Utah Chapter 13 Bankruptcy
Most people file a Utah chapter 13 bankruptcy when they are facing foreclosure on their home, they have too many assets that they would lose in a chapter 7 in Utah, or they make too much money and don’t qualify for a chapter 7. A Utah chapter 13 bankruptcy allows debtors to keep their property, and still get relief from creditors. Instead of a liquidation of assets, a chapter 13 bankruptcy works as a payment plan, where debtors pay at least a portion of their debt back over a 3 to 5 year period. Any debt not paid back after the period ends is discharged.
In order to file a Utah chapter 13 bankruptcy, you or your attorney files a plan with the bankruptcy court. The plan spells out how much the debtor’s monthly payments will be, how much each creditor will get through the plan, and how long the plan period will be. Creditors can object to the plan if they think they are being treated unfairly. In addition, the trustee can object to the plan if he/she feels that creditors are not being treated fairly. Usually parties file objections with the intent that the monthly plan payment be increased so the creditor or creditors get more money through the plan. Most chapter 13 plans are objected to by either the trustee or creditors or both. This is because as your representative, your attorney is trying to get the payment as low as possible, and naturally creditors and the trustee want it as high as possible. Your monthly payment needs to be feasible, in other words, it needs to be something you can afford, and generally you need to prove to the court’s satisfaction, by submitting a budget and paystubs, that you cannot afford a penny more, and creditors should take what they can get.
Foreclosure and Bankruptcy in Utah
The most common reason people file a Utah chapter 13 bankruptcy is because their house is being foreclosed. When filing bankruptcy, either a chapter 7 or a chapter 13, an automatic stay goes into effect, which basically prohibits any creditors from attempting to collect debt, whether that be phone calls, repossession, or foreclosure. However, not only does a Utah chapter 13 bankruptcy stay collection efforts, it also provides a legal remedy by which you can stay in your home. A chapter 13 bankruptcy forces your mortgage lender to accept monthly payments on the arrears on your home. The chapter 13 plan must be set up so that by the end of your bankruptcy, whether that be 3 or 5 years, the arrears are paid off in full. In addition, you must continue or begin making your normal house payment immediately upon filing bankruptcy. So the idea is, at the end of the 3 to 5 year period, you are current on your ongoing mortgage payment, and you have paid off the arrears. The natural drawback is, if you are having trouble making your mortgage payment as it is, and now not only do you have a mortgage payment but also a monthly payment towards the arrears, then the plan may not be financially feasible.
Utah Chapter 13 bankruptcies can be very complicated, even attorneys that haven’t spent a lot of time in bankruptcy law often struggle and provide a disservice to their clients. Your attorney at Pearson Law Firm has filed hundreds of bankruptcy cases, and he will aggressively represent you and ensure that your rights are protected and your monthly payments are as low as possible. Contact Pearson Law Firm today for a free consultation with an experienced Utah bankruptcy attorney, 801-888-0991.