Category Archives: Utah Bankruptcy

Utah Bankruptcy questions.

How do I turn in a scammer’s phone number so that they stop calling me after bankruptcy?

Short answer: report the scammer’s phone number to the FTC at 888-382-1222.

Long answer: it’s obnoxious and not very effective.

This morning I received a text message from a former client (yes, my clients can text me anytime, even years after their cases), and this is what she said:

So I have a question! We still have that 888 number calling hubby’s boss saying they are going to take legal action and ya da ya da! I called them today and spoke with someone. She said it’s from 2013 from hubby for a payday loan place, and that it can’t be included in that bk that was discharged because it was signed saying we weren’t planning filing bankruptcy and wouldn’t on that? It was included in that bk however! So is this a legit bill we need to take care of or was it included in that bk?

First, I reassured her that it was a scam. Unfortunately, after bankruptcy (or even outside of bankruptcy once the statute of limitations for debt collection has run), we still have shady collectors who sell off their bad debt to bad debt buyers. These companies will start calling you after a bankruptcy and saying that the debt wasn’t included, wasn’t discharged, and a police office is coming to your home in the next 10 minutes to arrest you if you don’t make a payment over the phone immediately.

Of course it’s a scam, but it’s still scary when you get the phone call.

When you get the call, don’t hesitate to contact your bankrutpcy attorney. He’ll tell you it’s a scam 99% of the time. It also gives you peace of mind.

The Federal Trade Commission FTC also has a great articles on this here: https://www.consumer.ftc.gov/articles/0076-phone-scams

On the FTC website, it recommends you also file a complaint with the Consumer Finance Protection Bureau CFPB either at
855-411-2372 orhttps://www.consumerfinance.gov/complaint/

Will bankruptcy clear an eviction off of my credit report?

Nope.

Bankruptcy will discharge the debt that you owe, but that eviction will stay on your credit report for 7 years.

When you file bankruptcy (either a 7 or a 13), you seek a discharge of your debts. When the debts are discharged, this means that the money you owe is wiped out and they cannot collect on you anymore. Unfortunately, sometimes they can still report on your credit. Creditors cannot report that there is any remaining balance (because the balance was discharged), but they can still report evictions.

This means that it will be much harder to get an apartment. On the plus side, after your bankruptcy, your credit score jumps and you no longer have any outstanding debt.

Before writing this, I read 8 different articles/blogs on how to get an eviction off of your credit report, and it boils down to two things (neither of which are helpful at all):

  1. Settle up with the landlord and pay off the debt. But even if you do this, he can still report the eviction on your credit unless you get him to agree to remove it, or
  2. Wait 7 years.

See, I told you those two things were not very helpful. In the end, the eviction stays on your credit, but at least we can wipe out the actual debt that you owe.

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.

Do I have to catch up on car payments if I want to keep my financed car in bankruptcy?

Maybe.  

In a chapter 13, no.  When you file a chapter 13 case, you can put your auto loan into your chapter 13 plan and start making payments through the chapter 13 trustee  (more below).

In a chapter 7, 99% of the time, you will have to be current on payments eventually if you want to reaffirm and keep the loan (more below).

Chapter 13

In a chapter 13 case, you file a plan with the court.  In this plan, you start making monthly payments to the chapter 13 trustee, who then makes payments to various creditors.  Your car loan will be part of this plan.  It does NOT matter if you are current on car payments.  Even better, your payments won’t start until next month.

For example, let’s say that you file a chapter 13 today.  You stop making car payments immediately (or maybe you already stopped).  Your first chapter 13 plan payment will be due on the 25th of next month.  As of this blog, today is March 8th.  If we filed a chapter 13 today, you would start making plan payments (including the car payment) beginning April 25th.

Chapter 7

In a chapter 7 case, if you want to keep a car loan, you reaffirm the debt.  You can find reaffirmation elsewhere in the blog, but basically, you sign a new agreement to pay the same balance, interest, and payments on your car.  99% of the time, the creditor will NOT let you reaffirm unless you become current on the car loan.  That doesn’t mean that you need to be current on the day you file your chapter 7, but in the next 2-3 months, you need to catch up on those missed payments.

If you are behind 2-3 months into the chapter 7, they will definitely repossess the vehicle, and you will  not be able to reaffirm.

What is a “Notice of Bankruptcy Stay,” and why did my creditor file that in state court?

The creditor filed that to protect himself.

When you file bankruptcy, the court imposes something called the “automatic stay,” automatically, which stays (stops) any creditor actions against you.  It normally stops garnishment, foreclosure, even those pesky phone calls.  

Now if a creditor has already filed a lawsuit in state court, that lawsuit cannot proceed.  It is frozen in place unless the creditor files a motion for relief from the automatic stay in the bankruptcy court.  He can do nothing in state court until or unless the federal bankruptcy court grants that motion.

Sometimes the creditor will file that “Notice of Bankruptcy Stay” to explain to the state court why he is doing nothing in the case.  The creditor doesn’t want to be accused of inaction, or even worse, of neglecting a case, so he will file that notice to explain why nothing is happening.

Usually, you get your bankruptcy discharge, and then the creditor can dismiss the state court action on their own, or if they simply do nothing for long enough, the state court will dismiss the suit.   If your bankruptcy case is thrown out for some reason, the creditor will notify the state court of the bankruptcy dismissal, and they can proceed with their state court litigation.

So the notice doesn’t really affect you;  it just protects them.

 

Can I spend my tax refund on prepaid VISA gift cards to hide the money from the bankruptcy trustee?

No, that’s fraud!

This time of year I have a large number of potential clients who are waiting on their tax refunds.   If they file bankruptcy before they receive and spend the refund, then they will lose that refund money to the bankruptcy trustee.  If they delay filing the bankruptcy for a few weeks, they can receive the refund and spend it on exempt (protected items).    

I’ve written enough blog articles on how to spend you tax refund before bankruptcy, so I won’t go over that again.

However, I need to warn you:  Do not try to trick the trustee.  The bankruptcy trustee has handled tens of thousands of bankruptcy cases.  There is nothing you can think of that he/she hasn’t already seen.

I had a client ask me if they could spend their refund on prepaid gift cards.  The answer is a resounding, “No!”  Those gift cards are the same as cash, and if you try to squirrel away cash before filing bankruptcy, that is fraud.  When the bk trustee discovers it, your case will be thrown out, your discharge revoked, and you’ll get sued.

Just play by the rules and you’ll be fine.

What happens to my Acorns (or Stash or other investment app money) account when I file for bankruptcy? Can I just not tell anyone about it?

What happens:

You probably lose it.  

On the day we file bankruptcy, we try to keep your combined bank accounts below a total balance of about $300, because there is a good chance that the bk trustee will order you to turn over the money in your account on the date of filing.  That means that if your payday is on a Friday, then we want to file bk on a Thursday when you don’t have much money left in your account.

Certain monies, retirement accounts in pensions, 401ks, and IRAs are generally protected in bankruptcy.  You could have $50,000 in your 401k, and that can be exempted (protected) in bankruptcy.  However, there are no good Utah exemptions for cash on hand (like money in the bank account).

There are various investment apps like Acorns and Stash, which allow you to put pennies or more into investment accounts.  If the money is going into a 401k or IRA, it may be protected.  However, most of these accounts are simply investment accounts with no retirement exemptions.  In other words, if you have $500 in your Acorns account, you may have to turn that over the bk trustee after you file, because it is simply cash on hand.

And yes, the trustee can order you to cash out your investment app monies and turn the cash over to him.

Can you hide it?

Probably not.

First off, that’s bankruptcy fraud.  Don’t commit fraud!  Disclose all of your assets so that you can get a real discharge of your debts and get a fresh start.

Second, the bk trustee has been doing this much, much longer than you have, and he can smell a lie.  When we meet with the bk trustee, he will ask for your bank statements for that last month, and sometimes for the last 6 months.  Those bank statements will clearly disclose that you’ve been stashing money away like a chipmunk stashes acorns.  (See what I did there with Stash and Acorns)?

What to do?

If you have investment accounts, tell your bankruptcy attorney before you file.  He will help you figure out if you can protect them, if you should liquidate them, or if it’s not a big deal.  But definitely don’t lie, and don’t try to hide anything.

 

 

 

Will the government shutdown delay my 2019 tax refund (I need it for bankruptcy)?

No, it will not.  Thank goodness!

In my bankruptcy practice, November – February are really rough because any time I meet a client with good tax refund coming, I tell him to wait.  My exact words in my heard are, “No, don’t pay me now.  I want to wait 4 months to see you again.  Dang it!”

If you file bankruptcy before you receive and spend that tax refund, you just may lose it.  This means that lots of clients with large families wait.  

This year, we have the current government shutdown with President Trump, the proposed border Wall with Mexico, and Democratic opposition to the same.  None of that affects your personal bankruptcy.  The IRS will still have employees process tax returns as of January 28, 2019.

Here is a link to a USA Today article that says the same thing:  https://www.usatoday.com/story/money/2019/01/08/government-shutdown-tax-refunds-filing-starts-jan-29/2511995002/

So file those tax returns on January 28, 2019, use the refund to pay for your bankruptcy, spend the rest on food storage, clothing, and necessary medical, and we can file your bankruptcy case and get you a fresh start.

Here is a link on what to do with your tax refund:  https://robertspaynelaw.com/myutahbankruptcyblog/2018/12/10/what-happens-to-my-2018-tax-refund-when-i-file-bankruptcy/

 

 

What happens to my 2018 tax refund when I file bankruptcy?

You lose it unless you receive it and spend it first.

That means that if you are receiving a large refund, you’ll probably want to hold off on filing bankruptcy until February or March of 2019.    

In other words, if you are contemplating bankruptcy, you should probably figure out how much of a refund you’ll be getting before you pull the trigger on any bankruptcy filing.  That doesn’t mean that you should drag your feet on getting the bankruptcy prepared.  You should still call today, meet with a bankruptcy attorney (like me), fill out the paperwork, take the online class, and be ready to file.  But, you won’t file until after you’ve received and spent that refund.

And yes, you can definitely use that refund to pay your attorney’s fees for the bankruptcy.

Just remember that you want to receive it and spend it before we file.  Don’t pay off friends or family!  Call me if you have any questions on how to spend it.  You can even text me on a Saturday at noon as you’re standing in an RC Willey trying to decide if you should purchase the new $800 bunk bed set for the twins (yes, you can). You can text me at 801-787-8860.

Here is a rehash of my post on this same issue last year (and the year before):

What happens to my 2017 tax refund if I file bankruptcy in 2018?

What happens to my 2016 tax refund when I file bankruptcy?

It’s that time of year again where I have to answer the phone and tell people that I don’t want their money until February or later because of tax refund season.  It makes a lean December/January in our household, but it’s the only way to protect my clients.

(I am cutting and pasting from earlier posts, so please forgive the repeat information).

So let’s say you get your refund February 1, 2016.   What do you do?

Better said, what don’t you do:

1.  Don’t go buy a new toy like a dirt bike or a tv.

2.  Don’t pay off any friends or family.  This is a preferential transfer, to an insider no less, and it results in Mom and Dad being sued by the trustee.

So what do you do:

1.  Spend it on exempt items under Utah Law.  This basically means food, clothing, washer, dryer, fridge, freezer, stove.

(Did you see a computer on the list?  No.   Don’t ask me if that’s okay.  It’s not).

2.  And use the rest to pay me.  :)

So let’s say you spend the tax refund on food storage March 1st and keep all of your receipts.  When can you file?  March 2nd.

Here is a relevant portion of the

Utah Exemptions Act, Utah Code Title 78B Chapter 5, Section 505

An individual is entitlted to an exemption in …

(viii) (A) one:

(I) clothes washer and dryer;

(II) refrigerator;

(III) freezer;

(IV) stove;

(V) microwave oven; and

(VI) sewing machine;

(B) all carpets in use;

(C) provisions sufficient for 12 months actually provided for individual or family use;

(D) all wearing apparel of every individual and dependent, not including jewelry or furs; and

(E) all beds and bedding for every individual or dependent;

There are other items you can spend the money on, and this is by no means comprehensive, but this should give you a good idea on how to spend it.  If you have questions on what to use it for, ask your attorney;  that’s what he’s there for.

What are the median income figures for bankruptcy in Utah (November 2018)?

Basically, if you are over, then you are a chapter 13.  If you are under, then you are a chapter 7.

The United States Trustee (UST) just updated the income figures on November 1, 2018.  Now remember that these numbers can be adjusted by child support payments (received or made), larger mortgages, huge tax debt, etc.  It is a gross overgeneralization to say that if you are over that figure then you MUST be a chapter 13, but this is the baseline we start with.  That being said, here are the current figures for Salt Lake County that we use on our Form 122 (6 month average of current monthly income and disposable income):

Single:      $61,044

Married:    $66,641

Married with 1 child:   $76,707

Married with 2 children:  $86,717

Married with 3 children:  $95,117

Married with 4 children:  $103,517

Married with 5 children:  $111,917

Married with 6 children:  $120,317

Married with 7 children:  $128,717

Married with 8 children:  $137,117

Married with 9 children:  $145,517

Married with 10 children:  $153,917

If you have more than 10 children, you’re probably going to be below median.  I have 11 children, and I know how expensive that can be.