Jeremy R. McCullough, P.C., Attorney & Counselor at Law, (435) 627-1260
Jeremy R. McCullough, P.C.
Attorney & Counselor at Law
1173 S. 250 W. Suite 105
St. George, Utah 84770
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Your Legal Resource for Southern Utah



What Is Bankruptcy?

Bankruptcy is a right guaranteed by the United States Constitution as well as Federal and State statutes. Bankruptcy is designed to allow people to gain a fresh financial start by eliminating or reorganizing debt. Your creditors MUST stop all collection activities IMMEDIATELY after bankruptcy is filed.

There are two types of bankruptcy that apply to most situations. The most common type of bankruptcy is Chapter 7 Bankruptcy. Under Chapter 7 a person is allowed to keep "exempt" assets (probably the majority of what you own), the non-exempt assets may then be sold to pay creditors. An experienced bankruptcy attorney will identify any issues and plan to reduce or eliminate the loss of belongings. The result of a successful bankruptcy proceeding is a "discharge," which releases the debtor from payment of affected debts.

The second most common type of bankruptcy is Chapter 13. Under Chapter 13 we create a repayment plan which typically must repay only a fraction of your debt. The specified payment is made each month for a period of 3 to 5 years, similar to a car payment. Chapter 13 is often the most effective in dealing with secured creditors, such as mortgage companies and financing companies, who might otherwise repossess a home or car. Chapter 13 has additional advantages because it can extend the time to repay debts and reduce the interest rate and total debt repaid on car loans. We may even be able eliminate your 2nd mortgage or HELOC. Chapter 13 can also suspend collections against friends or family who cosigned on loans.

Should I File Bankruptcy?

You should consider filing bankruptcy if you are being harassed by debt collectors, sued, garnished, are facing forclosure, or owe substantially more than you can afford to repay.

It is far better to deal with the problem today and receive a fresh start then to allow the financial problems to fester.

Who Can File Bankruptcy?

In general, any person or business can file for bankruptcy under Chapter 7. There is no minimum amount of debt required; however, a person who files usually owes considerably more than he or she can repay. Although it often makes sense for a husband and wife to file jointly, one may file without the other.

Only individuals can file under Chapter 13. Businesses must file under Chapter 11 to obtain a reorganization, which is a much more expensive and complicated process. Individuals qualify for a Chapter 13 bankruptcy if they owe less than $1,257,850 in secured debt and $419,275 in unsecured debts. (Although those amounts are periodically updated.)

Can I File Bankruptcy Again?

If you previously filed a Chapter 7 (and received a discharge) you must wait 8 years before you may file another Chapter 7 and 4 years to receive a discharge under Chapter 13.

If you previously filed a Chapter 13 (and received a discharge) you must wait 6 years before filing a Chapter 7, but only 2 years before receiving protection under Chapter 13.

What Can I Keep If I File Bankruptcy?

The first question to ask is, which state′s exemptions apply? If a person has moved within the past two years then the exemptions of another state may apply. (That can be both good and bad depending on the other state). If you have moved from out of state make sure that your bankruptcy attorney checks to see whether those exemptions apply. If your attorney doesn′t you may end up wasting time, taking unnecessary steps or even losing thousands in assets!

Certain property is exempt in Bankruptcy proceedings and can′t be taken. It is important to have a qualified and experienced Utah Bankruptcy Attorney review your situation to determine whether there are likely to be any issues. If the timing and preparation for your case aren't done carefully you may be subject to losing assets that you would otherwise have been able to protect. With that said, here are some Utah bankruptcy exemption basics:

Utah offers an unlimited exemption for all clothing (excluding furs and jewelry), one refrigerator, freezer, washer, dryer, microwave, and a sewing machine. Cars are protected up to $3,000 in equity in a vehicle for each owner (Up to $6,000 total if co-owned), $42,700 in home equity for a primary residence ($85,400 if jointly owned) and $5,000 in business assets. Other exempt assets include couches and related furnishings in the amount of $1,000, a dining room table and chairs worth up to $1,000, and a $1,000 exemption for heirlooms or items of sentimental value (all of which may be doubled if jointly owned). Also exempt are disability (both public and private), public benefits, child support, and most retirement accounts (except contributions made during the previous year). A person is also able to keep property or income earned after filing bankruptcy, with limited exceptions. (These exemption amounts were accurate when this was written but the amounts often change.)

You can keep your home or car even if they are worth more than the exemption amounts - as long as there is not more equity than permitted, and you are willing to continue to make the monthly payments. Sometimes it is possible to lower the amount that must be repaid through redemption or cram-down).

Exemption planning is an important part of an effective bankruptcy. Although emergency bankruptcy filings are sometimes necessary, it is often to your advantage to plan several weeks in advance to get the most out of bankruptcy. Effective planning can save you thousands!

Which Debts Will Not Be Discharged After Filing Bankruptcy?

Most debts will be discharged in bankruptcy, including credit cards, medical bills, and most other debt. Debts that are secured by collateral will only be discharged if the debtor returns the property (though they may be redeemed or crammed-down). A debtor will also have to repay most taxes, student loans, alimony and child support, government fines, and debts obtained right before the bankruptcy filing. A discharge may also be denied if an individual acts fraudulently in a bankruptcy case, such as by concealing assets or transfers of property.

What Will Happen To My Home If I File Bankruptcy?

Will I lose my home if I file for bankruptcy?
If filed correctly, you should not lose your home because of bankruptcy. The most common way that a person loses their home after bankruptcy is because they simply can't afford to make the monthly mortgage payments even after eliminating their other debts. The other way that a person could possibly lose their home is by filing a Chapter 7 bankruptcy while having too much home equity. In Utah a person is entitled to keep $42,700 in equity ($85,400 if owned in joint tenancy). This can be avoided by proper exemption planning or by filing under Chapter 13. Losing your home should be a strategic decision and should never be a surprise,
talk with an experienced bankruptcy attorney if you think either of these situations may apply to you.

How can bankruptcy help me keep my home?
First, filing bankruptcy imposes an "automatic stay," which causes all collection activities, including foreclosures, to stop immediately. Second, bankruptcy gives you some time to get funds to catch up your payments. Third, bankruptcy gives you the ability to force your mortgage company to receive the past due payments slowly over a period of up to 5 years with no interest or penalties (by filing under Chapter 13).

I have talked with many people who have been strung along for months by lenders promising to adjust their mortgage, only to have the adjustment denied after months of promises. Even worse, I have seen where the mortgage company actually completed foreclosure of a home while someone from the same company continued to tell the owner that the adjustment was almost complete. Chapter 13 is an excellent tool to prevent foreclosure and get your mortgage back on track.

Can bankruptcy lower my monthly mortgage payments?
Under the current bankruptcy laws you can only force your bank to lower your monthly mortgage payments under limited circumstances. These situations call for Mortgage Stripping (also called Lien Stripping).

If you have two mortgages on your home and the home is worth less than the first mortgage then the second mortgages can be stripped off in a Chapter 13 Bankruptcy. For example, lets say that our home is worth $200,000 and has a first mortgage of $210,000 and a second mortgage of $70,000. Because the home is worth less than the first mortgage ($200,000 < $210,000) we can strip off the second mortgage. That means that you only have to pay the first mortgage to keep the home. The same principles apply when there are more than two mortgages or liens on a home. This housing market provides many opportunities to strip loans from depreciated homes.

What if I have a lot of equity in my home?
$42,700 in home equity ($85,400 if owned jointly) is exempt and protected. If you only have the exempt amount of home equity then you will not lose your home as long as you keep your mortgage current. Under Chapter 13 you can keep your home even if you do have more than the exempt amount of equity in your home. However, under Chapter 7 it is possible that the trustee will request to sell your home if they determine that there is more than the exempt amount of equity. He/she would be required to give you a check for $42,700 to $85,400 and would then give the rest to your creditors. If you have a substantial amount of equity in your home then you should discuss asset protection techniques with your attorney and should also consider a Chapter 13.

What Will Happen To My Car in Bankruptcy?

Will I lose my car if I file for bankruptcy?
You will not lose your car unless you have substantially more than the exempt amount of equity in your car. If you owe more than what the car is worth then you can keep your car(s) as long as you continue making payments. You may also surrender your car without penalty. If you have substantially more than $3,000 (or $6,000) in equity then you will want to discuss filing a Chapter 13 bankruptcy, where you can keep your car and make minimum payments to the bankruptcy trustee (maybe as low as $50/mo). In a Chapter 13 bankruptcy we can also lower interest rates to around 5% and often lower your car payments.
Contact an experienced bankruptcy attorney for more information and other options to help you keep your car or to help you carefully plan out how to purchase a replacement before filing for bankruptcy.

Do I get to keep my car if it is my only vehicle?
This is a common misconception. The short answer is ... no. Bankruptcy uses different exemptions than medicaid and other programs. The Utah legislature thinks that it is sufficient to allow each person $3,000 in equity in a car. I don't think that is enough, but that is what we have to deal with. Contact me to discuss legal methods to help you keep your vehicle, transferring it to a family member won't work.

How can bankruptcy help me keep my cars?
First, the bankruptcy automatic stay prevents your car from being repossessed. Second, bankruptcy gives you some time to catch up your payments if you are behind. Third, in a Chapter 13 you can make up the past due payments over a period of up to 5 years. Fourth, you may be able to pay back only what the vehicle is worth rather than what is owed.

What Will Happen To My TV, ATV And Other Toys?

Televisions, stereo equipment, ATVs, sporting equipment, etc. are typically not exempt assets and are not protected in bankruptcy. That means that in a Chapter 7 bankruptcy the trustee has the ability to collect these assets and sell them in order to repay your creditors. However, it is extremely rare for people who file for bankruptcy to lose their televisions and other basic property.

Often ATVs and other toys are secured with loans or credit cards and do not have equity. You can usually keep these items in a Chapter 7 if you continue to make the payments to the person owed. Sometimes we can even reduce your payments to the actual value of the goods, which is usually less than what is owed. Even if your TV and other nonexempt assets are fully paid for, the trustee will not take them if he/she determines that the costs of examining, collecting, selling, and distributing the proceeds exceeds the equity in the items. We have dealt with the bankruptcy trustees extensively and during your Free Consultation we will discuss whether the trustee is likely to go after assets in your situation.

DO NOT transfer these assets because you think that you may lose them in bankruptcy!

It is very important to talk to a knowledgeable and experienced bankruptcy attorney about exemption planning to make sure you maximize your assets and avoid Fraudulent Transfers and Preferences. If the situation is handled incorrectly you may cost yourself or your loved ones thousands of dollars and also risk losing the forgiveness of your debts. Talk to an experienced bankruptcy attorney before transferring any property or paying money to family.

What Will Happen To Cosigners If I File Bankruptcy?

What happens if I cosigned on a loan for someone else?
Your bankruptcy filing will not have any effect on the other person. They can still keep their car or home even if you signed as a cosigner - as long as they make the required payments.

What happens to the cosigner of one of my debts?
Unfortunately, bankruptcy does not relieve a cosigner of their duty to repay the debt, but there are still a few ways to protect your cosigner. In a Chapter 7 bankruptcy the only way to protect the cosigner is to repay the debt after the bankruptcy. In Chapter 13 bankruptcy the cosigner will not have to make payments or be negatively affected during your bankruptcy if you reaffirm the debt, timely make the required plan payments, and repay the debt in the bankruptcy plan.

How Will Bankruptcy Affect My Credit?

Bankruptcy can appear on a person's credit record for up to ten years, but the practical affect is usually only felt for a couple years. Because debts are permanently wiped out, the debts will stop showing as being past-due. As a result the filer's debt-to-income ratio will improve. Creditors also know that new debts after bankruptcy won't be eliminated. Many clients receive multiple credit card offers after filing bankruptcy and we caution them to rebuild credit wisely.

How Much Do You Charge for Bankruptcy?

Check out the Bankruptcy Pricing page. You will see that being affordable is important to us. Our knowledge, service, and expertise will not be beat, especially at our prices.

Do I Really Need a Bankruptcy Lawyer?

Yes. Yes, you do. You also specifically need a lawyer who is experienced with bankruptcy filings. Bankruptcy is governed by a complicated web of statutes, rules and regulations, together with case law. Based on the number of calls that I get from people who have not hired me I can tell you that it is apparently not very hard to mess up what would otherwise be a simple case.

I have received many calls from people who have filed bankruptcy themself, usually with the help of a petition preparer, who then discover that they will lose thousands of dollars because of an oversight or simply because their timing was off by a week or so. At that point it is too late to help. A chapter 7 case can't simply be cancelled and the person must turn over money (which they often no longer have) or face serious legal problems.

"But, come on, we're buddies, tell me the truth, can't I just do this without a lawyer?" Honestly, I don't think it's worth the risk. Bankruptcy law is a mine field. You might get through it just fine, but you might file the wrong week and lose thousands because of a simple mistake.

Let us help you. We are nice people and this is what we do. We will defenitely make the process a much smoother one and we will probably save you money. To schedule a free consultation you may call the number listed below, complete the online case review form, or simply request an appointment here. Consultations can often be scheduled for the same day or the following day.

(435) 627-1260


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