In the United States there are several ways one can go about declaring bankruptcy, some apply strictly to individuals while others are more commonly used by businesses. The two common forms of consumer bankruptcy are Chapters 7 and 13. Chapter 7, often called “straight bankruptcy” allows the debtor to discharge the bulk of his or her debts, to do this they must sell their non-exempt property to pay the creditors what they can. Chapter 13 bankruptcy in Utah is somewhat different, the bankrupt can keep their property, agreeing to pay their credits over a period of time not to exceed 5 years.
A business, even if it is a sole proprietorship cannot avail of Chapter 13 protection, when a business is in need of reorganization under protection of the law it will be steered toward Chapter 11. Although the business cannot file for Chapter 13 this does not stop the sole owner from doing so and as such the business debts can be included because debts related to a sole proprietorship business are the personal liability of the proprietor.
You cannot qualify for Chapter 13 bankruptcy in Utah if you fail to prove that you have sufficient income. The court will demand a financial statement showing that you have enough income left after deducting allowable expenses and secured debt such as the mortgage on your home to meet the debt payments that are the result of your repayment plan. There are certain debts that must be repaid in full; if the plan does not provide for this your application for Chapter 13 protection will be denied. It does not matter what the source of your income is, it can be from wages, payments from your pension plan, Social Security payments and even child support.
There is a limit on the amount of secured debt you have to qualify for Chapter 13 bankruptcy in Utah. The current level of debt, which will be revised in accordance with inflation in April 2016, is a little less than $1.15 million. Typical examples of secured debt are the mortgage on your home and a car loan.
Over and above the cap on secured debt, your unsecured debt is also capped at $383 thousand. The greatest majority of unsecured debt is credit card obligations, medical bills, etc.
As well as the debt level requirements you must be up to date on your income tax filings for the four year period prior to your filing for Chapter 13 bankruptcy protection.
There are numerous rules that apply to Chapter 13 bankruptcy in Utah. For detailed information and a free consultation you are invited to contact the Law Office of Andrew B. Clawson, PC. For more information visit The Utah Bankruptcy Lawyer.
