Copyright 2023, Robert S. Payne, Utah Bankruptcy Attorney. All rights reserved. (This is not legal advice). Feel free to copy/link any of this material. Just give credit where credit is due.
Some states will give you an exemption to protect your tax refund monies. Utah is not one of them. In fact, in most states, you have to use it or lose it. If you’re unsure, call a bk attorney in your state and find out.
I’ve written a few articles on this, and the links are below.
Here, I will try to give you a quick and dirty list of the do’s and don’ts of spending your tax refund monies.
Don’t:
pay off Mom and Dad before you file bk
buy a new toy, like a dirtbike
hide the money and claim that you spent it
buy jewelry
prepay rent
Do:
buy food storage and clothing
buy boring household appliances like washer/dryer/refrigerator/freezer/stove/sewing machine
buy guns (really) (I can protect up to 3 of any value)
Utah has NO exemptions to protect your tax refund when you file bankruptcy. This means that if you go bankrupt before you receive and spend your tax refund, you will lose it. The chapter 7 trustee will take your refund and use it to pay your creditors. On the other hand, if you wait just a little bit to file and receive your refund, you can spend it all before filing bankruptcy.
Just remember to spend it on exempt items.
You can definitely use it to pay your bankruptcy attorney to prepare your case.
You may rescind (cancel) your reaffirmation agreement at any time before the bankruptcy court enters a discharge order, or before the expiration of the 60-day period that begins on the date your reaffirmation agreement is filed with the court, whichever occurs later.
So let’s break it down. When you reaffirm a debt, you are re-assuming the debt. This means that your liability isn’t wiped out by the bk. If you stop making payments a year from now, they can repossess the car and sue you.
However, by reaffirming the debt, you get to keep the financed car and get that positive credit reporting.
Before Discharge: If you change your mind after reaffirming the debt, you can rescind (or cancel) it at any time before discharge. All you have to do is notify the creditor. That being said, I like to file a Notice of Rescission with the court as well. I am putting a text version of my Notice of Rescission below. I also mail and email a copy to the secured creditor.
After Discharge: The bk code gives you 60 days from the date your reaffirmation agreement was filed with the court. This is NOT 60 days from when you signed it. This is 60 days from when the creditor got around to filing it. Use that same Notice of Rescission.
Case Closed: A Client contacted me today and said that wants to give up her reaffirmed truck. Her discharge was entered 2 weeks ago, and her case closed out 5 days ago. Now she changes her mind! Officially, I don’t have to file that Notice of Rescission, but I’m going to do so and send a letter to the creditor.
Oral Notice????: Technically, there is no required means of giving notice to the creditor. Oral notice is actually sufficient (just telling them over the phone). That being said, I like to keep things in writing. In law school they taught us that: “If it’s not in writing, it didn’t happen.”
Just remember that if you do rescind your reaffirmation agreement, they will want the car back soon. They can even repossess it that night. However, they’ll probably contact you to arrange a time to pick it up.
Here is a copy of my poorly drafted official “Notice of Rescission.”
IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
In re:
DEBTOR Debtor.
Bankruptcy No. XX-XXXXX
Chapter 7 Hon. WTT
NOTICE OF RESCISSION OF REAFFIRMATION AGREEMENT WITH RC WILLEY FINANCIAL SERVICES
Debtor gives notice that she is rescinding the Reaffirmation Agreement (Docket 10) recently filed between her and RC Willey Financial Services. Dated this 30th day of July, 2019.
/s/ Robert S. Payne Attorney for Debtor
Certificate of Service
I certify that I mailed a copy of the foregoing to RC Willey Financial Services at POB 65320, Salt Lake City, UT 84165-0320
Short answer: You can either file a chapter 13 bankruptcy within 10 days of the repossession or pay off the loan balance in full. Either one gets you the car back.
Since you’re probably not sitting on a wad of cash, you can file a chapter 13 and restructure the car payments over a 60 month plan at roughly 6% interest. Your chapter 13 plan payments will start on the 25th of next month.
The long answer is a bit more complicated.
Under the Utah Code, a creditor cannot sell the car for 10 days from the date of repossession. repo
70A-9a-612. Timeliness of notification before disposition of collateral. (1) Except as otherwise provided in Subsection (2), whether a notification is sent within a reasonable time is a question of fact. (2) In a transaction other than a consumer transaction, a notification of disposition sent after default and 10 days or more before the earliest time of disposition set forth in the notification is sent within a reasonable time before the disposition.
During that 10 day period, you have a right to redeem the repossessed car. This means that you have the right to pay off the loan balance plus any collection fees, and then you can get the car back.
70A-9a-623. Right to redeem collateral. (1) A debtor, any secondary obligor, or any other secured party or lienholder may redeem collateral. (2) To redeem collateral, a person shall tender: (a) fulfillment of all obligations secured by the collateral; and (b) the reasonable expenses and attorney
