What happens to my Utah state assistance (cash assistance or diversion payment) when I file bankruptcy?

Nothing at all. It is protected.

Under Utah law, your public assistance is “not assignable at law or in equity.” Utah Code 35A-3-112. This means that a creditor cannot levy, execute, attach, or garnish your public assistance. This also means that a bankruptcy trustee cannot take it.

I have a client who just received $1,500 in diversion assistance. It is sitting in her bank account, and we want to file bankruptcy today. We can. I simply need to identify that money as state assistance and then exempt it (protect it). This way, the bankruptcy trustee and her creditors cannot demand that we turn it over.

The entire code section reads:

35A-3-112.  Assistance not assignable — Exemption from execution, garnishment, bankruptcy, or insolvency proceedings.

(1)Public assistance provided under this chapter is not assignable at law or in equity.
(2)None of the money paid or payable under this chapter is subject to:(a)execution, levy, attachment, garnishment, or other legal process; or(b)the operation of bankruptcy or insolvency law.

In other words, it is safe.

Now the bigger question comes up: what exactly is public assistance? Under this code section, public assistance refers to: cash assistance under the Family Employment Program 35A-3-302 and/or a diversion payment (which is a one-time payment under 35A-3-303).

Yes, there are other kinds of public assistance, and most of those are protected under other exemptions. As usual, I must advise you to check with your attorney if you have questions.