Can I settle a debt with my judgment creditor without going bankrupt? (satisfaction of judgment)

Yes.  And although I hate saying it, if there is a way you can settle your debts and stay out of bankruptcy, then you should take it.  Your credit will be better in the long run.

I had a potential client who had $1,500 cash in hand ready to file a chapter 7 case.  I was more than ready to take his money.  Then he had an idea:  he would call his largest creditor and see if that creditor would take that same $1,500 to settle out a much large judgment claim.  

Fortunately for the client, the creditor accepted the offer.  Because of this settlement, my potential client didn’t need to file bankruptcy.

Now the creditor had sued my client and already had a judgment.  Not only was this hurting my client’s credit, but he was worried that this creditor would take the settlement money and then still proceed to garnishment.  In order to protect my client, he drafted up a Judgment Settlement Agreement (copied from a web search), and brought it to my office along with a cashier’s check to settle the debt.

Because there was a judgment entered, my client also needed a Satisfaction of Small Claims Judgment (found here: ).

Both parties signed the agreement, the plaintiff signed the Satisfaction of Judgment, everything was notarized, and we filed the Satisfaction with the court.

At that point, the judgment was satisfied, the creditor could no longer collect, and my client avoided bankruptcy.

Can I get rid of criminal restitution in bankruptcy?

Nope.  (And to be honest, you probably expected this answer).  

I get asked this question at least a month, and the answer is always a resounding “No.”

If you don’t know what criminal restitution, be grateful.  Let’s say that you have a very bad day and burn down the storage unit where you and your ex-husband used to keep all of your Christmas decorations.  This is arson.  After you are criminally charged and sentenced, the court will order you to pay various fines and even pay to restore the storage unit.  In this scenario, the amount is $20,000 in total.  Then you’ll have $20,000 in criminal restitution.  You’ll have to get on a payment plan with the state to pay that back.

When you file bankruptcy, it does NOT affect your restitution.  In some jurisdictions, you can organize those payments in a Chapter 13 bankruptcy, but here in Utah, the Chapter 13 Trustee does not want to be in charge of collecting and paying those each month.

If you are looking for the official bankruptcy code sections, you can go here:

11 U.S. Code § 523 – Exceptions to discharge

(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt

(7) to the extent such debt is for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit,

If you need case law, it is clear as well.  The U.S. Supreme Court found in Kelly v. Robinson, 479 U.S. 36 (1986) that criminal restitution payments cannot be discharged in bankruptcy.

You will want to get on a payment plan with the state and stick to it.  This doesn’t mean that we cannot go bk and discharge your other debts like medical and credit collections.

How much does it cost to file bankruptcy in Utah (Chapter 7 or 13)? or What are your attorney’s fees to file bankruptcy?

I hate this question, and to be honest, I’ve put off writing this blog post for over a year.  

First off, I will really try to price match, so don’t automatically call the lowest bidder.

Short Answer:  $500 up front to file a chapter 13 or $800 up front for a chapter 7.

Total fees go like this:


Chapter 7:  total attorney’s fees are $800 and total court filing fees $335 (which you pay directly to the court).

Chapter 13:  total attorney’s fees range from $3,000 to $3,500 (set by court) and total court filing fees $310 (which you pay directly to the court).

Here is your breakdown for a chapter 7:

You pay $800 to file the case.  Your attorney’s fees are done for the basic Chapter 7.  Next, you have to pay the filing fees to the court in installments as follows:

$100 in 2 weeks

$100 in 4 weeks

$135 in 8 weeks.

That’s it.

Here is your breakdown for a chapter 13:

You pay $500 to file the case.  Next you have to pay the filing fees to the court as follows:
$100 in 2 weeks

$100 in 4 weeks

$110 in 8 weeks

In a Chapter 13, you also make one monthly payment to the bk trustee to cover your car payments, back taxes, mortgage arrears, etc.  My remaining fees come out of this monthly payment.

Every attorney in the state is awarded the same fees in a chapter 13.  So you really won’t save any money by shopping around.  Some attorneys will charge $0 down for a chapter 13, but I’ve found that if my clients don’t have a little skin in the game (down payment), then they never take the bankruptcy seriously).

My fees are fairly comparable to the other bankruptcy firms, and I think that I can speak for all of us (bankruptcy attorneys) when I tell you that you are getting a smoking deal!  I bill out at $300 an hour, so if I were billing you for a bankruptcy instead of a flat fee, your fees would look like this:

$150 initial consultation (.5 hour x $300)

$1,200 document gathering and draft paperwork (4 hours x $300)

$300 correspondence and follow-up prior to 341 meeting (1 hour x $300)

$450 attend 341 meeting with bk trustee (1.5 hours x $300)

$300 follow-up with client (1 hour x $300)

$300 review/sign/file reaffs (1 hour x $300)

$300 correspond with client, file form 23 (1 hour x $300)

So the total would be $2,900 if I could bill out my time, but if I tried to do that, I would lose you to all of the other flat fee attorneys filing cases for much, much cheaper.  .

I hate the whole charging fees thing because I really did get into this to help people, but it turns out that I need to charge something to keep the lights on.  That’s why my fees are right in the middle for bankruptcy firms:  I’m not the cheapest, and I’m definitely not the most expensive).



I just received a lump sum settlement for my personal injury case. Is it safe in my bankruptcy? Is it safe from creditors generally?

Probably yes.

I have a client who received a $25,000 settlement from a personal injury case.  She is worried that creditors or even the bk trustee will try to take that money from her.  

So long as that money is for bodily injury and is compensatory, it is safe.  In other words, if she had made the mistake of signing a settlement agreement saying that they were punitive damages, then they could be taken by the bk trustee.  However, that is rare.  Almost everyone settles for compensatory damages to compensate you for some kind of injury.

I can safely list the $25,000 in her bankruptcy and then exempt (protect) it from creditors and from the trustee.

Here is the Utah Code Section that thankfully put her mind at ease:

Title 78B  Chapter 5  Part 5  Section 505

78B-5-505. Property exempt from execution.
(a) An individual is entitled to exemption of the following property:


(x) proceeds of insurance, a judgment, or a settlement, or other rights accruing as a result of bodily injury of the individual or of the wrongful death or bodily injury of another individual of whom the individual was or is a dependent to the extent that those proceeds are compensatory;

What happens if my bankruptcy case is audited by the U.S. Trustee’s Office (Department of Justice)?

Usually nothing.

(Chapter 13 cases get audited as well, but this blog article focuses on Chapter 7 cases).

Short answer:  If your case is above median and you draw an audit, they will ask for bank statements, tax returns, and paystubs to prove that you really do qualify for a chapter 7.  If you don’t, then they’ll move to dismiss your case. At this point, you can fight it (and lose), let it dismiss and try again, or even convert to a chapter 13.

Long answer:

When you file your chapter 7 case, the court assigns you an interim trustee.  This is the bankruptcy trustee that you have 99% of your dealings with.  Over him is the the U.S. Trustee’s Office, and they will periodically get involved in cases which are (1) above-median or (2) are referred to them by the regular trustees.

In my practice, when this happens, the U.S. Trustee will contact me, usually with the following email:

Dear Mr. Robert:

We have conducted a preliminary review of the Petition, Statement of Financial Affairs, Schedules and other documents filed in this case, pursuant to the United States Trustee’s duties under 11 U.S.C. §704(b), and have determined that we need additional information to complete our review. Pursuant to Bankr. D. Ut. LBR 2003-1(b) and 4002-1(b) please provide the information and copies of the following documents:
1) A copy of the Debtor’s most recent Federal and State tax returns with all attachments and Schedules (Please be sure to include a copy of the page showing itemized deductions claimed on that return (Schedule A), if applicable).
2) Copies of all payment advices received by the Debtor for the 6 months prior to the filing of bankruptcy (December 1, 2016 through May 31, 2017), including pension payments, social security payments, unemployment payments, etc.
3) Copies of check registers, canceled checks and bank statements from all financial institutions in which the Debtor maintained a financial account from December 1, 2016 through May 31, 2017.
4) A copy of the Debtor’s two most recent payment advices.
5) A copy of the Debtor’s Divorce Decree and/or Support Order.
6) The Debtor’s Statement of Intention shows he intends to retain his real property. However, his Schedule J lists no mortgage payment. Please explain the discrepancy between the two Schedules.
7) If any of the Debtor’s household expenses are not paid from his bank accounts, please provide verification of such expenses.

Please provide the response to by no later than Tuesday, July 25, 2017. If you have any questions concerning this matter, feel free to contact me at (801) xxx-xxxx.

The email looks scary, but it’s really not.  These are all numbers that you’ve already disclosed to your bankruptcy attorney, and if you are above-median, then you were probably expecting the audit.  The U.S. Trustee simply wants to verify the information you’ve provided.  Even better, they are professional, educated, and easy to work with.  They don’t want to trip you up and will be blunt and straightforward in their requests.  Your attorney will have no trouble dealing with them.  Unlike some other attorneys, they respond immediately to email and will actually answer their phones.

Being audited doesn’t mean that you’re in trouble.  It simply means that they are doing their job in a case where you may make too much for simple chapter 7.  Hopefully you do qualify for a chapter 7, and you pass the audit with flying colors.

If you don’t, then they will file a motion to dismiss.  You can fight it (and most likely lose).  You can convert your case to a chapter 13 and get on some kind of repayment plan with your creditors.  You can even let it dismiss out, plan a new chapter 7 with your attorney, and try again.

I have filed a lot of cases and have been audited over and over.  Sometimes I lose, but in most cases, the U.S. Trustee is satisfied with our documentation, and the clients receive a chapter 7 discharge.  The stories could make some fairly interesting blog posts, but not today.

I have a truck with some good equity in it. Should I sell it before I file bankruptcy?

Most likely yes.

Today I received a call from a woman who was laid off from her job after 20 years with the same company.  She was contemplating bankruptcy but had an interesting question for me:  what should she do with her truck?

She owed $4,000 on a secured loan with her credit union.  The truck itself was worth about $15,000.  If she filed bankruptcy with those numbers, the bk trustee would sell her truck, pay off the loan, and then give her $3,000 for her trouble (the $3,000 vehicle exemption under Utah law).  

She was contemplating selling it before going bankrupt but wanted to know if that would be considered “improper.”  I told her to sell it.  It is perfectly legal and proper to sell a non-exempt assets and convert it to an exempt asset.  In other words, I told her to sell it, pay off the secured loan, buy a car for $3,000 (the number I can protect), and use the rest for living expenses.

She then asked if the bk trustee would ask for receipts on her expenditures.  The answer is a definite YES!   The bk trustee knows (and I know) that you really want to put a few thousand in your dresser drawer for a rainy day, but you cannot do that.  You have to account for the funds, and the bk trustee will ask for proof, usually in the form of receipts.

So when you have an asset with value I cannot protect, it is generally a good idea to sell it and use the proceeds to benefit your family before you file bankruptcy.  If you let the bk trustee sell it, he will use it to benefit your creditors instead.

What happened to the chapter 13 trustee payment website for Lon Jenkins in Utah (tfs bill pay)?

It changed.

For the last few years, you could make your online chapter 13 plan payment at the trustee website using their bill pay service.  Now, when you click on their “Debtor Payments” button, it takes you here: .  It’s a new service, but clicking through their screens, it seems fairly straightforward to use.  Just don’t forget your case number.  

It seems to be a MoneyGram service, and unfortunately, yes, it does have a transaction fee of $8.99 per payment.  So if your plan payment is $100 a month, then you’ll be paying $108.99 each month if you use this service.  That is worth it, because you’ll receive immediate confirmation of receipt.


The trustee touts it as the:

Fastest Method of Trustee Payment

Use MoneyGram in time-sensitive situations like a dismissal hearing, before confirmation, or catch-up payment….

Peace of Mind!

Once your payment leaves your hands, it’s tracked and guaranteed to arrive at your trustee’s office.

The only bit of mild misinformation is the trustee’s statement that  you can “Talk to your Attorney.  They can print your MoneyGram card straight from their office.”  No, I can’t.

(See my now out of date articles here:

and here:

What documents do I need to bring to my 341 Meeting of Creditors with the bankruptcy trustee (2017 revisit)?

I covered this in 2014 (see below), and it really hasn’t changed.

About a month after we file bankruptcy, we meet with a bankruptcy trustee assigned to your case.  It is his job to determine if you have any non-exempt assets (things I cannot protect) that he can sell off so that he pay a portion of those proceeds to your creditors.  

Normally, the trustee asks for the following:

1.  driver’s license and social security card,

2. bank statement showing the balance on the date you filed and the transactions in the account during the month around your case filing,

3.  a current paystub (to show that your income is consistent with the paperwork we filed with the court).

At the meeting the trustee may demand that we produce other documents, like vehicle titles, or a copy of your divorce decree.  If you’ve already disclosed everything to your attorney, none of the trustee’s questions or demands will be a surprise at all.

If you are missing one of the essential items, like a driver’s license or social security card, the trustee may even refuse to conduct the meeting and will reschedule it when you have those items.

2017 revisit

You can bring alternate documents to the meeting if necessary:

  1.  driver’s license — you can actually bring any government issued photo i.d.  I have even had clients use their concealed carry permits (which seems like a vague threat to the bk trustee, but is really innocent, I hope).  No, you cannot use your Costco card, and yes, I have had clients try to use the Costco card before.
  2. social security card — anything issued by a third party with your social security number will work, including a W2 or a 1099.  i have even used a lawsuit where the creditor put the debtor’s social security number on the caption of the lawsuit to identify them (old lawsuit.  We don’t do that kind of thing nowadays).
  3. bank statement — if you don’t have it, you can email an electronic copy later, but the trustee will not accept your online bank statement off of your phone.  I probably have at least 1 client a month try to do that, and the trustee does not want to handle your phone.
  4. paystub — same as the bank statement.  If you don’t have it, you can email it later, but you cannot show a copy of your paystub off of your phone.

What do I need to bring to my 341 meeting of creditors with the trustee?

Will bankruptcy stop my payroll garnishment for child support (2017 revisit)?

In 2014 I wrote about this (see below) and said, ‘No,” but it’s a little more complicated than that.  

Filing bankruptcy won’t affect your normal monthly child support payments. But, it can affect back-child support.  Let’s say that you pay $500 a month in child support.  You are behind, a lot, and they are garnishing that $500 plus another $250 a month for back child-support.  If we file a chapter 13 case and propose to cover the back child support as part of your chapter 13 payments, then ORS will go back to garnishing the original $500. You still have to pay the back child support as part of your chapter 13 case, but it can be stretched over your 5 year (60 month) chapter 13 plan.

So, technically, filing bankruptcy can stop some of your payroll garnishment for child support.

Will bankruptcy stop my paycheck garnishment for child support?

What happens if I don’t give the bankruptcy trustee my tax refund (revisited)?

I covered this back in 2014 here:

Just remember that you don’t have to turn over your refund if you receive and spend it all BEFORE you file bankruptcy, but what happens if you are ordered to turn it over and you don’t?   

Short answer: you unleash a hellstorm of court proceedings.
Long answer: If you don’t turn over your tax refund monies after the trustee demands them, then various bad things can happen to you. In a chapter 13, you are required to turn over your refunds for the next three years. If you fail to do so, the trustee will dismiss your case. Sometimes, the trustee will dismiss your case and request that the court bar you from filing a new case for 180 days. This means that you can’t go bankrupt, can’t stop garnishment, and can’t avoid creditors for 6 months from the date that it is dismissed.

In a Chapter 7, it’s even worse. If you don’t turn over your tax refund, the trustee can and will file a Motion for Turnover (requiring you to turn over the refund). If you still don’t comply, then the trustee will file a Motion to Revoke Discharge, and your chapter 7 bankruptcy gets thrown out, you still owe the trustee the tax refund money plus his/her legal fees, and you can never get a discharge of those debts in a new Chapter 7.

It’s bad.

This is why I warn my clients about losing their tax refunds and remind them that it’s worth it in the short term to get rid of a lot of debt.

It is infrequent, but I sometimes have clients who refuse to turn over their tax refund monies.  I had one client who refused to turn over an $8,500 refund, refused to get on a repayment plan with the trustee, and eventually lost his discharge of over $60,000 of debt.  He chose to keep $60,000 of debt instead of lose that one year’s worth of tax refund monies.  It happens.