Before the foreclosure crisis, which peaked in 2010, federal and state laws regulating mortgage servicers and foreclosure procedures were relatively limited and tended to favor foreclosing lenders. Now, however, federal and state laws heavily regulate loan servicing and foreclosure processes. And most of the laws give protections to borrowers.
Servicers generally have to provide borrowers with loss mitigation opportunities, account for each foreclosure step, and strictly comply with foreclosure laws. Also, most people who take out a loan to buy a residential property in Utah sign a promissory note and a deed of trust, which is like a mortgage. These documents give homeowners some contractual rights in addition to federal and state legal protections.
In a Utah foreclosure, you’ll most likely get the right to:
A preforeclosure notice
Apply for loss mitigation
Receive certain foreclosure notices
Get current on the loan and stop the foreclosure sale
Receive special protections if you’re in the military
Pay off the loan to prevent a sale
File for bankruptcy, and
Get any excess money after a foreclosure sale.
So, don’t get caught off guard if you’re a Utah homeowner who’s behind in mortgage payments. Learn about each step in a Utah foreclosure, from missing your first payment to a foreclosure sale. Once you understand the process, you can make the most of your situation and, hopefully, work out a way to save your home or at least get through the process with as little anxiety as possible.
What Is Preforeclosure?
The period after you fall behind in payments, but before a foreclosure officially starts, is generally called the “preforeclosure” stage. (Sometimes, people refer to the period before a foreclosure sale actually happens as “preforeclosure,” too.) During this time, the servicer can charge you various fees, like late charges and inspection fees, and, in most cases, must inform you about ways to avoid foreclosure and send you a preforeclosure notice called a “breach letter.”
Fees the Servicer Can Charge During Preforeclosure
If you miss a payment, most loans include a grace period of ten or fifteen days, after which time the servicer will assess a late fee. Each month you miss a payment, the servicer will charge this fee. To find out the late charge amount and grace period for your loan, look at the promissory note you signed. You can also find this information on your monthly mortgage statement.
Also, most Utah deeds of trust allow the lender (or the current loan holder, referred to as the “lender” in this article) to take necessary steps to protect its interest in the property. Property inspections are performed to ensure that the home is occupied and appropriately maintained. Inspections, which are generally drive-by, are usually ordered automatically once the loan goes into default and typically cost around $10 or $15.
Other types of fees the servicer might charge include those for broker’s price opinions, which are like appraisals and property preservation costs, such as for yard maintenance or winterizing an abandoned home.
Federal Mortgage Servicing Laws and Foreclosure Protections
Under federal mortgage servicing laws, the servicer must contact, or attempt to contact, you by phone to discuss loss mitigation options, like a loan modification, forbearance, or repayment plan, no later than 36 days after you miss a payment and again within 36 days after each following delinquency. No later than 45 days after missing a payment, the servicer has to inform you in writing about loss mitigation options that might be available and appoint personnel to help you try to work out a way to avoid foreclosure. A few exceptions are in place for some of these requirements, though, like if you’ve filed bankruptcy or asked the servicer not to contact you pursuant to the Fair Debt Collection Practices Act. (12 C.F.R. § 1024.39, 12 C.F.R. § 1024.40).
Federal mortgage servicing laws also prohibit dual tracking (pursuing a foreclosure while a complete loss mitigation application is pending).
What Is a Breach Letter?
Many Utah deeds of trust have a provision that requires the lender to send a notice, commonly called a “breach letter,” informing you that the loan is in default before the lender can accelerate the loan. The breach letter gives you a chance to cure the default and avoid foreclosure.
When Can Foreclosure Start?
Under federal law, the servicer usually can’t officially begin a foreclosure until you’re more than 120 days past due on payments, subject to a few exceptions. (12 C.F.R. § 1024.41). This 120-day period provides most homeowners with ample opportunity to submit a loss mitigation application to the servicer.
What Is the Foreclosure Process in Utah?
If you default on your mortgage payments in Utah, the lender may foreclose using a judicial or non-judicial method.
How Judicial Foreclosures Work
A judicial foreclosure begins when the lender files a lawsuit asking a court for an order allowing a foreclosure sale. If you don’t respond with a written answer, the lender will automatically win the case. But if you choose to defend the foreclosure lawsuit, the court will review the evidence and determine the winner.
If the lender wins, the judge will enter a judgment and order your home sold at auction.
How Non-judicial Foreclosures Work
If the lender chooses a non-judicial foreclosure, it must complete the out-of-court procedures described in the state statutes. After completing the required steps, the lender can sell the home at a foreclosure sale. Most lenders opt to use the non-judicial process because it’s quicker and cheaper than litigating the matter in court.
Preforeclosure Requirements Under Utah Law
Much like the requirement under federal mortgage servicing laws, after determining that the loan is in default, the servicer or lender must appoint single point of contact who can provide information about the foreclosure and foreclosure relief. (Utah Code Ann. § 57-1-24.3).
Before filing a notice of default, the lender or servicer must mail a notice to you (the borrower) giving you at least 30 days to cure the default by getting current on the loan. The letter will also include the name, telephone number, email address, and mailing address of the single point of contact. (Utah Code Ann. § 57-1-24.3). This information will likely be included in the breach letter.
Notice of Default
The non-judicial foreclosure process formally begins when the trustee records a notice of default at the county recorder’s office. The notice of default gives you three months to cure the default. (Utah Code Ann. § 57-1-24).
Within ten days of the recording, the trustee mails a copy of the notice of default to anyone who has requested a copy. Most deeds of trust in Utah include a request for notice, so you’ll probably get this notification. (Utah Code Ann. § 57-1-26(2)(a)).
Notice of Sale
If you don’t cure the default, after three months, the trustee will record a notice of sale and:
Mail a copy to you at least 20 days before the sale (if your deed of trust includes a request for notice, which it probably does)
Publish notice of the sale in a newspaper, and
Post notice about the sale on the property at least 20 days before the sale. (Utah Code Ann. § 57-1-26(2)(b), § 57-1-25).
The Foreclosure Sale
At the sale, the lender usually makes a credit bid. The lender can bid up to the total amount owed, including fees and costs, or it may bid less. In some states, including Utah, when the lender is the high bidder at the sale but bids less than the total debt, it can get a deficiency judgment against the borrower, subject to some limitations. If the lender is the highest bidder, the property becomes what’s called “Real Estate Owned” (REO).
But if a bidder, say a third party, is the highest bidder and offers more than you owe, and the sale results in excess proceeds—that is, money over and above what’s needed to pay off all the liens on your property—you’re entitled to that surplus money.
How Long Do You Have to Move Out After Foreclosure in Utah?
If you don’t vacate the property following the foreclosure sale, the new owner will probably:
Offer you a cash-for-keys deal, or
Take steps to evict you.
The eviction process starts with a notice to quit. If you still don’t leave by the deadline given in the notice, the new owner will go through the court system to evict you. (Utah Code Ann. § 78B-6-802.5).
HOW CAN I STOP A FORECLOSURE IN UTAH?
A few potential ways to stop a foreclosure include reinstating the loan, redeeming the property before the sale, or filing for bankruptcy. (Of course, if you’re able to work out a loss mitigation option, like a loan modification, that will also stop a foreclosure.)
Reinstating the Loan
Utah law gives you three months after the trustee records the notice of default to reinstate the loan. (Utah Code Ann. § 57-1-31). Also, the deed of trust might give you more time to reinstate. Check the paperwork you signed when you took out the loan to find out if you get more time to get caught up on past-due amounts and, if so, the deadline to reinstate. You can also call your loan servicer and ask if the lender will let you reinstate.
Redeeming the Property before the Sale
One way to stop a foreclosure is by “redeeming” the property. To redeem, you have to pay off the full amount of the loan before the foreclosure sale.
Some states also provide foreclosed borrowers with a redemption period after the foreclosure sale, during which they can buy back the home. Under Utah law, however, foreclosed homeowners don’t get a right of redemption after a non-judicial foreclosure. (Utah Code Ann. § 57-1-28(3)).
Filing for Bankruptcy
If you’re facing a foreclosure, filing for bankruptcy might help. In fact, if a foreclosure sale is scheduled to occur in the next day or so, the best way to stop the sale immediately is by filing for bankruptcy. Once you file for bankruptcy, something called an “automatic stay” goes into effect. The stay functions as an injunction, which prohibits the lender from foreclosing on your home or otherwise trying to collect its debt, at least temporarily.
If a lender is preparing to foreclose on your home, they will first present you with an NOD, or Notice of Default. They also have to schedule a time for auction for your home. During this in-between period before the auction takes place, know that lenders will almost always work out a financial compromise that will allow you to get back on your mortgage program without foreclosure. Any final compromises you might be able to make should be suggested at that time.
Short Sale
If you receive an offer from a buyer between receiving your NOD and the auction date, the lender must consider it. They may view this option as a time-saver that nets them virtually the same result – after all, they’d already be turning around to re-sell the home anyway. This is called a short sale, and there are plenty of situations where it can work as an acceptable compromise for both sides.
Assumption/Lease-Option
Most loans these days are not assumable, but if you are facing foreclosure, there’s a chance your lender could be willing to modify your loan. They might be willing to allow another buyer to assume your loan if this means less hassle for them – if you can negotiate a down payment from the new buyer that pays off your outstanding balance plus assumes the loan at no additional risk to the lender, everyone wins.
Foreclosure Protections and Military Service members
The Service members Civil Relief Act provides legal protections to military personnel who are in danger of foreclosure.
Utah Deficiency Judgment Laws
In a foreclosure, the borrower’s total mortgage debt sometimes exceeds the foreclosure sale price. The difference between the total debt and the sale price is called a “deficiency.” For example, say the total debt owed is $600,000, but the home sells for $550,000 at the foreclosure sale. The deficiency is $50,000. In some states, the lender can seek a personal judgment against the debtor to recover the deficiency. Generally, once the lender gets a deficiency judgment, the lender may collect this amount—in our example, $50,000—from the borrower.
In Utah, the lender can get a deficiency judgment after a non-judicial foreclosure by filing a lawsuit within three months of the sale. (Utah Code Ann. § 57-1-32). The deficiency amount is limited to the difference between the lesser of :
Your total debt and the property’s fair market value or
Your total debt and the foreclosure sale price. (Utah Code Ann. § 57-1-32).
How to Find State Foreclosure Laws
To find Utah’s laws, search online for “Utah statutes” or “Utah laws.” Make sure you’re reading the most recent, official laws. Usually, the URL will end in “.gov” or the statutes will be on an official state legislature webpage.
Although the programs under the Making Home Affordable (MHA) initiative have expired, the MHA website still contains useful information for homeowners facing foreclosure.
Getting Help
How courts and agencies interpret and apply laws can change. And some rules can even vary within a state. These are just some of the reasons to consider consulting a lawyer if you’re facing a foreclosure. If you have questions about Utah’s foreclosure process or want to learn about potential defenses to a foreclosure and possibly fight the foreclosure in court, consider talking to a foreclosure attorney.
For people struggling with mortgage payments and at risk of default and foreclosure on a home, declaring bankruptcy can be a viable option in some cases. Bankruptcy attorneys can walk you through when declaring and might help save your home and preserve your equity.
Free Initial Consultation with Lawyer
It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
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Telephone: (801) 676-5506
Bankruptcy is a legal way to get rid of most of your current debt, stop harassment from creditors, and start fresh. It is a federal court process by which you can discharge some of your debt because you are unable to repay those debts. There are usually two ways bankruptcy is declared:
You file for bankruptcy
Your creditors ask the court to declare you bankrupt
Bankruptcy usually takes two forms: Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
Chapter 7 Bankruptcy, otherwise known as “straight bankruptcy” or “liquidation,” allows the debtor to sell their non-exempt assets to pay off their debts; after that, the debtor will be free from all dischargeable debts.
There are specific eligibility requirements that you must meet to qualify for Chapter 7 bankruptcy. Some of the scenarios where you wouldn’t be eligible for Chapter 7 include when:
Your income is too high (this is determined using the “means test”): In such cases, your case may be filed under chapter 13 bankruptcy
You have the ability to repay your debt
You dismissed a bankruptcy case within the past 180 days
You previously filed for bankruptcy and the time frame to file another bankruptcy case has not passed
You attempted to defraud creditors
Under Chapters 7, 11, 12, and 13 of the U.S. Bankruptcy Code, some or all of your existing debt can be discharged. A “discharge” means you are not personally liable for the money and do not need to pay it back. The creditor you owe, such as a hospital or credit card company, cannot call you or take collection actions against you once the debt is permanently discharged.
Chapter 7 bankruptcy often involves the liquidation (or selling off) of assets in order to pay past debts. Only after this process is completed can you have qualifying debts discharged. Some property is protected from liquidation by federal or state bankruptcy exemptions. In fact, many people who file for Chapter 7 can keep a majority of their property. It will be up to your attorney and bankruptcy trustee to decide what you can keep, what deals you can make with the creditor, and what you need to give up in your bankruptcy case.
Once assets are liquidated, the courts tend to discharge debts right away. In the whole Chapter 7 bankruptcy process, this happens about four months after you first file in bankruptcy court. Keep in mind you need to complete educational classes on debt management in between filing and receiving the discharge, or the judge may dent your debt discharge.
What Happens After a Chapter 7 Bankruptcy?
Those who pursue a Chapter 7 bankruptcy should be aware of some potential problems or concerns. Many forms of debt cannot be discharged under Chapter 7 bankruptcy, including:
Government-funded student loans
Some forms of tax debt
Federal tax liens
Child support
Alimony or spousal support
Debts for personal injury or death arising from a motor vehicle accident
Fines and penalties for violating the law
Certain tax-advantaged retirement plans
Cooperative housing fees
Potential applicants for Chapter 7 bankruptcy should be aware that even private student loans are rarely discharged without a special showing of undue hardship. This can be hard to prove but can happen if you become permanently disabled and cannot work.
Property That Can Be Taken Before a Discharge
Bankruptcy is intended to help you get relief from the burden of debt, so removing all of your property would be counterproductive, as you would need to rebuy a car or other items.
Property that is considered necessary for modern life may be exempt from creditors taking it back. But, you may need to petition a judge to stop them.
Some examples of the property a creditor might try to take back include:
Motor vehicles or a second vehicle
A second home or vacation home
Expensive clothing
Household furniture
Jewelry
Tools used in your work
Musical instruments (unless you can prove you are a professional musician)
Cash, bank accounts, stocks, bonds, and other investments
Pensions
A portion of the equity in your home
A portion of earned but unpaid wages
Public benefits that have accumulated in a bank account
Damages awarded for personal injury
Family heirlooms
While this list looks scary, it is important to remember that creditors can try to take these items, but they generally will not succeed. Much of this property is protected by Utah’s exemptions or wildcard exemptions, as it is essential for work or daily life.
A creditor will receive a notice saying your debts have been discharged. They can try reaffirming these items or sue you for debt if they do not agree with the discharge.
Once the discharge of debt is in place, things are considered final. A creditor cannot sue you, try to take your property, or harass you.
You also need to show you comply with the eligibility requirements before you can file Chapter 13. These include:
You are not a business organization
You took credit counseling
You have not dismissed a Chapter 13 case within the past 180 days
You have not filed for a Chapter 13 within the past two years
Use Reaffirmation to Stop Creditors Taking Your Property
Some creditors can keep their rights over your property even following a discharge. One way this can happen is through what is called a “lien.” A creditor can use a lien to enforce payment or take back the property.
For example, let’s say you keep certain secured property, such as your car. Your creditor may seek to reaffirm the debt with a lien. This “reaffirmation” takes place if you and the creditor agree:
You will remain liable for this debt
You will pay back some or all of a debt
You pay even though the debt would be discharged in bankruptcy
The creditor will not repossess the property as long as you continue to pay the debt
Reaffirmation must occur before the order of discharged debt is entered. If you want to keep a car or other property, you need to discuss this with the creditor early on. Your attorney can handle this for you and try to negotiate a fair payment schedule.
Solving Bankruptcy Problems
Following a bankruptcy, you may need to correct any inaccurate reports from former creditors. To do this, you will need to engage in a process with the credit bureau.
This can entail contacting former creditors for verification of the satisfaction of debts. Even when these issues are resolved, those who have completed a bankruptcy can still expect to:
Pay higher credit rates
Have higher down payments
Need to produce a co-signer when attempting to secure new credit
These complications are not the end of the world. They may require using a mortgage broker when seeking to purchase a house.
Even though it may be counterintuitive, there are benefits to bankruptcy when you have debts that you can’t pay. You will get a clean slate, and most negative outcomes will fade from your record within a few years. But whether or not you should file for bankruptcy is heavily dependent on an individual’s specific circumstances.
For this reason, it can be very beneficial to speak with a bankruptcy attorney in Utah who can explain the benefits and downsides to filing for bankruptcy in your particular situation.
Consult with a bankruptcy attorney or educate yourself on your options — you may find that filing for bankruptcy could help you out of a difficult financial bind.
Most filers find that bankruptcy eases stress by stopping:
Collections agency calls or harassment
Debt lawsuits from creditors
Wage garnishment (creditors taking money from your paycheck)
Foreclosure (unless the property has already sold)
Repossession of some property (in Chapter 13)
Bankruptcy will also:
Get rid of many debts (in Chapter 7)
Protect some property from being sold (depending on exemptions in your state)
Put an end to growing debt and give you a fresh start to turn things around
Is Bankruptcy a Good Idea for You?
The decision to file for bankruptcy is a serious one. There are several considerations worth examining closely before getting started:
The impact on your future ability to access credit, lenders, or low interest rates
The impact on your credit report
Whether you could lose assets (if you file for Chapter 7)
The differences in the time and expense associated with each form of bankruptcy
Whether you are eligible for certain forms of bankruptcy
Whether you can retain specific valuable assets from repossessions (many states have exemptions)
Considering other impacts can be critical in deciding whether to file for bankruptcy or which form is a better option. Some bankruptcies may:
Fail to discharge credit card debts
Impact your pension plans or other assets
Create financial issues for co-signers
Stop foreclosure
Feel like a significant invasion of your personal privacy with the bankruptcy court and working with your bankruptcy trustee
Any of these concerns may impact the desirability of the relief provided. However, none of these reasons are worse than staying in overwhelming debt or making your financial situation worse. Sometimes, you simply need debt help and cannot get there alone. Bankruptcy will give you a fresh start, and you can work towards the financial situation you want.
Despite what many think, filing for bankruptcy is not the end of the world. It can actually be the fresh start you have been looking for. The laws of bankruptcy were drafted with the purpose of giving people a second chance, and not to punish them.
But that doesn’t mean you should file for bankruptcy at the first sign of financial distress. Declaring bankruptcy will have short- and long-term consequences and should only be done as a last resort. So, when should you file for bankruptcy?
Before You File, Evaluate Your Situation
When should I file for bankruptcy? This is a question most people under financial distress ask. You should probably consider other options before going this route. These options include:
Getting credit counseling
Trying to negotiate your debt or make a payment plan with your creditor
Sticking to a budget
If, however, other options don’t seem feasible, filing for bankruptcy may give you the ability to get a fresh start.
Declaring Bankruptcy Will Affect Your Credit Score
In exchange for discharging your debt, filing bankruptcy shows everyone that you may be a credit risk, which will be reflected in your credit score. Thus, getting a loan, a mortgage, or a credit card may be very difficult after declaring bankruptcy.
You should note bankruptcy filed under Chapter 7 will remain on your record for 10 years. If you filed under Chapter 13, it would stay on your credit report for 7 years. After that, it is erased.
Your Co-Signers May Be Required to Pay Your Debts
Co-signers are people who agree to pay your debt if you are somehow unable/unwilling to pay the debt. If you file a Chapter 7 bankruptcy, your creditors are allowed to go after the co-signer even if your bankruptcy case is successful.
Under Chapter 13, your creditors can’t go after your co-signer as long as you make your regular payments per your agreement.
Filing for Bankruptcy during a Pandemic
Filing for bankruptcy during a pandemic or other national emergency may be challenging, as operational hours for courts may change. So, first, make sure your local bankruptcy court is open and taking cases before you file. You should also expect a delay in the processing of your case.
The Federal Government May Intervene
Under rare situations, the federal government may pass laws that could affect your bankruptcy case during a pandemic. For instance, the federal government passed a stimulus bill in response to the COVID-19 pandemic.
Under this stimulus bill, several temporary changes were made to the bankruptcy code. Some of these changes include:
Previously, the debt limit to be eligible to file for bankruptcy under the Small Business Reorganization Act (SBRA) was $2,725,625. Under this stimulus bill, the debt limit was increased to $7.5 million for a period of one year.
The bill also changed the definition of “income” for Chapter 7 and 13 bankruptcy filers. Accordingly, payments received from the federal government that are related to COVID-19 are not considered income for purposes of bankruptcy.
People with federal student loans can, without penalty, defer their payments for six months through September 30, 2020.
People who already filed a Chapter 13 and are under a repayment plan can make modifications if they can show “material financial hardship” because of the pandemic. The modifications include an extension of payments for seven years.
If your debts have become unmanageable or you’re facing foreclosure on your home, you might be thinking about declaring bankruptcy. While bankruptcy may be the only way out for some people, it also has serious consequences that are worth considering before you make any decisions. For example, bankruptcy will remain on your credit report for either seven or 10 years, depending on the type of bankruptcy. That can make it difficult to obtain a credit card, car loan, or mortgage in the future. It could also mean higher insurance rates and even affect your ability to get a job or rent an apartment.
The following are interesting things to know about filing bankruptcy. The decision to file bankruptcy can be tough so here are things you need to consider or know about before you make that decision:
• Deadlines: Deadlines are critical in bankruptcy court. The rules in bankruptcy are very complex, can be technical, and all case deadlines must be met. Failing to file the appropriate forms or documentation on time may result in your case being dismissed or delayed.
• You need to qualify to file for bankruptcy: Many people who would have qualified for a Chapter 7 discharge before the 2005 changes must now use Chapter 13 instead, which involve repayment of some of your debts. This is determined using the Means Test.
• Repayment Plans: In a Chapter 13 bankruptcy case a repayment plan that must be filed with the court. The court has a process that will determine exactly what income and expenses you have, and then calculate the reasonable expenses and monthly repayment amount for your case. In Utah this plan must be submitted to the court and confirmed.
• DIY Bankruptcy: Representing yourself in bankruptcy can be a huge mistake. The laws and the corresponding rules in bankruptcy can be very confusing, and many common errors could cost you a chance at a new financial start. An experienced attorney can help you determine the right laws to help you, represent you at the hearings and the meetings with creditors, and get most of the time save you money in the end.
• Focused Court: The Bankruptcy Court is a federal court which exclusively deals with bankruptcy cases. These courts are located around the United States, and they only handle bankruptcy cases and matters related to this legal area. You reside in an area that is served by a bankruptcy court.
• You get your own Trustee: The Department of Justice and the Bankruptcy Court in Utah will appoint a trustee in your case. This trustee will be responsible for overseeing your specific case and ensuring that all of the documentation is filed. The trustee is not in favor of either the consumer or creditors, but is an officer of the court instead.
• Get the best attorney: Choosing the right attorney that you can afford to represent you in bankruptcy court is very important and can affect the outcome of your case. You want a lawyer who will aggressively defend you and work hard to overcome any objections that may be presented by your creditors or the trustee. Experience is also very important, so you want an attorney who is very knowledgeable in bankruptcy law and that has been in the game for a long time.
• Your goal is a discharge: Another interesting things to know about filing bankruptcy is that a bankruptcy discharge is an order issued by the bankruptcy court stating which of your debts are forgiven. Usually this will include most unsecured debts that have not been repaid are eliminated in the process unless you have reaffirmed your obligation.
Utah Chapter 7 Bankruptcy or Utah Chapter 13 Bankruptcy
There are several situations where a Chapter 13 is preferable to a Chapter 7. A Chapter 13 bankruptcy is the only choice if you are behind on your mortgage or business payments and you want to keep your property, either in Utah or another state, at the end of the bankruptcy process. A chapter 13 bankruptcy allows you to make up their overdue payments over time and to reinstate the original mortgage agreement. In general, if you have valuable property not covered by your Utah bankruptcy exemptions that you want to keep, a chapter 13 filing may be a better option. Also, people file Chapter 13 bankruptcy because they have too much income to file a Chapter 7 bankruptcy or have the kind of debt that is non- dischargeable in a Chapter 7 (e.g. certain taxes). However, for the vast majority of Utah residents who simply want to eliminate their heavy debt burden without paying any of it back, Chapter 7 provides the most attractive choice.
Advantages to a Utah Chapter 7 filing:
• You receive a complete fresh start. After the bankruptcy is discharged the only debts you owe will be for secured assets on which you choose to sign a “Reaffirmation Agreement.”
• You have immediate protection against creditor’s collection efforts and wage garnishment on the date of filing.
• Wages you earn and property you acquire (except for inheritances) after the bankruptcy filing date are yours, not the creditors or bankruptcy court.
• There is no minimum amount of debt required.
• Your case is often over and completely discharged in about 3-6 months.
Disadvantages to a Utah Chapter 7 filing
• You lose your non-exempt property which is sold by the trustee. If you want to keep a secured asset, such as a car or home, and it is not completely covered by your Utah bankruptcy exemptions then Chapter 7 is not an option.
• If facing foreclosure on your home, the automatic stay created by your Chapter 7 filing only serves as a temporary defense against foreclosure.
• Co-signors of a loan can be stuck with your debt unless they also file for bankruptcy protection.
• If you filed a prior case and received a discharge of your debts, you can only file a second Chapter 7 bankruptcy case eight years after you filed the first case.
Advantages to a Utah Chapter 13 payment plan:
• If you choose and you can afford the payment plan, you can keep all your property, exempt and non-exempt.
• While debts are not canceled as in a Chapter 7 discharge they can be reduced under a Chapter 13 payment plan.
• You have immediate protection against creditor’s collection efforts and wage garnishment.
• More debts are considered to be dischargeable (including debt you incurred on the basis of fraud and credit card charges for luxury items immediately prior to filing).
• If the Chapter 13 plan provides for full payment, any co-signers are immune from the creditor’s efforts.
• You have protection against foreclosure on your home by your lender as long as you meet the terms of the plan.
• You have more time to pay debts that can’t be discharged by either chapter (like taxes or back child support).
• You can file a Chapter 13 at any time.
• You can file repeatedly.
• You can separate your creditors by class where different classes of creditors receive different percentages of payment. This enables you to treat debts where there is a co-debtor involved on a different basis than debts incurred on your own.
Disadvantages to a Utah Chapter 13 payment plan:
• You create a payment plan where you use your post bankruptcy income. This ties up your cash over the Chapter 13 plan period.
• Legal fees are higher since a Chapter 13 filing is more complex.
• Your plan and therefore your debt will last for 3 to five years.
• You are involved in the bankruptcy court process for the term of the 3-5 year plan.
• Stockbrokers and commodity brokers cannot file a Chapter 13 bankruptcy petition.
Filing for Bankruptcy without an Attorney
You are not required to have an attorney to file for bankruptcy. In some simple Chapter 7 cases, you can file on your own (it’s called filing “pro se,” meaning that you represent yourself) if you are willing to put in some time and research. However, in many cases, it’s a good idea to have a bankruptcy attorney. The importance of an attorney depends on the complexity of your case and whether you are filing a Chapter 7 or Chapter 13 bankruptcy.
When Is it Feasible to File Without an Attorney?
What Is a Priority Debt?
Bankruptcy is an excellent tool that helps many people overwhelmed with debt get back on their feet. But it might not discharge (get rid of) everything that you owe. Priority debts get paid first if money is available to pay creditors. More importantly, they’re non-dischargeable—they don’t go away in bankruptcy.
Debts that you’ll remain responsible for include (many, but not all of these debts are priority in nature):
• child support, spousal support, or another domestic support obligation
• fines, penalties, and restitution imposed as punishment for violating the law
• some taxes
• intoxicated driving debts
• homeowners’ association dues assessed after filing for bankruptcy
• retirement plan loans
• money borrowed to pay off non-dischargeable tax debt (for instance, the credit card debt incurred after using your account to pay a tax bill), and
• debts determined non-dischargeable in a previous bankruptcy.
A student loan won’t get wiped out either unless you can prove to the court that it would be a hardship to make you pay it. Most people are unable to meet the standard, however. It can be costly to file and litigate the lawsuit necessary to prove the case, as well. Additionally, any creditor can file a non-dischargeability complaint asking the court to determine that a debt shouldn’t be discharged in your case. To win, the creditor will need to prove that one of a variety of situations exists.
• You committed fraud (for instance, you wrote a bad check or lied about your income on a credit application).
• You charged a luxury item less than 90 days before you filed for bankruptcy.
• You intentionally harmed someone or damaged their property.
• You embezzled funds or stole money.
• You failed to list all creditors in your bankruptcy petition.
If you suspect that you might have non-dischargeable debts, or that a creditor might file a lawsuit against you, it’s probably not a good idea to represent yourself. Instead, consider speaking with a bankruptcy attorney. The lawyer can consult with you about the status of your debt and whether proceeding forward is in your best interests. However, keep in mind that even the simplest Chapter 7 requires you to fill out extensive paperwork, gather financial documentation, research bankruptcy and exemption laws, and follow the local rules and procedures.
When Is it a Bad Idea to File Bankruptcy Without an Attorney?
There are many reasons to file a Chapter 13 bankruptcy instead of a Chapter 7 bankruptcy. You may want to file a Chapter 13 bankruptcy because you wish to catch up on mortgage arrears, get rid of your second mortgage, cram down (reduce) your car loans, or pay back non-dischargeable priority debts, such as back taxes or support arrears. Or maybe you make too much money to qualify for a Chapter 7 bankruptcy. No matter what your reason is, most Chapter 13 cases are too difficult to file on your own. Chapter 13 bankruptcies are a lot more complicated than Chapter 7s. In addition to filling out the official bankruptcy forms (and perhaps some local forms), you must also design a proposed repayment plan, something that is very difficult to do without the expensive software that most attorneys use. Also, certain actions such as stripping your second mortgage or cramming down a car loan will usually require filing additional bankruptcy motions and paperwork with the court. As a result, even some attorneys will limit their bankruptcy practice to Chapter 7 cases because they feel they are not qualified to handle a Chapter 13. In fact, an overwhelming majority of Chapter 13 cases filed without an attorney get dismissed by the court. So if you are planning to file a Chapter 13, it is a good idea to hire a qualified attorney.
If You Have a Complicated Chapter 7 Case
Certain Chapter 7 cases are more complicated than others. Your Chapter 7 will usually be more complex if you own a business, have income above the median level of your state, have a significant amount of assets, or have creditors who can make claims against you based on fraud. If any of the above applies to you, you risk having your case dismissed, your assets being taken and sold, or facing a lawsuit in your bankruptcy to determine that certain debts should not be discharged. In that case, it is advisable to hire an attorney to handle your bankruptcy.
If You Are Not Comfortable Doing it on Your Own
If you have a simple Chapter 7 case, bankruptcy can be an intimidating and time-consuming process. You will need to accurately fill out many forms, research the law, and attend hearings. If you are not comfortable with any aspect of the bankruptcy process, you should consider hiring an attorney who will prepare the forms, attend the hearings with you, and guide you through the process.
Filing for Bankruptcy in Utah
Are you a resident of Utah and thinking of filing for Chapter 7 or Chapter 13 bankruptcy? If so, you will have to participate in credit counseling before you file, complete the bankruptcy petition and other required forms, and file those forms in the Utah bankruptcy court. After filing, you must complete debtor counseling before receiving your discharge. Although most of the bankruptcy process is governed by federal law, there is some Utah-specific information you will need to know before filing.
Pre-Bankruptcy Credit Counseling and Pre-Discharge Debtor Education in Utah
In order to qualify for Chapter 7 or Chapter 13 bankruptcy, you must show that you received credit counseling from an agency approved by the U.S. Trustee in Utah within the six month period before you file for bankruptcy. You’ll also have to take a debtor education course before you get a bankruptcy discharge.
Utah Bankruptcy Exemptions
Utah has a set of bankruptcy exemptions which help determine what property you get to keep in Chapter 7 bankruptcy and play a role in how much you repay unsecured creditors in Chapter 13 bankruptcy. Some states allow debtors to choose between the state exemption system and a set of federal bankruptcy exemptions but Utah is not one of them. In Utah, you must use the state exemptions–the federal bankruptcy exemptions aren’t available.
Completing the Bankruptcy Forms in Utah
When you file for Chapter 7 or Chapter 13 bankruptcy, you must complete a bankruptcy petition, a number of schedules containing detailed information about your finances, and several other forms, including a lengthy form known as the “means test” (for Chapter 7) and a similar form for Chapter 13.
Finding Means Test Information for Utah
When you file for bankruptcy in Utah, you must compare your income to the median income for a household of your size in Utah. If your income is less than the median, you will be eligible to file for Chapter 7 and, if you choose to file for Chapter 13, you can use a three-year repayment plan (rather than five years). This is called the means test. If your income is above Utah’s median income, you still might qualify for Chapter 7, but you’ll have to provide detailed information about your expenses and payments on secured debts in order to find out. Most Chapter 13 filers also have to provide this information.
Speak to an Attorney Before You File for Bankruptcy
If you are considering filing for bankruptcy, it is very important you have all the information you need, especially since bankruptcy laws tend to be detailed and complicated. Speaking to a bankruptcy attorney in Utah is the best way to ensure your rights are protected.
Free Initial Consultation with Lawyer
It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
How Do I Collect Child Support From An Out Of State Non-Custodial Parent?
If a non-custodial parent moves out of state, or already lives out of state, rest assured you can still get the child support your children need. Having one parent live in a different state can make the process trickier, but there are ways to find your ex and make sure they pay child support. Family court orders are enforceable across state borders, so it does not matter where a parent lives. Child support services can help you, and family court judges can hold your ex in contempt of court or enforce any existing child support order. If there is not already a court order in place, then you need to file with the state you live in now before seeking child support from someone out of state.
First Steps To Enforcing Child Support Payments
No matter where the custodial parent lives, they have many options for going about this process. This can be an easy process or a difficult one, depending on whether your ex is cooperating or trying to hide.
Your first steps may include:
• Finding out the other parent’s current address from relatives or friends
• Hiring a private investigator
• Using locator resources from your local child support office
These would all be viable options if your ex did not tell you where they were moving. Under the Uniform Interstate Family Support Act (UIFSA), sometimes called “Interstate Action,” states must help you find your ex for missing child support. This act also prevents multiple states from ordering child support and helps you find the other parent if they move away.
Child Support State Services: The Basics
You can choose to work with your local Child Support Enforcement Agency (CSEA) or directly with your state. Generally, you should pick one of these options and not both, so there are not duplicate cases in progress. In some states, you may need to start the process with your CSEA, and they will refer it to the state.
It is essential to know that the state you live in is the “initiating state,” and they will contact the “responding state” as the case progresses. You do not need to contact the state your ex moved to — only the state or CSEA office in the state you live in.
Using Parent Locator Services
Every state has a parent locator services. The local child support offices have access to resources such as:
• Federal new hire data
• State new hire data
• Driver’s license change of address information
• Unemployment insurance information
• Worker’s compensation filing
• Criminal and civil court records
• Credit bureau data
• Bureau of Motor Vehicles or DMV information
• Public assistance applications (such as applying for food stamps)
Essentially, if your ex tries to work, get a place to live, use a credit card, or apply for government assistance, agencies can find them. Once the other parent’s address is found, the courts have a way to contact them, and the enforcement of child support can begin.
Using Your Ex’s New Job for Child Support Payments
An easy way to enforce child support orders when the other parent is out of state is to garnish wages. You can have the courts send a garnishment order directly to the other parent’s employer, and the child support will come straight out of their paycheck.
Under federal law, all employers must honor child support garnishment orders from other states. Your ex’s employer can’t refuse to garnish an employee’s wages for child support just because the garnishment order comes from another state.
Uniform Interstate Family Support Act (UIFSA)
Every state has passed some version of the UIFSA. This law is designed specifically to enforce child support orders from one state against a parent who lives in another state. Filing a claim under UIFSA usually involves hiring an attorney or working with your local child support office. It enables you to contact relevant people in the other parent’s state to enforce your child support order, such as:
• The state’s local courts
• Child support agencies
• The other parent’s attorney
The courts and authorities in the other state must enforce your child support order — just as if it was created in that state. This can take time, so it is helpful to start the process right away. It can take months or over a year to get child support cases to court when legal action is needed.
Pressing Charges for Unpaid Child Support
Many states also have criminal laws that address unpaid child support orders. If a parent refuses to pay child support as ordered, you can take action. However, if they cannot pay because of financial issues, there are other paths to take that do not involve criminal charges. You or an attorney can contact your local prosecutor’s or district attorney’s office. They can file criminal “nonsupport” charges against the other parent, even if they live in another state.
Extraditing a Parent Back to Your State
In some cases, your state can “extradite” or bring the other parent back to your state, but only if they are charged with a child support crime.
The felony nonsupport charges vary state by state, and can result in:
• Arrest
• Jail or prison time
• Home detention or house arrest
• Probation
The process will involve steps to find the parent and use strategies to get your children’s support money. Rest assured that crossing state lines will not stop your ex from paying the child support your family needs.
Understanding Child Custody Laws in Utah
Some parents who file for divorce may seek full custody of their children. While Utah laws do not recognize or use the term “full custody,” parents can file a petition for “sole legal/physical custody.” Here’s what you need to know about gaining sole legal/physical custody of your children in Utah.
What is Sole Legal & Sole Physical Custody?
Sole legal custody means the custodial parent is the primary decision-maker regarding the well-being of the child. With sole physical custody, the minor children will live with the custodial parent more than 255 overnights each year. The non-custodial parent will be permitted to spend time with minor children as per an agreement between both parents. In the case where parents disagree on a parent-time schedule, one will be ordered by the court.
This is generally the arrangement parents strive for when they seek “full custody.” There are many types of child custody arrangements, and there several factors that the courts will examine when making a custody decision.
• The moral and financial conduct of each parent
• The child’s relationship with each parent
• Each parent’s capability and desire to care for the children
• Each parent’s willingness to allow continuous and frequent contact with the children
• The children’s relationship with extended family members and the significant impact on their best interests.
In child custody cases, the courts will also consider any evidence of domestic violence, neglect, and physical, sexual, or emotional abuse that involves the child, parent, or other household members of the parent.
Filing for Sole Legal Custody
First, every child custody case must start with a court-filed petition and state your case as to why you should be granted sole legal custody. Filing for custody is complex, and the laws can be challenging to understand without legal assistance. Having an experienced lawyer on your side can help you make the right decisions regarding your children’s best interests.
Utah Child Custody Laws
There are more children of separated or divorced parents in the United States today than ever before. With all of the emotion involved in a separation or divorce, parents sometimes fail to consider their children’s desires when making custody decisions. However, under Utah custody laws judges often consider an older child’s preference when determining custody.
Physical and Legal Custody in Utah
Parents can work out their own custody arrangements or go to Utah family court and have a judge decide their case. In either situation, a custody order must address both physical and legal custody and meets a child’s needs.
Your custody order will dictate how much time each parent spends with the child. Parents with joint physical custody will spend substantial, but not necessarily equal amounts of time with the child. The parent who spends the most time with the child is typically designated as the “custodial parent”. The other parent is called the “noncustodial parent.”
“Legal custody” refers to a parent’s right to make major educational, medical, religious, legal, or cultural decisions on the child’s behalf. Like physical custody, parents can share legal custody or one parent may have sole decision-making power over the child. In situations where parents share legal custody, the custodial parent will still have the final say on decisions where the parents can’t agree.
Establishing Visitation Schedules
Under Utah custody laws, your custody order must set forth a visitation schedule covering weekly, monthly, holiday, and summer visits. Both parents are entitled to regular time with their child and neither parent can prevent visits. Even in cases where a parent has struggled with substance abuse or physical violence, a judge may award that parent visitation – usually supervised.
A noncustodial parent without joint custody is entitled to minimum visitation under Utah’s custody laws. Generally, this equates to one weeknight per week with the child and overnight visits every other weekend. A judge can award a parent additional visitation time, but not less. The Utah Courts website provides more information on child custody and parent-time in Utah.
In limited circumstances where a child’s safety and well-being at issue, a judge may grant one parent only supervised visits. Supervised visits take place at a designated location or agency. A parent will be required to have his or her visits supervised until a judge can be sure a child is safe in that parent’s care.
In situations where parents share legal custody, the custodial parent will still have the final say on decisions where the parents can’t agree.
Best Interests of the Child Factors in Utah
Utah courts decide child custody whenever parents can’t come to an agreement on their own. Yet even in cases where parents agree on custody and visitation, a judge will review a custody agreement to ensure it serves a child’s best interests. Utah family courts must consider several factors when deciding child custody in Utah, including:
• the child’s physical and emotional needs
• the child’s relationship with each parent
• the distance between the parents’ residences
• each parent’s physical and mental health
• the child’s ties to the community, sibling relationships, and relationships with extended family members
• each parent’s willingness to encourage a relationship between the child and the other parent
• either parent’s history of domestic violence
• the child’s preference if of a sufficient age and maturity, and
• any other factor the court deems relevant to custody.
When Will the Utah Family Court Consider a Child’s Preference?
A child’s preference is one of several factors a judge will weigh in a Utah custody case. The child’s age and maturity matters. Specifically, a judge will give more weight to an older child’s preference, such as a child over 14. Generally, a judge won’t give much consideration to a child’s wishes if the child is under 10. In one Utah family court case, an 11-year old boy stated a preference to live with his father, but the judge said that an 11-year old shouldn’t have control over where he lives.
Judges will also look at the reasons a child prefers to live with one parent over the other. In one case, a father with custody of two boys moved them from their hometown and away from their school, friends, and other family members. The children wanted to live with their mother to be close to friends and family, and to continue going to the school they knew. The court found that these were valid reasons to want to live with their mother and gave the children’s preferences significant weight in the custody decision.
On the other hand, if a child’s reasons for wanting to live one parent are immature, for example, because one parent is laxer with discipline or gives them lavish gifts, the judge won’t give the child’s preference much weight.
Keep in mind that even if a child has a strong custodial preference, it won’t be the controlling factor in a court’s decision. A judge can always overrule a child’s preference if it’s in the child’s best interest to live with the non-preferred parent.
Judges will also watch to see if parents have coached their children. In one case, a judge questioned the children and discovered that their mother had told them to lie about her boyfriend’s overnight visits in their home. The mother’s coaching was a major factor in the judge’s decision to transfer custody to the father.
Do Children Have to Testify About Their Custodial Preferences in Court?
In Utah, children can’t testify in court unless there are extenuating circumstances, and there’s no other way to obtain their testimony. Instead, judges usually interview children in court chambers to determine their custodial preferences. Normally, the court will ask the parents for permission to interview a child, but parental consent isn’t necessary if the judge decides that an interview is the only way to figure out the child’s custodial desires. Parents can’t attend the in-chambers interview. The judge may or may not allow the parent’s attorneys to be present. Often, a court reporter will record the interview.
Courts can determine a child’s preference in other ways as well. In one case, the judge deciding custody considered letters written by two boys to their mom, stating that they wanted to live with her. Courts may also allow custody evaluators or mental health professionals to testify about what children have told them regarding their custodial preferences.
When Can I Modify Child Custody in Utah?
Life is full of changes, and after a few years your custody order may need an adjustment. Utah custody laws allow either parent to file a custody modification request if there’s been a material change in circumstances affecting the child or parents or more than 3 years have passed since entry of the previous custody order. In either situation, the parent requesting a custody change must show that the modification would serve the child’s best interests.
When considering whether a modification is appropriate, a judge will consider the same best interests’ factors as listed above. A judge will hold a court hearing to consider all the evidence. A child’s needs—not a parent’s wishes—will determine the outcome of your case. For example, a parent’s desire to relocate for a new job might not be enough to justify a change in custody. However, a custodial parents’ medical crisis might warrant switching custody to the other parent. The interplay of numerous factors will determine the outcome of your custody case. If you still have questions after reading this article, you should seek out a local family law attorney for advice.
Free Initial Consultation with Lawyer
It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
Ascent Law LLC 8833 S. Redwood Road, Suite C West Jordan, Utah 84088United States
Telephone: (801) 676-5506
