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Bankruptcy is a process under federal law designed to help people and businesses receive protection from their creditors to whom they owe money. After a petition for bankruptcy and a filing fee are submitted to the court, the court issues an automatic stay. This court order temporarily protects the debtor from all further acts of collection until the court accepts a repayment plan or grants a complete discharge of debts.
Numerous reasons and circumstances may lead people to file for bankruptcy. Some are possible to avoid. Some are not. Possible reasons some choose to file bankruptcy may be due to a combination of several factors, such as:
While there are four (4) types of bankruptcy listed below, Chapter 7 and Chapter 13 are the most common bankruptcies used by consumers. A qualified Utah bankruptcy attorney can help guide you to see which type is best for your situation.
When a business can no longer meet its financial obligations, bankruptcy may provide a path forward. At Alta Legal, we help Utah businesses determine whether bankruptcy is a viable option, taking into account their financial structure and objectives. In many cases, bankruptcy can provide the time and legal framework necessary to reorganize debt, protect critical assets, reduce creditor pressure, or bring closure to a struggling operation. This process can preserve value for stakeholders and provide clarity during an otherwise uncertain time.
The type of bankruptcy available depends on the nature of the business, its debt load, the presence of secured or unsecured creditors, and whether the owner wishes to continue operations or close the business entirely.
Chapter 7 bankruptcy, commonly referred to as liquidation, is typically used when a business is permanently shutting down. For corporations and partnerships, Chapter 7 does not discharge the business’s debts. Instead, the assets are liquidated by a bankruptcy trustee and distributed to creditors according to priority. Once the process is complete, the business entity usually dissolves.
In contrast, sole proprietors may file Chapter 7 and include both personal and business debts. Since the owner and business are legally the same entity, this option may allow for the complete discharge of qualifying liabilities. However, non-exempt business assets can be sold as part of the bankruptcy estate. We assess each sole proprietorship’s structure to determine the risks and potential benefits of filing under Chapter 7.
Chapter 11 bankruptcy is a reorganization process that allows a business to continue operating while repaying debts over time. It is often used by companies seeking to renegotiate contracts, restructure payment terms, and enhance cash flow without shutting down operations. The business remains in control of day-to-day operations while following a court-approved repayment plan.
For small businesses, Subchapter V of Chapter 11 offers a more accessible option. It reduces procedural hurdles and legal costs while still providing the flexibility to restructure obligations. Subchapter V is available to businesses with a certain amount of secured and unsecured debt, allowing owners to retain equity while negotiating terms with creditors.
Not every business qualifies for Subchapter V, and navigating the requirements demands close attention to financial details. Our firm assists clients in preparing detailed plans, complying with filing requirements, and presenting proposals that enhance the chances of approval.
Certain debts are readily dischargeable in bankruptcy. They include:
It is always in the best interest of the individual to work through their own money problems and pay bills rather than declare bankruptcy, especially if the amount is near $20,000, which is often around one year’s salary for most people.
Seeking information and options from legal counsel is always a good idea to find the best solution for your individual situation.
For individuals in severe financial distress, bankruptcy is a viable option. While it does not wipe a credit record clean, it does offer a new start. One should seek competent legal counsel to consider all options before making a decision.
Once the bankruptcy is filed, all property of the debtor at the time of filing, as well as specific future property, becomes the property of the bankruptcy estate. This means that the bankruptcy trustee will take control of the property to pay creditors.
However, there is a particular property that the debtor will be able to keep, which means it is either excluded or exempt from seizure. Which assets or property that will be exempt is determined based on your situation, your income, and the state law. The best way to determine which property to keep requires a detailed analysis of your situation by a professional attorney.
Depending upon your circumstances, you may be exempt (or able to keep) up to $100,000 in equity. When calculating your equity, use a lower amount, which reflects the price of a forced liquidation rather than ideal selling conditions, to determine the value of your home. Once you know the value, subtract the amount owed on the loan, plus selling and transfer costs, from the value. This will be the equity. You can keep up to $100,000 in equity. Unfortunately, liquidated properties are often valued less than what we like to think the property is worth.
In most situations, courts understand that you need a car to work to get back on your feet. However, if you own vintage or expensive cars worth many thousands of dollars, it is more than likely that you will not be able to keep them. If, on the other hand, you have a car worth $10,000 and you owe $8,000 on it, you will most likely keep it, but you must still make the payments on your car loan. This is referred to as reaffirming (or maintaining) the debt. In some cases, your attorney or representative can also renegotiate the loan or the lease to get a more favorable deal for you.
No. Bankruptcy laws prohibit discrimination against debtors who file for protection under the bankruptcy laws. Under normal circumstances, unless your employer is a creditor, they will not be aware.
Because there are several areas related to this question, you should consult your attorney. In particular, there are three items worth mentioning.
You want to make sure you are well-informed. A professional bankruptcy attorney can easily educate you on the steps that need to be taken and can help you make the best decisions that can positively impact you and your family.
By seeking an attorney who is professionally educated in bankruptcy law, you can secure your future. It is prudent to protect your assets and your life by ensuring you have someone who can be there for you when you need them.
Because most bankruptcy processes and most cases are complicated, consider getting professional help.
While there are options to try first (such as working with your own creditors or seeking a non-profit financial education counselor), you should not wait until the last minute to think about seeking professional legal help for bankruptcy, because some necessary bankruptcy rights may be lost by delay.
Bankruptcy is a legal proceeding with complicated rules and paperwork. You will want to get professional legal help, especially if you hope to use bankruptcy to prevent foreclosure or repossession of property and/or vehicles.
There are many legalities included in any type of bankruptcy law case. An attorney ensures that you understand what you are dealing with and how to improve your position. Have a lawyer by your side who can help guide you through the legal processes. You do not want to be faced with decisions that you are not well-informed about. You do not want to blindly proceed with a bankruptcy and make a wrong move, which could delay your rights. Contact a Utah bankruptcy attorney today.
There is a seven-step process during a bankruptcy procedure, and a knowledgeable attorney can not only help guide you through the process but also prevent unforeseen delays in the discharge of debts.
Step 1: Call a bankruptcy attorney.
Step 2: Means Testing – The attorney will conduct a means or ability to pay analysis required by law to determine if you are eligible and which type of bankruptcy is right for you.
Step 3: Credit Counseling – a session designed to ensure you are aware of all your options and resources available to you before filing bankruptcy.
Step 4: Filing – Your Utah attorney will file your bankruptcy with the bankruptcy court, and all collection efforts by creditors will be temporarily halted.
Step 5: Completion of a Financial Education Program certificate, as required by law.
Step 6: Meeting of creditors – Within 45 days of filing, you and your attorney will meet with creditors, where you will testify under oath before a trustee that the information in your petition is accurate.
Step 7: Discharge of debts – usually 60 days after meeting of creditors.
John Christiansen is a premier bankruptcy attorney recognized for three consecutive years as a Rising Star in the bankruptcy category of Super Lawyers for Utah and the surrounding areas. For over 10 years, he has consulted and represented thousands of clients in successfully eliminating and reorganizing debt. Combine that with Alta Legal’s super-competitive, low-cost pricing on attorney fees, and you will have a team that simply cannot be beat.
We are proudly a federal debt relief agency that helps people file under the bankruptcy code. If you are considering filing for bankruptcy in Utah, contact the bankruptcy lawyers at Alta Legal for experienced representation.
