Author Archives: robertspaynelaw

What happens if you are in a car accident before repossession (or have a damaged car that is repossessed)?

Generally, you wipe out the debt.

Every week or so I look at the “insights” on my blog to see what searches people run.  Here is today’s entry:  


If you look at the searches, you can see that somebody was on my blog today who apparently had a financed vehicle, damaged  in an accident, that was going to be or already was repossessed.  I’m assuming that they’re worried about being sued by the bank.  If they don’t file bankruptcy, that’s a real possibility.  If they do file bankruptcy, then they should be fine.

Basically, you can discharge that debt and turn over the vehicle, no matter what the condition.  Now you should have had it fully insured, and if you receive an insurance settlement, you may have to turn over those monies to the bank who financed your car.

However, if you let your insurance lapse, then there’s no insurance settlement coming.  In theory, the bank could sue you for the damage to the car, but that gets wiped out by the bankruptcy as well.

I wrote about this 3.5 years back.  It’s still relevant:

What happens after a repossession if my car is in bad shape with body damage?

How do I file my Utah State Individual Income Tax Return for previous years or past due returns (like 2008 when I never filed)?

I am not an accountant and I don’t do taxes!  So take this with a grain of salt.  This is just what one of my clients did recently with the Utah State Tax Commission (“USTC”).    

We are sitting in court at our 341 Meeting of Creditors, and the USTC representative says that they’ve never received a copy of my client’s 2008 TC-40, Utah Individual Income Tax Return.  My client is sure that she’s filed it, but the USTC wants a copy.

At this point, we can try to find the copy of the 9 year old tax return, or recreate it.  She can’t find it, so she’s stuck recreating it.  She can’t find her federal returns either, so it’s off to the internet.

Here are the basic steps:

  1.  First, she gets her federal transcript from the IRS.
  2. She gets a blank Utah tax return for previous years.
  3. She uses that transcript to fill out her 2008 Utah TC-40.
  4. She signs it in blue ink (just because blue is prettier), and
  5. I forward it to the USTC representative.  (If you don’t have an attorney, you can mail it to them).

And she’s done (and filed).

Here are the same steps substantially fleshed out.

  1.  How to get your transcript from the IRS.

There are two kinds of transcripts, a tax return transcript and/or a tax account transcript.

Here’s the difference, as defined by the IRS:

  • Tax Return Transcript – shows most line items including your adjusted gross income (AGI) from your original tax return (Form 1040, 1040A or 1040EZ) as filed, along with any forms and schedules. It doesn’t show changes made after you filed your original return. This transcript is only available for the current tax year and returns processed during the prior three years. A tax return transcript usually meets the needs of lending institutions offering mortgages and student loans. Note: the secondary spouse on a joint return must use Get Transcript Online or Form 4506-T to request this transcript type. When using Get Transcript by Mail or phone, the primary taxpayer on the return must make the request.
  • Tax Account Transcript – shows basic data such as return type, marital status, adjusted gross income, taxable income and all payment types. It also shows changes made after you filed your original return. This transcript is available for the current tax year and up to 10 prior years using Get Transcript Online or Form 4506-T. When using Get Transcript by Mail or phone, you’re limited to the current tax year and returns processed during the prior three years. Note: If you made estimated tax payments and/or applied an overpayment from a prior year return, you can request this transcript type a few weeks after the beginning of the calendar year to confirm your payments prior to filing your tax return.

Now that you know the difference, here is where you go to get the transcript emailed to you from the IRS.

2. How to get a blank Utah tax return for previous years.

You go here:  

You click the drop down menu for what kind of return (individual), type in the year on the next drop down menu, and the form appears in .pdf, blank and ready for you to fill out.

The form we needed was located here:

3.  How to fill out our your blank TC-40.

Use your federal tax transcript.  It should show all of the numbers you need to plug in to the state form.  If it doesn’t, I’m at a loss, because I am not an accountant and I don’t do taxes.  (But don’t worry, it really does).

4.  Sign it in blue ink.

No, it doesn’t really matter.  But I love blue ink because it shows that this really is an original document.

5.  Send it to the tax commission.

If you are in bankruptcy, you can give it to your attorney, and he’ll email a scanned copy to the USTC.  Then it is magically filed.

If you are not in bankruptcy yet, then you’ll need to send it to the USTC directly.  You can do so here:

Call them just to double-check.


What happens to my tools from Snap-On Credit when I file bankruptcy?

You lose them unless you keep paying for them.  

When we file a chapter 7 bankruptcy, you list secured items (like your home or car or tools) and then list the secured creditor.  If you want to keep the collateral, like the tools, then you check a box that says “reaffirm,” you keep making payments, and sign a reaffirmation agreement.  If you want to surrender the collateral, then you stop paying and turn it in.

On the other hand, if you want to surrender the tools, then stop paying on them and eventually Snap-On (Snap-On Credit or Snap-On Financing) will contact you to pick them up.  Unlike the picture, they are rather friendly and easy to work with.

In a chapter 13, it’s a little different.  You make one monthly payment to the chapter 13 trustee to cover secured payments like car loans (and tools loans).  So stop making the payment directly and talk to your attorney about your chapter 13 repayment plan.

Now to make it  more complicated, let’s say that you have almost paid off the loan and have some tools with real value.  Then we get to apply exemptions (protections) if we can.  If you use the tools for work or for your business, then we can exempt them as “tools of the trade.”

So if you use it for work or business, I can protect it, up to $5,000 of value above and beyond the loan amount.  If you don’t use it for your work or business, then I cannot protect its value, and you may end up losing it anyways.


Is my ex-wife/husband going to find out that I filed bankruptcy?

There’s a pretty good chance that they will.  

When you file bankruptcy, you are required to list any person to whom you pay child support/alimony (what we call a “Domestic Support Obligation” or DSO).  They receive notice that you filed bk.  Don’t try to hide it.  The trustee will double-check to make sure that you have your DSOs properly listed.

Additionally, you have to list your creditors.  If you have any joint debts with your ex-spouse (like the Chase credit card you used to pay for your joint divorce attorney), then you are supposed to list the ex-spouse as a joint debtor.  Even if you fail to do this for some reason, they will probably hear from the creditor.  The bk protects you, but now the bk filing will probably prompt the creditor to try to collect from your ex-spouse.

Now if you don’t have any DSO or joint debt, then you may be able to keep your own business private.  However, they may still hear about it from your children, friends, social medial posts, or some third party.

This doesn’t mean that your bankruptcy is hurt, or affected in any way.  It may be a blow to your pride, but that’s it.

Am I going to lose my financed car if I file a chapter 7 bankruptcy?

No, you don’t automatically lose it just because of the bankruptcy.  You can pay for it and keep it, or give it up.  The choice is yours.  

When you file a chapter 7 case, you list your secured debts (like car loans, mortgages, financing/purchase contracts for furniture) in the bankruptcy, and then you state whether you want to surrender or retain the collateral.  If you want to surrender it, then you stop making payments.  Eventually they will repossess your car, and the balance is wiped out by the bk.

If you want to retain it,  you list the loan in the bankruptcy, and then you check a box that states that you want to keep the car and keep making payments on it.  This is called your Statement of Intention.

Normally, when you keep a car loan, you sign a reaffirmation agreement (after you file bankruptcy), which obligates you to the same payments, same interest rate, same balance, same everything.  It is very unusual for a creditor to change any of the terms for you (like lowering the interest rate).  Don’t hold your breath on changing any of the terms.

Don’t just take my word for it.  The Utah Bankruptcy Court has a fairly clear description of reaffirmation agreements here:

Reaffirmation Agreement
A debtor in a bankruptcy case may decide to remain legally obligated to pay a debt that would otherwise be discharged in bankruptcy. This is called reaffirming a debt. Reaffirming a debt is voluntary; debtors are not required to reaffirm any debt.

The reaffirmation of a debt is governed by 11 U.S.C. § 524(c), (d), and (k). A Reaffirmation Agreement is enforceable only if it complies with these Bankruptcy Code provisions. For example, any agreement to reaffirm a dischargeable debt must be entered into before the debtor receives a discharge.

Instructions for filling out a Reaffirmation Agreement form are avaialble here.

Debtors who are NOT represented by an attorney MUST also file a Motion for Approval of Reaffirmation Agreement. Upon receipt of the motion for approval, a hearing will be set and notice of that hearing will be mailed to the debtor and the creditor. The Debtor MUST attend the hearing to have the reaffirmation agreement approved.

And a sample reaffirmation agreement here.

Now of course there are all kinds of potential pitfalls with keeping the car.  You have have too much equity, or too little income, or other loans with the credit union which are cross-collateralized with the car.  But this is a bit more complicated and you’ll need to work it over with your attorney.

One of our clients filed bankruptcy. Where do I send the bill to be included in bankruptcy?

(This is a creditor question, and I don’t represent creditors.  I represent the people who need to seek bankruptcy protection from creditors, but I get asked the question enough that I thought it would be easier in the long run to have an answer on my blog).

I get the following email all of the time from creditors.  I don’t represent them, and if they have any questions, they really should hire their own collection attorney.  That being said, I can at least steer them in the right direction, and I usually do.  Courtesy pays, and that karma thing is real.  

This morning I received an email from a creditor that said:


We have an outstanding bill for water mitigation services performed by
XXXXX, who we represent, on Ms. XXXX’s home in May 2016 for
$2655.36. I am emailing to inquire where to send this bill to include it
in the bankruptcy, and to ask if XXXXX can expect to be paid as a part
of Chapter 13.

Thank you,

I responded and sent them to the bankruptcy court website here in Utah.  If you are a creditor in a chapter 7 or a chapter 13, there is a chance that the debtor (person filing bankruptcy) will be paying out some money to his creditors.  Sometimes, it is only pennies on the dollar.  However, in some cases, the debtor has to pay our 100% of properly filed claims.  The key phrase there is “properly filed.”  If you don’t file a claim, you won’t get paid.

I filed a case a couple of years back for a collector for a large credit card company.  She was in a 100% repayment plan with her chapter 13, and she owed about $15,000 on a credit card with her employer.  Her employer (a solid collector), filed its claim 2 days late with the bk court, and that $15,000 claim was wiped out with a total repayment of $0.00.  They were only 2 days late!

Sometimes a creditor may file a claim that may be improper (such as a 10 years old collection bill for a credit card where the statue of limitations was only 6 years), and those claims can be knocked out as well.  However, it is guaranteed that the creditor will receive nothing if they don’t even try to file a claim.

Here is the bk court page for filing a proof of claim.

Their instructions are very straight-forward:

To file a claim for a case in the District of Utah, complete a Proof of Claim form. 

Do not include any personal identifiers on the form. In compliance with Fed. R. Bankr. P. 9037 a filing (any document or attachment to a document) made with the Court must not contain certain information, including

an individual’s social security number,

  1. a taxpayer identification number,
  2. an individual’s birth date,
  3. the name of a minor, or
  4. a financial account number.

Such information must be removed or edited. The document shall only contain:

  • The last four digits of the social security number and taxpayer-identification number
  • The year of the individual’s birth
  • The minor’s initials
  • The last four digits of the financial account number

The party filing a document is responsible for redaction. The Clerk’s Office does not review documents filed with the court for compliance with this rule

The original claim and any supporting documents are filed with the Clerk’s Office. Proof of Claims may be filed electronically with a Limited User – Claim Filer electronic filing account, hand-delivered to the Courthouse, or mailed* to:

United States Bankruptcy Court District of Utah
350 South Main St.
Suite 301                                                                   Salt Lake City, UT 84101

*If claim filers wish to have a conformed copy; please include an extra copy and a self-addressed stamped envelope.

It is fairly simple, and you should be able to prepare and file the proof of claim on your own.  However, it may be a good idea to consult with a collections attorney to make sure you do it right.  Because, if you mess up on your proof of claim, you will most likely receive nothing.



What happens to my tax refund in a chapter 13 bankruptcy?

It’s complicated.  Plan on losing all but $1,000 of it for the next 3-5 years.

And don’t forget, when you pay this tax refund money into your chapter 13 case, it does NOT pay off your plan early.  It goes into a pool to pay your unsecured creditors a little bit more.  So it does NOT shorten your bk plan at all.  

In a chapter 13, we normally propose that you keep the first $1,000 of your tax refund each year (and maybe the first $2,000 if you get the EIC or ATC).  The chapter 13 plan language reads like this:

For the next three tax years of  xxxxxxxxxx for below median cases and the next five tax years xxxxxxxxxx for above median creditors, the Debtors shall pay into the Plan yearly state and federal tax refunds that, when combined, exceed $1,000 or $2000 in the event the refunds are a result of receiving the Earned Income Credit (“EIC”) and the Additional Child Tax Credit (“ACTC”) or either, then the excess of $2,000 shall be contributed to the Plan.

This means that in most cases if your income is below the median income figures, that you will lost a part of your refunds for the next 3 years.  If your income is high, then you will lose a portion of your refund for the next 5 years.

There is also a more complex option that goes like this:

The following tax years are proposed to be contributed [xxxxxxxxxx].  On or before April 30 of each applicable year, debtors shall provide the Trustee with a copy of the first two pages of filed state and federal tax returns.  Any required tax refund contributions shall be paid to the Trustee no later than June 30 of the year the applicable return is filed.

For the first tax year contribution xxxx, debtors shall contribute to the Chapter 13 Trustee the pro rata portion of the tax refund that would be contributed in a chapter 7 case.  This amount shall be used to satisfy the 11 USC § 1325(a)(4) requirement and shall be disbursed to unsecured creditors in Class 3, Class 4 and Class 6  as listed in Local Rule 2083-2(e) as soon as possible.  In the event of conversion to a chapter 7 case, tax refunds on hand will be submitted to a chapter 7 trustee as an asset of the bankruptcy estate.

For the second and third tax year contribution, debtors are authorized to retain any Earned Income Credit and/or Additional Child Tax Credit.  Debtors shall contribute any refund attributable to over-withholding of income tax that exceeds $500.  However, debtors are not obligated to pay tax overpayments that have been properly offset by a taxing authority.  Tax refunds paid into the plan may reduce the plan term to no less than the Applicable Commitment Period, but in no event shall the amount paid into the Plan be less than thirty-six (36) Plan Payments plus all annual tax refunds required to be paid into the plan.

In this scenario, you may pay more from your first year tax refunds and then may pay less on your next two years.

As I said, it’s complicated.  Just plan on losing part of your tax refunds for 3-5 years.

Now that I’ve filed bankruptcy, how many years will the trustee take my tax refund?

Hopefully just the next one (in a Chapter 7).

You will normally only lose one tax refund to the bk trustee, and if you do it right, then you won’t lose any refund money at all.  

When we file bankruptcy, the Chapter 7 trustee has a duty to take your non-exempt assets (unprotected assets) like your unspent tax refund, and then he uses that to pay a small portion to your creditors.  If we time the bankruptcy correctly, you will file, receive, and then spend your tax refund before we file the actual chapter 7.  At that point, there is no refund to lose.

Then the bk trustee gets to do a little guesswork to see if next year’s tax refund is worth going after.  He is entitled to a portion of your next refund, depending on when you filed bk.  Let’s say you filed on April 1, well he can go after January/February/March’s portion of next year’s refund, or about 1/4th.  If you file on July 1st, he can go after 1/2 of next year’s refund, October 1st 3/4th of the refund, etc.  Generally, the bk trustee won’t keep a case open long enough to take next year’s refund unless it looks like he will receive at least $2,000 to pay out to creditors.

So, if you’re someone who gets a $12,000 refund each year, then he will keep the case open almost a year to see if he can hit that $2,000 threshhold.  If your refund is small each year ($3,000 or less), then it’s generally not worth his time.

So normally, you are only in danger of losing this upcoming refund, which is why you want to file and spend that refund money before you file bk.

The bk trustee will NOT keep your case open year after year in order to go after your tax refund (at least in a Chapter 7).

In a Chapter 13, it’s a little different.  Here in Utah, if your income is below median, you’ll turn over part of your tax refund for the next 3 years of your case.  If your income is above median, then you’ll turn over part of your tax refund for the next 5 years.  The portion amount, above median/below median numbers, and the calculations are a little complicated, so I’ll save that for another day.

What happens if I don’t make my filing fee installment payments to the bankruptcy court?

Your case gets dismissed, you still owe the money, and you are no longer protected from your creditors.  

So when you file bankruptcy, you are required to pay a filing fee to the bankruptcy court.  Currently, the fees are $335 for a chapter 7 and $310 for a chapter 13.

Many people chose to pay these filing fees in installments to the bk court AFTER filing their bankruptcy case.  In those cases, the attorney files an Application to Pay Filing Fee in Installments.

(I wrote about it briefly here:  )

However, if you miss one of those filing fee payments, the court may dismiss the case immediately, or may issue an Order to Show Cause accelerating all of your filing fee payments to be due in the next 2 weeks.  If the case is dismissed, your creditors can start calling you right away, they can start garnishment, and yes, they can come repossess your financed cars.

If you are lucky, you only have to face the Order to Show Cause.  But now, you’ve got to pay the remaining filing fees as a lump sum.  Your installment plan over the next 2 months is gone.


Yes, it is possible to reinstate your case and vacate (take back) the dismissal, but it takes at least a month of no bankruptcy protection and a complex motion that your attorney will probably charge you to prepare and file.

New Case

Even worse, if you try to file a new bk case, you owe new filing fees plus you still owe those prior filing fees to the court.  Your old bankruptcy case does report to your credit, because it was filed (even if it did not go all of the way through).

Strategic Dismissal

Some people may even think that it’s a good idea to quickly crank out a bankruptcy case to stop a foreclosure or garnishment and then let it simply dismiss out when they fail to make that first installment fee payment. This is a bad idea.  Now you have a bk on your credit for the next 10 years (because you DID file), and if you try to file again. the automatic stay (bankruptcy court protection) may be gone on subsequent cases.  And yes, you still owe those filing fees to the court.