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THE
NEW AND IMPROVED
UTAH BANKRUPTCY LAW HANDBOOK
PROPERTY
YOU CAN KEEP IN BANKRUPTCY
In a
Chapter 7 Bankruptcy
Case, all of a Debtor's non-exempt
property
becomes the property of the bankruptcy estate and may be sold by the bankruptcy trustee.
The sale proceeds are then distributed among the Debtor's
creditors.
In a Chapter 13 Bankruptcy Case, Debtors retain all of their assets.
Nothing is sold.
WHAT IS EXEMPT PROPERTY?
Under Federal and State exemption laws, certain assets are protected from
collection by Creditors and from a Bankruptcy Trustee in a Chapter 7 case.
In addition, exempt property is relevant in formulating a Chapter 13 Plan and
calculating the required return to your unsecured Creditors.
WHAT
PROPERTY IS EXEMPT IN UTAH?
The Utah
Exemptions Act is set forth at the Utah Code
- Title 78 - Chapter 23. The following is a brief summary of the most commonly claimed exemptions in this
Statute. Please refer to the statute for a detailed analysis of the
exemption(s) you seek to claim.
HOMESTEAD EXEMPTION. The Homestead
laws in the State of Utah are presently very favorable to Debtors.
Individuals can claim a homestead exemption in their primary residence in the
amount of $20,000, and $5,000 if the property is not the primary residence of
the individual. The homestead exemption is applied to home equity.
Home equity is computed by deducting from the fair market value of the real
property, the amounts of all outstanding mortgages and loans against such real
property.
EXAMPLE:
Your
home is worth $100,000.00 and you have a first mortgage against your home in the
amount of
$40,000.00, and a home equity line of credit with a balance of $20,000.00.
You therefore have $40,000.00 of equity in your home. If you are an
individual debtor, your equity would not be fully exempt, and the Bankruptcy
Trustee would sell your property and distribute the sale proceeds among your
Creditors. In this case, you should file Chapter 13. If you are
filing jointly with your spouse, the full $40,000.00 equity in your home would
be exempt and you may file Chapter 7 without losing your home.
The full
text of the homestead exemption laws is set forth at Utah
Code Section 78-23-3.
VEHICLE EXEMPTION.
Each individual
is entitled to an exemption for one motor vehicle not exceeding $2,500 in
value. If you are filing jointly with your spouse and you share one
vehicle, you can each assert the vehicle exemption against the same
vehicle. If the equity in the vehicle you share is not more than
$5,000.00, it would be protected from bankruptcy. The vehicle exemption is
applicable to motorcycles if the motorcycle is your primary means of
transportation.
SUMMARY OF
MOST FREQUENTLY CLAIMED EXEMPTIONS PERMITTED UNDER UTAH CODE
78-23-5: An
individual is entitled to exemption of the following property (generally
without regard to value):
one clothes
washer and dryer, one refrigerator, one freezer, one stove, one
microwave oven, one sewing machine, all carpets in use, provisions
sufficient for 12 months for your family, all wearing apparel of every
individual dependent, not including jewelry or furs, and all beds and
bedding for every individual or dependent.
personal injury
settlements, judgments, etc. accruing as a result of bodily injury of
the individual, to the extent the proceeds are compensatory.
(Wrongful death benefits may also be exempt - please review full text of
statute.)
401K, IRA and
other retirement benefits described in Utah Code Section 78-23-5(1)(x)
and (xi) are exempt EXCEPT amounts contributed or benefits accrued by or
on behalf of a debtor within one year before the debtor files for
bankruptcy.
a burial plot.
health aids
reasonably necessary to enable the individual or dependent to work or
sustain health.
for other
specific exemptions provided by this Code Section, and a detailed
explanation of the specific exemptions summarized herein, please
refer Utah
Code Section 78-23-5.
SUMMARY OF
EXEMPTIONS WITH DOLLAR LIMITATIONS:
An individual is entitled to an exemption of the following property up to
a total value of $500 ($1,000 per couple):
SOFAS, CHAIRS AND RELATED
FURNISHINGS REASONABLY NECESSARY FOR ONE HOUSEHOLD.
An individual is
entitled to an exemption of the following property up to a total value of
$500 ($1,000 per couple):
DINING AND KITCHEN TABLES
AND CHAIRS REASONABLY NECESSARY FOR ONE HOUSEHOLD.
An individual is
entitled to an exemption of the following property up to a total value of
$500 ($1,000 per couple):
ANIMALS, BOOKS, AND
MUSICAL INSTRUMENTS, IF REASONABLY HELD FOR THE PERSONAL USE OF THE
INDIVIDUAL OR HIS DEPENDENTS.
An individual is
entitled to an exemption of the following property up to a total value of
$500 ($1,000 per couple):
HEIRLOOMS OR OTHER ITEMS
OF PARTICULAR SENTIMENTAL VALUE TO THE INDIVIDUAL.
TOOLS OF
TRADE. An
individual is entitled to an exemption, not exceeding $3,500 in aggregate
value, of tools of his or her trade including tools, equipment,
professional books, and other implements of a trade or profession.
Therefore, if you utilize your tools, computer, etc. to perform your job
responsibilities and make a living, they are exempt.
APPLYING
THE NUMEROUS EXEMPTIONS PERMITTED UNDER UTAH LAW TO YOUR SPECIFIC ASSETS
CAN BE QUITE COMPLEX. YOUR ATTORNEY WILL ASSIST YOU IN THIS REGARD.
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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