Bankruptcy Questions, Answered Plainly

Bankruptcy is a federal court process that gives people overwhelmed by debt a legal fresh start. Chapter 7 wipes out most unsecured debts in a few months. Chapter 13 sets up a three-to-five-year payment plan that lets you keep property and catch up on secured debts like a mortgage.

Chapter 7 eliminates eligible debts quickly, usually without any repayment, but you must pass the means test. Chapter 13 is a repayment plan based on what you can afford; it is often used to stop a foreclosure, catch up on a car loan, or protect property that Chapter 7 would not.

It is a court order that takes effect the moment your bankruptcy case is filed. It stops most collection calls, lawsuits, wage garnishments, repossessions and foreclosure sales while your case is pending.

Secured debt is tied to property the lender can take if you stop paying, such as a mortgage or car loan. Unsecured debt is not tied to property, such as credit cards, medical bills and most personal loans. Unsecured debt is usually what bankruptcy eliminates.

No. Child support, alimony, most recent taxes, criminal fines and most student loans are generally not discharged. Some older income taxes and, with a separate court case, some student loans can be. We will tell you exactly which of your debts are likely to be discharged.

No. You must list everything you owe. If you want to keep paying a particular debt, such as a car loan, you can usually do so, sometimes by signing a reaffirmation agreement.

Your own liability can be discharged, but the creditor can still pursue a co-signer who did not file. In Chapter 13, co-signers on many consumer debts are protected while your plan is active.

Yes. A spouse who does not file stays responsible for joint debts, and the household income of both spouses is usually considered in the means test.

Tell your attorney right away. Schedules can usually be amended while your case is open to add a creditor that was missed.

Most people do not. Utah exemptions protect a portion of home equity, a vehicle, household goods and more. If you are behind on payments, Chapter 13 can help you catch up and keep the property.

Social Security benefits are protected, and qualified retirement accounts such as 401(k)s and IRAs are generally protected in bankruptcy.

A refund you are owed when you file can be part of your bankruptcy estate, and Chapter 13 plans may require you to contribute refunds during the plan. Planning when to file can make a big difference, so ask before you spend or file for a large refund.

Chapter 7 is usually complete in about three to four months. Chapter 13 lasts for the length of your plan, which is three or five years.

Most people only attend the meeting of creditors, which is run by a trustee, not a judge. In Utah these meetings are held by video, and your attorney attends with you.

Your consultation is free, and we offer $0-down options and payment plans. We explain the total cost, including the court filing fee, before you decide anything.

Yes. You must complete a credit counseling course within 180 days before filing and a financial management course after filing. Both are usually available online.

A Chapter 7 bankruptcy can appear for up to 10 years and a Chapter 13 for up to 7 years. Many people find their credit scores begin recovering sooner than they expect, because their debt load is lower.

Waiting periods depend on the chapters involved. For example, you generally must wait eight years between Chapter 7 filings, measured from the filing dates. Other combinations have different waiting periods.

Possibly. A closed bankruptcy can often be reopened to pursue a student loan discharge through an undue-hardship case.