatched from the Bankruptcy Court do not reference the State Court Case number, so oft- times the State Court does not claim to have adequate notice of the Bankruptcy by the time that was originally set as the Court date. But, once you appear at the Court hearing and give them notice of the Bankruptcy Case, the Court simply does not proceed because they then have actual notice of the pending Bankruptcy case. At that point, the opposing side should also hesitate to proceed because they are also aware of your Bankruptcy case, and they do not want to be sanctioned by the Bankruptcy Court by continuing to collect from you after they are aware of the Bankruptcy.

How soon can garnishments be stopped?
Very similar to all other collection efforts, garnishment of your wages stops immediately upon filing your Bankruptcy Petition. But to assure that your wages are not garnished by your employer, at the time you meet with our office, you should provide us with a copy of the garnishment documents that you have received from your employer. Those documents will identify the name of the Creditor that is garnishing your wages, as well as your employer. We will then be able to communicate with the proper people to assure that the garnishment stops in accordance with the Bankruptcy Code.

Over the past several years the issue of garnishments has become a little more complicated due to more and more companies using payroll services that are located out of state. Because these companies often prepare the paychecks several days in advance, extra effort needs to be expended to address garnishments of wages. This procedure sometimes causes money to be deducted from your original paycheck, but those funds are normally returned to you in a couple of days once the payroll service company obtains proper notification of the Bankruptcy and is otherwise capable of processing a separate check.

The procedure for stopping a garnishment requires cooperation from many parties; the Creditor, your employer, yourself and our office, all have the common goal of making sure you obtain your entire paycheck after you have filed the Bankruptcy Petition. As indicated above, your obligation is to provide our office with the garnishment documents to enable us to establish contact with the Creditor and your employer. Once we contact the Creditor, it is their responsibility to process a “Release of Garnishment” pleading, file it with the appropriate court, and circulate it to your employer. Once your employer receives the Release of Garnishment, the company no longer has an obligation to garnish your wages, and they will communicate to the payroll department to pay you your entire wages without any deduction.

Are your paychecks in jeopardy of being garnished?
Contact us to schedule an appointment or call us at (801) 596-9400.

My car was recently repossessed, can I get it back?
If you file a Chapter 13 Plan of Reorganization, a car that was recently repossessed can be recovered if it has not been sold prior to the filing of the Bankruptcy Petition. In the State of Utah, Creditors are obligated to provide you with written notification that they intend to sell your car; they are also required to give you ten (10) days advance warning of the sale date.

There are certain complications that may arise in recovering an automobile after it has been repossessed, so it is always best to file your Bankruptcy Petition prior to the time your car is taken by the Creditor. Most often people are aware that a car is likely to be repossessed because the Creditor has made numerous efforts to resolve the past due amount through telephone calls, written correspondence, and other means of resolution. Normally, it is only when it appears that a person is not capable of making the payments on the car that a Creditor will take the severe action to repossess the vehicle.

One of the complications of recovering a repossessed car is that there are additional fees and assessments that are related to the repossession of the vehicle. Under most contracts of sale, the buyer of the vehicle consents in advance to pay all such costs that are reasonably incurred. Therefore, although you can recover possession of the car, you need to evaluate whether or not the car is worth the amount that is owed on it, plus all of the additional costs that are incurred in the repossession efforts. If you file a Chapter 13 case, you will still only be paying for the fair market value of the car.

In a Chapter 7 Bankruptcy, the recovery of a repossessed vehicle is more complicated, but not necessarily impossible. Each case has it’s own intricate details that need to be evaluated, so it does not lend to an answer that is generally applicable to all cases. Please contact our office if you have questions as to whether or not recovery of your automobile would be probable under your given circumstances.

Lastly, it should be noted that under the impending new Bankruptcy laws, treatment of automobiles in general in Bankruptcy Cases will be significantly different than previously. If you have purchased a vehicle within the past two and one-half years, it is likely that you will be required to pay for the entire amount of the automobile if you intend to retain possession of it. This is a factor that you have to consider in your determination of not only which Bankruptcy Chapter you intend to file, but also a substantial amount of planning may be necessary to assure that you have sufficient transportation after you have filed your Bankruptcy.

Is your car in jeopardy of being repossessed, or has repossession recently taken place? Contact us to schedule an appointment or call us at (801) 596-9400.

This website is intended to provide general information and is not intended to serve as legal advice regarding specific factual situations. Information should not be acted upon without personal legal advice. Neither viewing the information on our site, nor sending us an e-mail establishes an attorney-client relationship