4 Reasons Utah Bankruptcy Cases May Be Dismissed

Utah bankruptcy cases aren’t dismissed often, but it happens.

If the court dismisses your Chapter 7 case, you won’t receive a discharge. And your creditors will have the right to restart their debt-collection efforts. To avoid this financial nightmare, it may help to understand some of the most common reasons Utah courts dismiss bankruptcy cases.

bankruptcy dismissal Utah

No. 1: Debtors Transfer Assets Before Filing for Bankruptcy

When filing for Chapter 7, Utah debtors are required to list all their assets. The court often requires that nonexempt, valuable property, such as a second vehicle or expensive jewelry, be sold to pay off creditors.

Some debtors try to get around this requirement by transferring ownership of nonexempt assets to friends or relatives. Utah bankruptcy courts consider this to be fraud.

Transferring property within the 12-month period immediately preceding a Chapter 7 filing is a surefire way for debtors to face a dismissal.

No. 2: Debtors Hide Financial Information

Utah bankruptcy courts expect debtors to be honest and forthright about their financial affairs. But debtors sometimes try to withhold information from the bankruptcy trustee, in an attempt to conceal their true financial status. They make false statements, lie about assets or destroy financial documents, for example.

Hiding financial information from the courts is also considered fraud, and usually leads to dismissal.

No. 3: Debtors Fail to Complete Required Bankruptcy Classes

Federal law dictates that, within the six-month period before filing for Chapter 7, debtors complete a credit counseling class through an approved agency. In addition, they must complete a debtor-education course just prior to the conclusion of the case, in order to obtain a Utah bankruptcy discharge.

If a debtor fails to meet these requirements, the court will dismiss their case.

No. 4: Debtors Submit Incorrect Bankruptcy Paperwork

When filing for Chapter 7 in Utah (or any state), debtors must accurately complete and submit all required forms to the courts. Debtors must also submit the required court and filing fees.

Bankruptcy law mandates the specific forms, petitions and schedules that you must file. Failure to turn in all the proper paperwork, or to pay all the required fees, typically results in dismissal.

What Happens When Bankruptcy Cases Are Dismissed?

Chapter 7 cases that are dismissed for compliance issues — such as not completing a required bankruptcy class or failing to correctly complete the proper paperwork — can often be filed again immediately.

If the dismissal is based on fraud, however, the Utah courts can block debtors from receiving a discharge for a certain period of time.

Because Utah bankruptcy procedures can be complex and convoluted, debtors may lack the legal knowledge to complete the process correctly. An experienced bankruptcy lawyer can assist you with every part of the process, providing support and making sure that you don’t commit any violations that could result in the dismissal of your case.

The experienced attorneys of Lewis Adams & Associates, serving the greater Salt Lake City area, can alleviate your concerns and put you on the path toward a brighter financial future. To schedule a complimentary Utah bankruptcy consultation, contact our West Jordan office today.

Can You File for Bankruptcy Without an Attorney?

You don’t have to use a bankruptcy attorney to file for Chapter 7 or Chapter 13 in Utah. The law allows you to file as a pro se debtor, which means that you are representing yourself in the legal proceedings.

However, just because you can do something doesn’t mean you should. Filing for bankruptcy without the advice of a qualified attorney is a daunting task, and handling the matter yourself may not be in your best interest.

file for bankruptcy

Simple Chapter 7 Cases Aren’t So Easy Without a Bankruptcy Attorney

Are you planning to file for Chapter 7 bankruptcy? If yours is a simple case — you own little or no assets, have an income less than the state median and don’t have debts that are likely to be challenged by creditors — you may be able to obtain a discharge without an attorney.

However, even a simple Chapter 7 case will require a significant amount of time and effort on your part. You’ll be expected to be familiar with the U.S. Bankruptcy Code and to follow the rules and procedures of the federal and local courts. In addition, you’ll need to fill out the forms and schedules accurately and completely.

If you make a mistake at any point, you could put your discharge at risk. For that reason, filing for bankruptcy without an attorney is rarely a wise idea.

Complex Chapter 7 Issues May Require Bankruptcy Attorney Assistance

For complicated Chapter 7 cases, hiring a bankruptcy attorney is important, if you hope to achieve the best possible outcome.

If you own a business or a number of assets, have an income above the state median or have creditors that could claim fraud, filing as a pro se debtor comes with several potential risks.

Without a bankruptcy lawyer on your side, for example, your assets could be seized and sold to pay your creditors. Or the courts could dismiss your case. The financial risk is too great for most clients to attempt a complex Chapter 7 bankruptcy on their own.

A Bankruptcy Attorney Is a Must for Most Chapter 13 Cases

Chapter 13 bankruptcies are typically much more complicated and labor-intensive than any Chapter 7 case.

To receive court approval for a Chapter 13 bankruptcy, you’ll need to come up with a creditor repayment plan — a difficult task without an attorney’s extensive knowledge of the law. Trying to cram down (reduce) your car loan or a strip off (recategorize as unsecured debt) a HELOC or second property mortgage as a pro se debtor is extremely difficult, as the additional paperwork is highly complex.

Because of the complexity of filing for Chapter 13 and the long-term legal and financial outcomes that could result, hiring a bankruptcy attorney is always recommended to ensure maximum protection.

The professional legal team at Lewis Adams and Associates offers free consultations to Chapter 7 and Chapter 13 filers in Salt Lake City and throughout northern Utah. Contact our West Jordan office today to schedule a confidential consultation with an experienced bankruptcy attorney.

Chapter 7 Bankruptcy and Tax Refunds — What You Need to Know

After you file for Chapter 7 bankruptcy, will you be allowed to keep your income tax refund?

You may be able to keep your refund — if you plan ahead. To avoid losing your tax refund check, you’ll need to consider the timing of your bankruptcy filing.

bankruptcy taxes

Tax Refunds Are Considered Assets in Chapter 7 Bankruptcies

As soon as you file for Chapter 7, most of your assets become part of your bankruptcy estate and are eventually distributed among your creditors.

If your bankruptcy case is filed during tax season, your refund will likely be considered an asset, regardless of whether you’ve received the check yet.

Chapter 7 bankruptcies are based on the property you own, minus any exemptions. Tax refunds are considered property, and in most cases, they are not exempt under Utah law. If you aren’t careful in choosing your filing date, you may be required to turn your tax check over to the bankruptcy trustee.

Timing Your Chapter 7 Bankruptcy to Keep Your Tax Refund

If you don’t want your refund allocated to your bankruptcy creditors, you’ll have to delay filing your Chapter 7 case until after you have received and spent the money.

A word of warning: You can’t simply go out and append the money on frivolous purchases. Buying luxury items before filing for bankruptcy can place your discharge at risk, as it has the appearance of fraud.

Instead, use your refund for necessities. Using this money to pay your mortgage, utility bills, medical costs, food, car maintenance or other living expenses isn’t likely to cause a problem for your Chapter 7 claim.

You can also use these funds to pay your bankruptcy attorney as well as any case-related costs and filing fees.

Tax Refund Considerations for Future Chapter 7 Bankruptcy Filers

If you plan to file for Chapter 7 later in the year, you can avoid this issue with next year’s income tax refund by adjusting your tax withholding now.

The number of allowances you claim on your W-4 determines the amount of federal income tax that is withheld from your paychecks. If you have a high allowance count, the IRS holds more of your money throughout the year. Once you file your tax return, they refund the difference between withholding and your tax liability.

If you lower the amount of your withholding, you’ll keep more of your salary as you earn it, rather than getting a tax refund next year. Be careful not to have too little withheld though, or you could incur an IRS penalty for underpayment.

To determine the appropriate withholding amount in your case, consult with a tax professional and your bankruptcy lawyer.

The experienced bankruptcy attorneys at Lewis Adams & Associates, serving the greater Salt Lake City area, can help you determine your best filing option for your bankruptcy case. To schedule a complimentary consultation to discuss Chapter 7 bankruptcy, contact our West Jordan office today.