What Debts Can I Include When Filing Bankruptcy ?

Each type has its benefits


Utah Chapter 7 Bankruptcy

Filing Chapter 7 in Salt Lake City, or elsewhere in Utah, is going to pretty much wipe out most of your unsecured debt, like credit cards and medical bills.  It will also cancel out any remaining debt from auto repossessions, broken leases, etc.  What’s more, if your wages are currently or in danger of being garnished as a result of these kinds of unsecured debt, as soon as you file Chapter 7 these garnishments and the lawsuits that brought them on will cease.  Once again, your paycheck will be yours alone and your need to pay back these debts will be over.  Closed case - for good!

What Chapter 7 won’t eliminate are debts associated with taxes (typically, though there are exceptions), alimony and child support, court fees and fines for criminal cases, and restitution.  Certain secured debts are possible to have discharged as long as you are willing to give up your home or car to be free and clear of the remaining debt.



Utah Chapter 13 Bankruptcy

If you have crippling debts that won’t be resolved by filing Chapter 7, Chapter 13 may be the perfect answer.  What filing Chapter 13 in Utah does is take all of your debt, including taxes and past-due child support along with home and car loans, and wraps them all up into one lower monthly payment that you can actually afford.  After 3 to 5 years, whatever is still unpaid after the monthly installments is forgiven.  Meaning you have nothing left to pay on your old debt, ever.  And, to top it all off, you get to keep your car and your home.

Here is a real-life example of how filing Chapter 13 can help, a case I see a lot.  The Smiths come into my office with over $600 monthly minimum payments on their medical bills and credit cards alone, and they also pay $280 a month on their car, which they need to keep.  Their combined annual income is $50,000.  By filing Chapter 13, all of their bills including the car loan are combined into one single repayment plan, which allows them to pay only $175 a month – for everything.  And once the 3 to 5 year limit is up, they walk away free and clear, nothing more to pay.

Chapter 13 bankruptcy is a truly amazing program that gives you the chance to breathe easier knowing that the burden of debt has been released and lets you begin fresh down the road to financial stability. 

Any type of bankruptcy is going to lift the stress of financial strain.  It is important to know your options and how the two kinds are different.  Make sure, no matter who your bankruptcy attorney is, that you are clear on the benefits and downfalls of each – don’t let anyone try to tell you “talk you in to” one or the other without knowing for sure which one is right for you.
Call or text me now to discuss your situation and get the answers you need to move forward. 801.721.9633

Utah Bankruptcy Clinic
699 E. South Temple, Suite 201F
Salt Lake City, UT 84102