Filing Chapter 13 Bankruptcy in Utah

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Bankruptcy protection is offered to citizens of the United States by laws passed by the federal government. However, while federal laws set the structure for bankruptcy protection, each state does have some specific rules unique to those filing bankruptcy within its borders. Those who live in the state of Utah, therefore, must understand the chapter 13 bankruptcy rules in Utah. 

Chapter 13 in Utah

Chapter 13 has become a very common form of consumer bankruptcy in Utah. It is one of two primary options that are created for consumer bankruptcy. Chapter 7 is the other, but is not available to all debtors due to strict income requirements passed in 2005. Under the bankruptcy rules, a person must make below the Utah median and/or pass a means test showing insufficient disposable income to repay debts. If a debtor makes above the state median, he/she cannot file chapter 7 and must file chapter 13. Chapter 13 will provide the debtor with protection unless the debts are extremely high, at which point a chapter 11 (normally meant for businesses) or some other chapter may be required. 

When a debtor files a chapter 13, there are a few basic rules and a few things to understand about the process. Debtors must complete approved credit counseling prior to filing and have no chapter 7 discharges on their record within the past 6 years. Debtors must create a plan to repay debt. The monthly payments made to the trustee under this plan will be based on the debtor's income and the amount of eligible debt. Secured debts (home mortgages, etc.) are usually not restructured as a part of this plan, and some debts like unpaid student loan/child support debt are not eligible for protection and are not included. 

The plan to repay debt must be approved by creditors. It generally will last for between 3 and 5 years. At the close of the 3-5 year plan, provided all rules were complied with and payments made, remaining debt that was eligible for bankruptcy protection will be discharged. 

Those who file for a chapter 13 have to repay some debt, unlike those who file for chapter 7. However, they are also able to keep their assets, money and bank accounts will many of those things become part of a bankruptcy estate and sold during a chapter 7. 

Getting Help

The creation of a chapter 13 repayment plan is not generally something you can do yourself. You need to have a bankruptcy lawyer if you wish to be successful in dealing with your debt through a chapter 13 bankruptcy in Utah. Your lawyer will help with all aspects of filing for chapter 13 to ensure you get the best possible outcome for your finances.