Filing for bankruptcy can be a difficult and confusing process, especially if you’re unfamiliar with the laws in Utah. Making mistakes or wrong decisions during the filing period can cause you unnecessary stress and heartache—not to mention unintended financial consequences. That’s why Rulon T. Burton and Associates has created this guide to help you understand how to make the best choices when it comes to filing for bankruptcy in Utah.
What is Bankruptcy?
First of all, what is bankruptcy? It’s a legal process that allows individuals and businesses to manage their debts if they are unable to pay them. It is an important tool for individuals and businesses, as it can provide them with a fresh start when dealing with overwhelming financial difficulty.
Mistake #1: Not Understanding the Different Types of Bankruptcy
When it comes to filing for bankruptcy, there are several different types of bankruptcy that can be filed. It is important to be aware of the differences between each type so that you can make an informed decision when selecting the right one for your situation. The most common types of bankruptcy are Chapter 7 and Chapter 13.
Chapter 7 bankruptcy is often referred to as liquidation bankruptcy because it involves selling off some or all of your assets in order to pay back creditors. This type of bankruptcy typically takes three to four months from start to finish and allows you to keep certain exempt property such as:
- Your primary residence
- Your primary vehicle
- Basic household items
Once the petition is filed, a trustee will assess your assets and determine how much of them must be sold in order to satisfy creditors.
Chapter 13 bankruptcy is also known as reorganization or debt adjustment bankruptcy because it allows debtors to reorganize their finances and pay back some or all of their debts over time. Unlike Chapter 7, there is no liquidation involved with this type of filing; instead, debtors create a repayment plan that they must then adhere to in order for their debts to be discharged at the end of the repayment period. This kind of filing typically lasts three to five years depending on individual circumstances.
Mistake #2: Failing to Gather All Necessary Documents and Forms
Filing for bankruptcy is a complicated process and failing to gather all the necessary documents can have serious consequences. It’s essential that you understand what documents you need to file and make sure to have them ready before submitting your case to the court.
Depending on which type of bankruptcy you are filing, there are certain documents required by law. For example, if you are filing for Chapter 7 bankruptcy, some documents you will need include:
- Tax returns from the past two years
- Bank statements from the past six months
- Pay stubs for the past two months
- A list of all of your creditors and their contact information
- Proof of any insurance policies you may have
- Information about any debts you owe secured lenders (like car loans)
- Credit report
Failing to submit one or more of these documents could delay or even lead to dismissal of your case. Additionally, without having all the relevant information in hand it’s impossible to know if filing bankruptcy is even a viable option in your situation. Therefore it’s important that you take the time to research what documents are necessary for filing and make sure that they are collected before proceeding with submission.
Mistake #3: Not Consulting with a Bankruptcy Attorney
Filing for bankruptcy is a major financial decision that should not be taken lightly. If you are considering filing for bankruptcy, it is essential that you consult a qualified bankruptcy attorney to ensure that your rights are protected.
When filing for bankruptcy, an attorney can help you understand the different types of bankruptcy available, and which type would be most appropriate for your circumstances. An attorney can also evaluate any documents you will need to file in order to properly complete the process, as well as walk through the entire process with you step-by-step. They may even be able to recommend options that could reduce the amount of debt owed or create a more manageable repayment plan.
Additionally, when working with an experienced attorney they should be able to answer any questions or concerns you may have about the process. A qualified lawyer will also help you understand any potential long-term consequences associated with filing for bankruptcy and how this could affect your credit score or other financial goals in the future.
Overall, consulting with a bankruptcy attorney before deciding whether or not to file for bankruptcy is essential in order to secure the best possible outcome from the process. While there may be costs involved in hiring an experienced professional, these costs are often far less than what might occur from attempting do-it-yourself bankruptcies without legal guidance.