If You Are Going to Lie, Don't Write it Down

A recent decision by the United States Supreme Court indicated that false representations to creditors about one's financial situation does not necessarily rise to the level of a non-dischargeable debt. Ordinarily, when a person files for bankruptcy relief under Chapter 7, with the exception of certain taxes, family support, fines, and student loans, which are non-dischargeable, most other debts are dischargeable, meaning that the the court will issue a permanent injunction against creditors from collecting the debt, forever.

To overcome the dischargeability of the debt, a creditor would have to show that there was actual fraud, fraudulent representations by the debtor, embezzlement, or willful and malicious injury. Fraudulent representations in laymen terms would be to lie about something, such as your financial situation or ability to pay to a creditor. The Supreme Court has ruled in "Lamar, Archer & Cofrin, LLP v. Appling, 584 U.S. ___ (2018)" that unless such a false representation about a person's financial situation is in writing, even if the creditor relied on the representation to its detriment, the debt is dischargeable. In other words, as long as the lie is not in writing, intentional or not, a debtor would be able to get a discharge of the debt. The reasoning is that over time, memories have a tendency to change. Memories can embellish representations and people can forget important facts. A writing, however, provides a clear picture of what occurred. The takeaway, I suppose, is if you plan to lie about your financial situation to a creditor, don't put it on paper, keep it oral. If you are under financial stress, we would be happy to assist you in resolving your creditor issues. Your first appointment is always a free consultation

Chapter 13 vs. Chapter 7 Bankruptcy — What’s the Difference?

Filing for Chapter 7 bankruptcy can help you get back on your feet if you are struggling under a mountain of debt. However, Chapter 13 bankruptcy also offers an opportunity for a fresh financial start.

So what is the difference between these two types of bankruptcies? And which is the right solution for your debt problems?


What Is Chapter 7 Bankruptcy?

In Utah, Chapter 7 is designed to wipe out most unsecured debts, including medical bills, credit cards, personal loans and past-due utility bills.

When filing for this type of bankruptcy, debtors are typically able to keep their car and house. Nonexempt assets — such as a second vehicle or home, expensive jewelry, art, guns, family heirlooms or collectibles — will likely need to be surrendered to the court. The trustee will then sell this property to pay creditors. For this reason, Chapter 7 is considered a liquidation bankruptcy.

If you have no nonexempt assets, your creditors will get nothing when you get your discharge.

Chapter 7 is a relatively quick process. In most cases, debtors receive a discharge within three to six months after filing.

What Is Chapter 13 Bankruptcy?

In Utah, Chapter 13 doesn’t erase your debts and it doesn’t force you to give up any assets. Instead, you’ll enter into a repayment agreement, hence the reason this type of case is referred to as a reorganization bankruptcy.

Most repayment plans have a duration of three to five years, after which you will receive a bankruptcy discharge.

Priority debts, including child support and certain tax obligations, must be paid in full by the end of the repayment period. You will also need to be current on payments for secured debts, like your mortgage and car loan.

Unsecured debts don’t need to be fully paid for a bankruptcy discharge, though the court may expect some of your disposable income to go toward these bills.

Which Bankruptcy Filing Option Should You Choose?

Unfortunately, this decision may not be yours to make.

To be eligible for Chapter 7, your disposable income must fall under a certain threshold. If you make too much money, the court will require you to file for Chapter 13.

But that doesn’t mean everyone who qualifies should file for Chapter 7.

This bankruptcy filing option may not make sense if you have significant, nondischargeable debts, such as student loans and back taxes. And if you have co-debtors — like a friend or family member who cosigned a loan — they’ll still be on the hook for the debt.

In addition, Chapter 13 allows you to keep all your assets and property, an important consideration for some debtors. This type of bankruptcy can also help you avoid foreclosure, as you’ll have more time to get caught up on missed mortgage payments.

Ultimately, the safest way to choose a filing option is to consult an experienced Utah bankruptcy attorney.

In the Salt Lake City area, the legal team at Lewis Adams & Associates offers complimentary consultations. To learn more about the differences between Chapter 13 and Chapter 7 bankruptcy in Utah, contact our West Jordan, Utah, office today.

Top 3 Personality Traits for Bankruptcy Attorneys​

When choosing a bankruptcy attorney, experience is essential. In Utah, your bankruptcy lawyer also needs a solid understanding of federal laws as well as the regulations and procedures of the local district court in Salt Lake City.

bankruptcy attorney Utah

While knowledge and expertise are the primary characteristics to look for in a bankruptcy attorney, personality is also important. For the best possible experience, look for a local bankruptcy attorney who makes you feel comfortable and inspires your trust.

Your Bankruptcy Attorney Must Be Patient and Understanding

The burden of dealing with mounting debt can leave you feeling stressed out and worried for your financial future. Making the decision to declare bankruptcy can be painful, and taking the step to meet with an attorney requires courage.

A good bankruptcy lawyer understands these challenges and has the patience to address all of your concerns. A lawyer with a relaxed and reassuring personality will help make you feel better about your situation. While you may never be thrilled about filing for bankruptcy, you should leave your initial consultation with a feeling of trust and a more positive outlook.

Your Bankruptcy Lawyer Must Have Excellent Communication Skills

Communication is an exchange of ideas that requires both speaking and listening. The bankruptcy lawyer you hire must be skilled in both roles.

You will rely on your bankruptcy attorney to provide sound legal advice that is appropriate for your situation. Planning an effective approach to your case requires a willingness to listen and the ability to ask probing but compassionate questions about your financial situation.

At the same time, your bankruptcy lawyer must be able to communicate clearly to prevent misunderstandings. This provides assurance that you will never leave your attorney’s office confused or unsure about how your case will proceed. And because follow-up is a key component of good communication, look for an attorney who takes a proactive role in moving your case along.

Look for a Bankruptcy Attorney Who Is Passionate About the Process

You wouldn’t choose a knee transplant specialist to perform your open heart surgery. Likewise, asking a family law or personal injury attorney to handle your bankruptcy case doesn’t make sense. Different aspects of law require attorneys to develop specialized skillsets.

Look for a bankruptcy lawyer who is passionate about helping clients resolve their financial difficulties, rather than one who seems to be going through the motions. You’ll be more likely to achieve a better outcome if the lawyer who represents you in court is enthusiastic about their work.

The compassionate and experienced legal team at Lewis Adams & Associates has served the greater Salt Lake City area for over 16 years. We are committed to helping you get the fresh financial start you need. Contact our West Jordan office today to schedule your personal bankruptcy attorney consultation. We look forward to helping you create a strong, optimistic future.