Chapter 7 Bankruptcy in Utah

Who qualifies for Chapter 7?

Eligibility is decided mainly by the means test. It compares your household income over the six months before filing with the median income for a household of your size in Utah. If your income is below the median, you generally qualify. If it is above, a second calculation looks at allowed living expenses to decide whether you still qualify or whether Chapter 13 is the better fit.

There are also timing rules. You cannot receive a Chapter 7 discharge if you received one in a case filed within the previous eight years, and different waiting periods apply if you previously filed Chapter 13.

What debts does Chapter 7 wipe out?

• •Credit cards and store cards
• •Medical bills
• •Personal loans and payday loans
• •Collection accounts and many judgments
• •Deficiency balances after a repossession or foreclosure
• •Some older income taxes that meet strict timing rules

Some debts are generally not discharged, including child support and alimony, most recent taxes, and criminal fines. Student loans are also usually not discharged unless you prove undue hardship in a separate court case.

What happens to my house and car?

Chapter 7 is often called "liquidation," but most people who file keep their essential property. Utah law protects many kinds of property through exemptions, including a portion of home equity, vehicle equity, household furnishings, tools of your trade and qualified retirement accounts.

If you are current on a mortgage or car loan and want to keep the property, you can usually keep paying. For car loans, that sometimes means signing a reaffirmation agreement. We review your property before you file so there are no surprises.