Thinking About Filing Bankruptcy? 

Welcome to the web site of Southern Utah's established bankruptcy lawyer with over 15 years of experience. Dan Robison represents clients from the five county region of Southern Utah, including Washington, Iron, Kane, Beaver and Garfield Counties.  With the recent shift in the real estate and mortgage industries which has hit Southern Utah, more people are feeling smothered by mortgage obligations and ever increasing credit card payments. This has greatly contributed to Southern Utah having one of the highest foreclosure rates in the country.

The decision to file for Bankruptcy is a difficult one, which some individuals fear as the worst case scenario. However, in many instances it may be your best option. For example, filing for Bankruptcy can stop a foreclosure, repossession, or garnishment, allowing you some precious time to deal with your financial troubles. You may also be able to eliminate many types of your debt (in a Chapter 7) or develop a payment schedule (in a Chapter 13) to ease your financial burden.

In addition, we may be able to negotiate loan modifications with mortgage lenders in conjunction with both Chapter 7 and 13 Bankruptcies. This is a recent development with many lenders. Further, we may be able to completely remove a second mortgage as part of a Chapter 13 Bankruptcy.

Each client's unique situation will dictate whether a client should file for Bankruptcy, and then if a Chapter 7 or Chapter 13 filing is appropriate. Contact Southern Utah Bankruptcy Attorney Dan Robison to arrange a free consultation to see if Bankruptcy makes sense for you.

Bankruptcy Basics

Bankruptcy is a legal proceeding in which a person who can not pay their bills gets a fresh financial start. The right to file for Bankruptcy is provided by federal law, and all Bankruptcy cases are handled in federal court. Filing Bankruptcy immediately stops your creditors from seeking to collect debts from you, at least until they are sorted out according to the law.

Chapter 7 Bankruptcy

Chapter 7 filings are commonly known as the “straight” Bankruptcy or "liquidation." These filings are for the traditional liquidation of personal, business or partnership assets. By extinguishing these debts you will, in effect, get a fresh start. In addition, you are able to stop a foreclosure or repossession.

Chapter 13 Bankruptcy

Unlike Chapter 7 filings, Chapter 13 filings do not just eliminate your debts. You will have to make payments over a 3 to 5 year period to the Bankruptcy Trustee, who will then pay your creditors. Typically, these payments to your creditors are less than your regular monthly payments. A payment plan will have to be developed which will allow you to pay all of your living expenses and secured obligations, as well as a portion of your unsecured obligations.

Removing a Second Mortgage

Chapter 13 Bankruptcy also offers an important, and often unknown, option to consumers who have a residential real estate mortgage, namely, removing a junior lien holder or “2nd” mortgage from your home.

Options to Stop Foreclosure

One of the possible benefits to filing Bankruptcy is the "automatic stay", which stops most types of legal actions against a debtor, including foreclosure. However, in many instances homeowners are facing foreclosure do not want to, or can not, file for Bankruptcy. In these instances, our firm can assist with other other means that may help a debtor avoid foreclosure and/or Bankruptcy, such as negotiating loan modifications with lenders or assisting homeowners with short sale negotiations.

Mortgage Modification and Bankruptcy

Under existing Bankruptcy laws, debtors are not able to force a first mortgage to modify the terms of the mortgage on loans for their primary residence. While we can not currently force a lender to modify the first mortgage, many lenders who realize the alarming state of the economy are willing to negotiate a modification of a mortgage, allowing a debtor to lower their monthly payments.

Frequently Asked Bankruptcy Questions

We typically hear common questions from our clients. The most common pertain to the following:

Vehicles
Generally speaking, in either a chapter 7 or chapter 13 Bankruptcy you are able to keep your car if you stay current on your payments. You may also choose to surrender your vehicle if you prefer not to keep it. If you own your vehicle, you are permitted to keep it provided that you have less than $2500 of equity in the vehicle. Also, married couples are allowed this exemption for two vehicles, one for each spouse.  Married couples can also stack their exemptions onto a single vehicle.

Houses
In the current economic times, it is quite common to use a Chapter 7 Bankruptcy to surrender all real property and simply walk away from a house. This is a good alternative if you do not have the ability to pay your mortgage and the fair market value of your property is less than what you owe. If you choose to surrender your real property in bankruptcy, the loans associated with the property are extinguished. This holds true even if you have more than one property. In a Chapter 7 Bankruptcy, you may keep your primary residence if you can stay current on your payments and the amount of equity in the home is below the appropriate level.

Bank Accounts
Generally, in your Bankruptcy Petition you must list every bank account and investment account you have in your name which includes, but is not limited to: checking accounts, savings accounts, CD's, stock accounts, money market accounts, retirement accounts, 401k accounts, IRA, and SEP accounts. There is no particular exemption (or means to preserve in bankruptcy) for most types of bank and investment accounts, unless it is a "qualified" retirement account such as 401k’s, IRA’s, SEP’s and pension accounts.

Retirement Accounts
“Qualified” retirement accounts are fully exempted in bankruptcy as long as the contributions were made prior to 12 months before filing.  In actuality, the difficulty of obtaining funds from qualified accounts, prevents many trustees from pursuing even contributions made within the last 12 months.

Tax Returns & Refunds
There is no specific protection for tax refunds in bankruptcy. Utah does not have a “wild card” exemption which is used in most states to try to protect these funds as much as possible.

When do I need to move?
There is no definitive answer to when you should leave your house if you plan on relinquishing it to your lender. There are, however, some general timelines that you can use to guide you with this issue. Generally, you can miss six months or more before your house will be foreclosed upon by the bank.

Qualifying for a Chapter 7 Bankruptcy
The gross annual income is a primary factor in determining whether you may qualify for a Chapter 7 Bankruptcy. For these purposes, the gross annual income is not the actual income earned over the past year, but rather the average monthly gross income earned for the six months prior to filing bankruptcy multiplied by 12.