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THE
NEW AND IMPROVED
UTAH BANKRUPTCY LAW HANDBOOK
BANKRUPTCY REFORM -
THE
LAST "OVERHAUL" OF THE BANKRUPTCY CODE OCCURRED IN 2005. THIS
PAGE CONTAINS SOME OF THE NEW CHANGES
Credit Counseling
All persons filing a Chapter 13 or Chapter 7 Bankruptcy Case must
have a minimum of 90 minutes of Credit Counseling prior to
filing their case and 3 hours of Credit training after you
file bankruptcy.
To prove
that you took the course, you must provide a "credit counseling
certificate" to the court. To prove that your took the 3 hour
course after your case, you have to provide a "certificate" that you
attended a "course on personal financial management" which also must
be filed with the court.
Although
the credit counseling is relatively low in cost ($35 - $50) it is
yet another increase for you in time and money that is now required.
Chapter 7
filing fees are currently $299.
Chapter
13 filing fees are currently $274.
The
Reform did not make Bankruptcy impossible. It is just a little
more time consuming and a lot more paperwork is required.
Bankruptcy now protects middle and upper income families more than
before and punishes lower income families with more expense and
work.
People
that go through credit counseling or debt restructuring like
Ameridebt will have about as much damage to their credit scores as
persons filing bankruptcy.
Residency Requirements.
New
Residency requirements to keep property. Your state of residency for
the prior 2 years now controls what state you can file in, what
property you can keep and what state law you can use to keep
property. In order to stop fraudulent transfers and preferential
transfers the trustees can now look at property that you sold or
gave away up to 2 years ago. Also trustees are paid not for their
hours but as a percentage of what they can sieze and collect. The US
Trustee will audit cases at random.
Your
qualified retirement plan, such your IRA, 401(k), 403(b) and other
plans are exempt completely.
Means Testing.
Families
that earn over the average income and fail the means test for their
size family will be required to file a Chapter 13, unless they can
show and prove that they cannot afford a $100.00 a month Chapter 13
payment. The means test allows you to take you average income for
the last 6 months and deduct for average expenses or actual secured
debts such as a mortgage or car loan. If you can't afford the $100
per month payment or a 10% plan you can still file a Chapter 7.
People
that earn under the average income will be able to automatically
file a Chapter 7. If you earn over that amount only then will you
have to calculate the means test. Almost all Chapter 13 plans will
be for 5 years. People with below average incomes may file 3 year
plans. You will be given a budget for your expenses that you will
have to live within. In order to calculate whether or not you have
below or above average income you will have to supply the last 180
days of pay advices (also known as pay check stubs) and prior 60
days of pay stubs from your employer. Your last 180 days of income
will be averaged to find the average monthly income.
The means
test calculates your annual income minus your expenses for taxes
child support car payments and house payments to determine what you
have left over to pay debts with. In Utah, the amount ranges
depending on the county you live in. In Salt Lake County, the
median family income for a single person is $4,069 per month or
$48,832 per year. If you are single, you must be at this level
or below to qualify for a chapter 7 bankruptcy.
The
current United States Trustee website that discusses means testing
is located at:
http://www.usdoj.gov/ust/eo/bapcpa/meanstesting.htm
The Means
test is a long 5 page calculation to arrive at average income minus
standard expenses and only your attorney should do this for you.
This test is based on gross income before expenses, and not
net income.
If you don’t automatically qualify based on gross income you may
still qualify for a Chapter 7 after a the long 5 page means test
calculation done by your attorney. There is a second half of the
test which looks at your gross income minus your actual expenses for
mortgages; car loans; and secured debts plus your average expenses.
If you can’t afford a payment after this which repays a significant
portion of your debt you may still file a Chapter 7.
On a positive note the reform changes helps women collect child
support as a priority debt.
DISCLAIMER
NO INFORMATION OR MATERIALS CONTAINED HEREIN ARE INTENDED
TO CONSTITUTE LEGAL ADVICE, AND IS NOT APPLICABLE TO ANY SPECIFIC SET OF FACTS,
ESPECIALLY AS TO ANY INDIVIDUAL'S PERSONAL SITUATION. THE INFORMATION
CONTAINED HEREIN NOR THE PERUSAL OF IT DOES NOT
ESTABLISH NOR CONSTITUTE AN ATTORNEY-CLIENT RELATIONSHIP WITH EVELAND &
ASSOCIATES OR ANY OF ITS ATTORNEYS.
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