I just received my chapter 7 bankruptcy discharge. Is my case done?

Kind of, but not really.

As for done-ness, your credit starts to rebound once you get the discharge. Your debts have been discharged, and you’ve gotten the relief you were seeking in bankruptcy. As far as your debt is concerned, yes, you are done.

As for being fully done, no. The bk trustee still has to administer the estate. Now what does this mean? I had a client ask me recently, and here’s what I told her:

Yes and no. (ha, I love lawyer answers).
You will get your discharge on October 27, and at that point your credit will start to rebound. However, the bk trustee will keep his half of the case open to see if your tax refunds are large enough for him to take. Once he determines that, he will either take the refund, or abandon it, and then the case closes out.

You can look at the end of your bankruptcy case has having two distinct parts: 1. the discharge, and 2. the trustee’s final report.

  1. the discharge — You receive your discharge about 3 months after you file.
  2. trustee’s final report — the bk trustee needs to determine if you have any assets worth taking (that aren’t exempt), like upcoming tax refunds, too much equity in your home, or too much equity in one of your cars. If there is enough there (usually at least $2,000 worth), then the bk trustee will take those assets and pay out a small percentage to each of your creditors.

The real problem comes down to timing. You get your discharge 3 months after you file. The final report may not close out your case until 2 years after you file. Yes, 2 years.

There is NO good way to tell the bk trustee to hurry up. Here’s a fun story about my feeble attempt: I reminded the trustee in an email that he had been sitting on my client’s tax refund for almost 3 months. He sent me a very unfriendly email, laced with expletives no less, saying that he might keep the case open up to the 2 year mark just to teach me and my client a little patience. That was the last time I tried to gently remind a trustee to do his job.

Yes, some of your attorneys will say that you can file a motion to force the trustee to administer the estate or abandon it, but those attorneys like to pick unnecessary fights and anger the trustees for years to come.

Can I add new debts to my bankruptcy case if they happen while it’s open?

Short answer: No (and maybe…).

The long answer is bit more complicated.

Basically, if the debt was incurred (happened) before you filed the bankruptcy, then you can add it to your open case. If the debt was incurred after you filed, then you cannot. (but see below).

When you file a bankruptcy case (7 or 13), you list all of your debts for things that happened up to the moment of filing. So if you are in a car accident as you drive to your attorney’s office to file the paperwork and get rushed to the hospital, you can add those bills, because they happened before you filed the bk.

However, if you have a follow-up with the doctor after you file bk, that follow-up appointment is not covered. It happened after the bk was filed.

On the other hand, let’s say you file bankruptcy, and then receive some collection bills from creditors for things that happened before the bk was filed. You can add those to your current case.

Even more complicated: you visit the doctor before filing, but he forgets to bill you until after we file. This IS covered, because the actual visit/service occurred before the bankruptcy was filed.

It all depends on when the debt was incurred.

With my clients, we try to list every creditor we can. Then we file the case. After filing, I tell them to make a stack of any collection notices they receive after we file. About 2 months after filing, we compare this stack to the list of creditors in the case. If there is someone we forgot, we add them.

Exception for new debt: That being said, if you are in a chapter 13 and incur new debt (like a huge hospital bill), you can convert your case to a chapter 7 and add the new debt. However, this is complicated enough that it deserves its own post.

Do I need to list my health insurance provider in the bankruptcy as well as the hospital?

Generally, no.

When we file bankruptcy, we list all of your creditors (people you owe money to). We even list potential creditors (like that landlord who let you out of your lease early with a sly smile, promising not to sue you). That being said, we don’t list everyone under the sun.

Medical bills are very common in bankruptcy. Whether it’s a chapter 7 or a chapter 13, you want to list the hospital where the medical debts were incurred, as well as each individual doctor, doctor’s office, and ambulance company involved in giving you an outrageous amount of debt.

However, your health insurance provider isn’t one of your creditors. They won’t care about your bankruptcy. They won’t write off your various debts to hospitals in their system because of your bankruptcy. We don’t need to list them.

Now it’s a different story if you are behind on insurance premiums. If you are behind and have an outstanding bill with your health insurance, then yes, we list them. Not for the medical bills and medical debt, but for the insurance premiums you owe them.

Of course, if you’re in doubt, list everyone. It’s better to be safe than sorry.

Do we lose all the equity in our home if we do not reaffirm the mortgage in bankruptcy?

No, it’s still your home and your equity. The only thing that reaffirmation does is keep it on your credit.

I had a client contact me today because Wells Fargo never filed the reaffirmation agreement that we signed 6 months ago. She was worried, because it sounds like a big deal. Thankfully, it’s really not (and probably for the best).

Here is my email response to her:

what if they didn’t reaffirm?

Robert Payne robertspaynelaw@gmail.com
3:10 PM (2 minutes ago)

I know that they’ll get back to you next week, but this is going to be stewing in your mind all weekend.

When we filed the bk, we filed a Statement of Intention stating clearly that you wanted to reaffirm. After we file that, they are supposed to prepare a reaffirmation, send it to us, we sign it, send it to them, they sign it, and then they file it.

So what happens if they do NOT file it?

Not much.

The mortgage will not report on your credit, which is bad. But, you can refinance with another lender if you want the credit reporting.

Otherwise, it’s still your home. Every payment you make pays down the mortgage, and you do get credit for it. If you pay off the home, you get the title. If you sell the home, you keep the equity because you are on title.

The only problem with no reaffirmation is the credit reporting.


I forgot to take my second bankruptcy class. Can the court extend the time to file my financial management course certificate (Form 423)?

Yes, you can extend the time.

And no, this is not really how my client asked the question. To quote as best I can, he called me and said,

Man, I got your email and text and totally forgot to take that class. Am I screwed? The court letter says it was due last week and I don’t have $260 to pay those bastards.

For a little explanation, you have to take two online classes as part of your bankrutptcy. Before you file bankruptcy, you have to take an online class and receive a Certificate of Credit Counseling. At the end of your case, you have to take a second class which issues a Certificate of Completion for your second Financial Management Course.

When your case is about to close out, the court will send you a reminder letter. The letter says “Notice to Debtor of Deficiency Concerning Discharge and Requirement to Complete Debtor Education.” The letter also warns that if you miss the deadline, your case will close out with NO DISCHARGE. This means that you still owe all of your creditors in full. Finally, the letter threatens that if your case closes without discharge, it will cost you a reopening fee of $260 to reopen your case and file that certificate. This is in addition to whatever your attorney charges to file a Motion to Vacate Dismissal and notify all of your creditors.

Today one of my clients called me saying that he missed the deadline. I looked up his case, and it was still open, but poised to close out at any moment. He promised to take the class this weekend. I quickly drafted up a very shoddy motion, which I’ll include below:

            On July 15, 2020, this Court issued a Notice to Debtor(s) of Deficiency Concerning Discharge and Requirement to Complete Debtor Education, giving a deadline of July 27, 2020 to file Form 423.  Debtors have not taken the Personal Financial Management Course yet.  However, Debtors will be taking the course over this coming weekend and will be able to have the Form 423 filed no later than August 4, 2020.
            THEREFORE, Debtors request that this Court extend their deadline to file Form 423 until August 4, 2020. 

Apparently this happens more than I thought. When I went to file the Motion, the court’s filing system (CM/ECF) actually has a dropbox choice under “Motions/Applications” for a “Motion to Extend Time to File Financial management Course Cert (Form 423).”

From a practice standpoint for other attorneys reading this, I did NOT file a certificate of service. I did NOT set it for hearing. I know that the court clerk will see this and give me the week before calling me and asking if I want to set it for hearing.

Hopefully my client will take that second class this weekend. I can file his certificate (along with the accompanying Form 423) on Monday, and he’ll receive a discharge of his debts.

We like to keep money in our savings account as a “rainy day fund.” What will happen to it when we file bankruptcy?

You’ll lose it.

On the day you file bankruptcy, the bankruptcy estate is created. This estate is comprised of everything you own on that day: equity in your home, furniture, 401k, and money in your bank account.

The bk trustee looks at your bankruptcy estate to see if you have any non-exempt (unprotected) assets that she can use to sell off and pay your creditors. Normally, we can exempt (or protect) your various assets under state laws. Some states even have wildcard exemptions that let you protect a certain amount (like $25,000) of anything, even a pile of cash sitting on your kitchen table.

However, Utah (and most states) don’t have a wildcard. If you have cash in your bank account on the date of filing, you will lose it. In a chapter 13, the bk trustee will ask you to pay that balance to your creditors over your 5 year plan. In a chapter 7, the bk trustee will demand that you turn over your bank account balances to pay your creditors.

Now remember, it’s only the balance on the day of filing. That means that if your payday is on a Friday, then we file the bankruptcy on a Thursday when your balances are too low to be enticing to a bk trustee.

More often than you’d think, I have clients who argue with me, saying that they like to keep a savings built up for emergencies. The trustee won’t care. She’ll take that savings when you file. You can always build up a new savings after we file the case. And as for emergencies, i would say that bankruptcy is a pretty huge emergency.

So if you have a savings built up, I will recommend that you spend it on exempt items like food storage, clothing, and new tires for your car. It never hurts to use some of that to pay your bankruptcy attorney as well!

Can the bankruptcy trustee take my unemployment benefits (or my pandemic unemployment assistance)?

No, he cannot!

I filed bankruptcy for a client who had just been approved for unemployment, and she had received a check for about $3,200. Unfortunately, she received and deposited this check one day before filing bankruptcy.

Normally, when we file bankruptcy, we try to keep your combined bank balances below about $300. The bankruptcy trustee can take whatever money you have on hand on the date of filing and use it to pay your creditors. So here we are, ready to file, with a nice, tempting wad of cash ($3,200) sitting in the bank account.

Thankfully, this is not the kind of money that a trustee can take. Unemployment compensation, both state and the federal pandemic unemployment) are protected from creditors, and from the bankruptcy trustee.

We filed the case, exempted the money in the bank account, and client was very happy.

Utah Code 35A-4-103 (4)

(4) Except as provided for in Subsection (5):
(a) any assignment, pledge, or encumbrance of any right to benefits that are or may become due or payable under this chapter is void;
(b) rights to benefits are exempt from levy, execution, attachment, or any other remedy provided for the collection of debt;


Utah Code 78B-5-505(1)(a)(iii):

(a) An individual is entitled to exemption of the following property:
(i) a burial plot for the individual and the individual’s family;
(ii) health aids reasonably necessary to enable the individual or a dependent to work or sustain health;
(iii) benefits that the individual or the individual’s dependent have received or are entitled to receive from any source because of:
(A) disability;
(B) illness; or
(C) unemployment;

If I file bankruptcy on Green Light Auto Solutions, can they still shut off my car?


Technically, on the day we file bankruptcy, it stops any kind of collections, including garnishment, repossession, foreclosure, and even the remote “shutting off” of your leased car through Green Light Auto Solutions.

If they shut off your car after we file the bk, I can call them to turn it back on. I actually had to do that this afternoon for client who found herself stranded in California. She was a few days behind on her lease payment, and they activated the remote shutoff. Unfortunately, she was on a road trip, in California, in the middle of nowhere. She frantically called me, I called them, and they turned it back on.

However, if they have shut off your car before we file the bk, I can only force them to turn it back on if you either:

  1. in a Chapter 7, only if you catch up on payments and are planning on keeping it, or
  2. in a chapter 13, if you file your chapter 13 plan proposing to catch up on payments.

What this means is that if it’s shut off after we file, bankruptcy can get it turned back on. If it’s shut off before we file, you have to propose some kind of way to catch it up, or it will stay off.