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Types of Bankruptcy in Salt Lake City Utah

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Types of Bankruptcy in Salt Lake City Utah

People often assume that bankruptcy is for millionaires who blew their fortunes through a series of bad decisions. However, bankruptcy statistics tell a different story. According to Debt.org, 60 percent of all people who file for bankruptcy make $30,000 or less annually. Further, bankruptcies are not always caused by financial irresponsibility. Almost half of all bankruptcy cases are filed for medical reasons, including outstanding medical bills and injury or illness that causes income loss. Many cases filed during the recession that began in 2008 were due to job loss. Bankruptcy hit its peak in 2005 with more than 2 million people and businesses filing that year.  

Types of Bankruptcy

There are two common types of bankruptcy, Chapter 7 and Chapter 13. Chapter 7 is by far the most common, accounting for about 70 percent of all cases filed in the US. Under Chapter 7, all applicable debts are forgiven. Chapter 13 requires a repayment plan. Once you have repaid part of your debt under the agreed-upon terms, the remainder of your debt is forgiven. Chapter 13 is a more common option in higher-income cases. However, it is important to note that some types of debt are not wiped out by any type of bankruptcy. These include alimony, child support, debts incurred due to certain illegal activities, some student loans, and some taxes.

Consequences of Bankruptcy

Chapter 7 remains on your credit report for 10 years, while Chapter 13 sticks around for seven years. Under Chapter 7, some of your assets, including your home and vehicles, may be sold to recoup legal fees and partially compensating your creditors.

Are There Alternatives?

Debt consolidation and debt settlement are two ways to reduce the amount you owe, if you qualify. For people with less than $15,000 in debt, using one of these options may be a better choice in the long-term than bankruptcy.

Bankruptcy Attorney in Salt Lake City

If you're facing overwhelming debt, contact a bankruptcy attorney in Salt Lake City to determine which avenue is best in your particular case. An experienced lawyer can help you navigate your state'ÂÂs laws and choose which type of filing is more beneficial. These specialized attorneys understand the petitions, schedules, and other documents required throughout the process, and they can ensure that you choose the correct property exemptions. They also know what to do when problems arise, such as a creditor filing an adversary action.