CHAPTER 7 BANKRUPTCY

PLEASE READ THE FOLLOWING INFORMATION CAREFULLY AS IT CONTAINS IMPORTANT DETAILS WHICH MAY BE RELEVANT TO YOUR CHAPTER 7 BANKRUPTCY CASE. IF YOU HAVE ANY QUESTIONS REGARDING THE INFORMATION SET FORTH HEREAFTER OR ANY OTHER QUESTION, PLEASE SEND AN E-MAIL TO JODY L. HOWE AT THE E-MAIL ADDRESS SET FORTH BELOW AND SHE WILL RESPOND TO YOUR QUESTIONS WITHIN 24 HOURS.

Communicating with our Office via E-mail

The best, fastest way to receive a response from our office staff or attorneys is via e-mail. E-mail is our favored way of communicating with our clients. We receive a high volume of inquiries and it helps us a great deal if we can screen your questions via e-mail. If we cannot address your issue effectively in an e-mail response, we will telephone you.

If you have any questions or concerns not addressed in this brochure or on our website, please send your questions to our office via e-mail and we will promptly respond to any concerns that you may have.

We endeavor to provide clients with individualized service to the extent possible. The use of e-mail communications assists us in accomplishing this objective.

Jody: jody@utahbankruptcy.com

Final Review - Crystal crystal@utahbankruptcy.com

Motions- Victoria: victoria@utahbankruptcy.com

Chapter 7 Issues - Jessica: jessica@utahbankruptcy.com

On the day we file your Bankruptcy, a unique number will be assigned to your case. We will e-mail or telephone you with your Bankruptcy Case No. as soon as your case is filed. Your Bankruptcy Case No. protects you from your Creditors. If a Creditor telephones you following your bankruptcy filing, give them your Bankruptcy Case No. and the date of filing. Most Creditors understand that they are prohibited from communicating with you after you have filed for bankruptcy.

Within about ten (10) days from the date your bankruptcy case is filed, the Bankruptcy Court sends a notice to every Creditor you have listed in your bankruptcy schedules, informing them of your bankruptcy filing and dates relevant to your case. If a Creditor is a huge institutional corporation such as a credit card company, the appropriate department responsible for terminating collection efforts may not immediately receive notice of the bankruptcy. Therefore, if a Creditor contacts you before they receive written notice of your bankruptcy, simply give them your case number and the date of filing.

Most Creditors understand the legal significance of a bankruptcy filing and the severe penalties that may be imposed if they continue to attempt to collect from you. If they persist in attempting to collect from you, please request the name and telephone number of the particular person who is communicating with you. Then call or e-mail this information into our office, and we will communicate with the Creditor and make them cease all efforts to collect from or communicate with you. If necessary, we will seek sanctions from the Court.

It is not unusual for Creditors to continue to send statements or collection letters for several weeks following your Bankruptcy filing. Even though all of your Creditors will receive Notice from the Bankruptcy Court of your bankruptcy filing within 10-14 days of the filing date, it often takes time for this Notice to be directed to all appropriate departments of huge, institutional Creditors. If you receive statements or collection letters in the mail, write your case number on the statement or letter, indicate you have filed bankruptcy, and return it to your Creditor in the mail.

All money you have on deposit in any of your checking or savings accounts ON THE DATE OF FILING, is property of the bankruptcy estate and is no longer your money. It is easy for a Bankruptcy Trustee to ascertain the exact amount you have in your bank account(s) on the date of filing by making you provide them with a copy of your bank statement. Your bank statement will indicate the exact amount of money you have on deposit in your bank account(s) on the date of filing. If it is a significant amount of money, the Bankruptcy Trustee will request that you turn these funds over to them, and if you have spent the funds, you will need to figure out how to come up with the money to pay the Trustee. Note, your check register is generally not consistent with bank statements as the bank statements do not take into account your outstanding checks. Unfortunately, the Bankruptcy Trustee can take the bank statement figure without regard to your check register and outstanding checks.

Example: John and Susan Smith deposited Mr. Smith’s paycheck into their checking account the week before they filed bankruptcy, and sent a check off in the mail for payment of their home mortgage ($1,700.00) and car payment ($450.00). At their bankruptcy hearing, the Bankruptcy Trustee requested they provide him with a copy of their bank statement for the month before they filed. The bank statement revealed they had $2,300.00 dollars in their account on the date of filing. The Smiths argued that they had used the funds to pay their $1,700.00 home mortgage and $450.00 car payment, but that these payments had not cleared the bank on the date of filing. This argument was irrelevant to the Trustee and he made them turnover to him the $2,300.00 they had in the account as of the date of filing. Since they had spent the funds, it was necessary for them to borrow funds to pay the Trustee.

How can I protect funds in my checking and savings account(s)? It is very important that we file your case on a day on which funds in your bank account are low such as before you receive your paycheck, or after you have paid your major monthly expenses such as rent, mortgage and car payments. Be cognizant of the fact that in the days before we file your case, you should pay your expenses with cash or money orders so that the funds are pulled out of your account immediately, eliminating the necessity of waiting for checks to clear your bank accounts.

Should I open a new bank account before I file bankruptcy? If you owe money to the bank at which you have your accounts at the time of filing, and you intend to eliminate that debt in bankruptcy, you should open a new bank account before you file bankruptcy. If you intend to reaffirm the debt, you should contact the bank, explain you are required to list them in your bankruptcy schedules, and explain to them that you want to retain your banking privileges and that you will be reaffirming your debt with them.

When can I start using my bank account again? If you are paid the day following your bankruptcy filing, it is safe to deposit your check. The balance on the date of filing is the balance the Trustee can take. However, if you make a large deposit the day after your file bankruptcy which would show up on your bank statement, you may need to explain the source of funds to the Trustee. If you have money in your pocket on the date of filing, it is also property of the bankruptcy estate.

Yes, you are required to appear at an initial hearing in relation to your bankruptcy case. This hearing is known as the §341 Hearing or Meeting of Creditors, and is conducted approximately 30-40 days following the date your bankruptcy case is filed. For most individuals, this is the only hearing you will be required to attend in the bankruptcy process. The hearing is conducted by the Bankruptcy Trustee assigned to your case in various locations based on where you reside. It is imperative that you appear at the hearing, and your spouse must also be present if you filed jointly with your spouse. An attorney from our offices must be present with you at the hearing. If you fail to appear, your case may be dismissed. If a Creditor contests your bankruptcy case, or if the Trustee challenges or questions some aspect of your case, you may be required to appear at additional hearings.

Although all Creditors are invited to attend the hearing, most Creditors do not appear at the hearings. They are more likely to address issues pertaining to your case by corresponding with or telephoning our offices. Occasionally Creditors who have provided financing for vehicles and other assets appear at the hearing; and a representative from R.C. Willey is present at all §341 Hearings.

Within 10 to 14 days from the date your case is filed, the Bankruptcy Court will send Notice to you and all of the Creditors you listed in your Bankruptcy schedules, informing you and your Creditors of the date, time and place of your bankruptcy hearing. The Notice also sets forth other important dates and deadlines relevant to your case. Look for the Notice in the mail, and if you have not received it by the end of two weeks after your filing date, please contact our office and we will ensure you obtain a copy. A representative from our office will attempt to reach you by telephone or e-mail a few days before the hearing to remind you of the hearing date and time.

Re-scheduling the date and time of your hearing is extremely difficult, and in many cases, impossible. Just as we must rearrange our schedules to ensure we are present with you at your hearing, it will be necessary for you to do the same. If it is impossible for you to attend your hearing because of a personal or medical emergency, we can seek permission from the Court to obtain a new hearing date. If you unavoidably and unexpectedly must be out of town at the time of your hearing, we may be able to obtain Court permission to conduct the proceedings telephonically, provided we have sufficient advance notice of your inability to appear in person.

1- You must take with you to the hearing, PHOTO IDENTIFICATION such as a driver’s license or passport; and VERIFICATION OF YOUR SOCIAL SECURITY NUMBER. If your social security number is listed on your driver’s license, this is sufficient verification of your social security number. Individuals are often surprised to learn that their social security number is not listed on their driver’s license; so make sure you double-check this before the hearing. Social security numbers are never listed on passports. Verification of your social security number which will be acceptable to the bankruptcy trustee include: insurance card, paystub, W-2, social security card, other formal documentation of your social security number. Your attorney will be present at the hearing with your file and all other appropriate paperwork to represent you in your hearing.

2- You are required to take with you to the hearing a copy of statements from all of your financial accounts (usually just bank and credit union statements), reflecting the account balance(s) on the day the case was filed.

3- You are required to take with you a copy of the paystubs(s) you received most recently prior to the date of the hearing. These are in addition to the ones you previously filed before the case was filed.

Approximately eight to ten bankruptcy hearings are scheduled each hour; and although your portion of the hearing will involve examination time of about five to ten minutes (generally); it is not possible to ascertain in advance when within the hour, your case will be called. You must, therefore, set aside the entire hour on your calendar. Remember to schedule sufficient time for traveling and parking prior to the hearing. Your attorney will meet you at the hearing room approximately fifteen minutes before the scheduled hearing.

The Bankruptcy Trustee assigned to your case will have carefully reviewed prior to the hearing, all of the statements and schedules filed in relation to your case. The Trustee may question you regarding any aspect of your statements and schedules they desire. In general, the Trustee in a Chapter 7 case is focused on identifying assets they may sell or administer for the benefit of your Creditors. They are also concerned that you have made a full and accurate disclosure of assets and other information requested in the statements and schedules.

Will the Trustee instruct me to take any particular action at the hearing?

The Trustee may issue directives (instructions) requiring you to perform certain tasks such as amend your paperwork, obtain an appraisal of a motor vehicle or other asset, surrender an asset, turnover an asset to them, file tax returns, provide copies bank statements, divorce decrees, contracts, etc. You must comply with the Trustee’s instructions within about 10 days following the hearing. If the Trustee requests written information, you will need to send it to our office and we will forward it to the Trustee. We will work closely with you to comply with the Trustee’s directives. If you fail to comply, your bankruptcy discharge may be denied. In many cases, the Trustees issue no directives or instructions, and you are not required to take any specific action following your hearing.

What happens in my case following the bankruptcy hearing? Your Creditors will have two months following the bankruptcy hearing to contest the bankruptcy discharge If no Creditor contests your bankruptcy (and they usually do not), and if your case is designated a no-asset case (no assets are collected to disburse to your Creditors), your case will be closed in about two months following the §341 Hearing. The Court will mail formal notice to you and all of your Creditors that your debts have been discharged in bankruptcy. Note, the Trustee must file a report with the Court indicating that the Trustee has designated your case as a no-asset case, and that they were unable to identify non-exempt assets of sufficient value to warrant to collect or sell to make a monetary distribution to your Creditors. The Trustee will not issue this report until the Trustee directives have been complied with.

This course is in addition to consumer credit counseling you were required to complete before your case was filed. Unless debtors complete a course in Financial Management, their debts will not be discharged (eliminated) in bankruptcy. Request that the certificate of completion of this course be sent to our office at reception@utahbankruptcy.com. In addition, complete, sign and provide to our office, Form B23 which much be filed with your certificate.

How do I know if the Trustee intends to take my assets to sell and distribute them to my Creditors? We will have a good idea in most cases at the time of the §341 Hearing whether or not the Trustee intends to administer any of your assets for the benefit of your Creditors. The Trustee may instruct you at the time of the Hearing to turnover assets to them which they intend to distribute to your Creditors. In other cases, the Trustee may simply seek additional information regarding your assets to determine whether they have sufficient value to warrant collection of the same for the benefit of your Creditors. If the Trustee does not request you to turnover any asset or provide them with additional information regarding any of your assets, it is usually safe to assume that they do not intend to administer your case and that your case will be designated a no-asset case.

If my case is a no-asset case, when will it be over? Your Creditors have about two months following the §341 Hearing, to contest the bankruptcy. If no one contests the bankruptcy discharge, and if your case is designated a no-asset case, your debts will be discharged and your case will be closed about two months following the bankruptcy hearing. The Clerk’s office of the Bankruptcy Court will distribute a formal notice to you and all of the Creditors you listed in your schedules and statements that all of your debts have been discharged in bankruptcy.

How will my case proceed if the Trustee finds assets to distribute to my Creditors? The Trustee will collect or request that you turnover the assets he/she finds, sell assets if necessary, and send notice to all of your Creditors informing them that funds are available for distribution and inviting them to file claims with the Court by a particular date. If the Creditor fails to file a claim by the date specified (and they very often do not file claims), they will not be permitted to participate in the distribution. After the claims cut-off date, the Trustee will distribute the funds they have collected from you to all Creditors who filed claims, on a pro-rata basis.

Is there any way I can preserve my assets if the Chapter 7 Trustee indicates he/she will take and distribute my assets to my Creditors? There are many things we can do including converting to Chapter 13 or making arrangements to purchase your assets from the Chapter 7 Trustee. Any such action requires careful consideration and should be evaluated in detail with your attorney.

Can I predict whether any of my Creditors will contest the bankruptcy discharge? Creditors usually do not contest bankruptcy discharges. The most common reason Creditors contest a bankruptcy discharge is where there is a significant amount of charging activity right before the bankruptcy filing. The Department of Workforce Services frequently contests bankruptcy discharges of any portion of an individual’s obligation to them. To contest a bankruptcy discharge, a Creditor must file a lawsuit against you in the Bankruptcy Court which is expensive to do. It will be necessary for you to defend yourself in the litigation which we will do for you if you desire, although this is not included in the fee we charge for your Chapter 7 Bankruptcy and is an extra charge.

Does a representative of the Bankruptcy Court come to my home in relation to my bankruptcy filing?

No, not unless they have some reason to believe you are concealing assets in which case they have the option of involving the FBI in your case. If they want something, they will ask you to provide it to them, they do not come to your house to get it, nor do they contact your bank or employer.

Although you are legally required to list all Creditors to whom you owe money as of the date of filing, you can always continue to pay whomever you want to pay, even without signing a reaffirmation agreement. If you have a relationship with a dentist or physician you desire to preserve, you may wish to contact them concurrent with your bankruptcy filing, explain to them that you are legally required to include them in your bankruptcy schedules, but that you intent to continue to pay them.

Yes, you may add Creditors after you file your bankruptcy case until your case is closed, provided the debt you desire to add was incurred PRIOR TO the filing date. You may not add debts incurred AFTER the filing date. You may add as many Creditors as you desire for an additional fee of $50.00 (per Creditor list), which includes a fee assessed by the Court to add Creditors after the filing date.

If your case is a no-asset case, even omitted Creditors are included in the bankruptcy discharge as long as the debt was incurred before the date of filing. So, for example, if a Creditor seeks to collect from you even two or three years after your bankruptcy case is closed, their collection efforts will be in violation of the discharge order as long as the debt was incurred prior to the date you filed your bankruptcy case, even if you forgot to list them in your bankruptcy schedules. If your case was administered as an asset case, and if your case is closed at the time you learn of an omitted Creditor, you can seek to have your case re-opened to add the omitted Creditor.

The Homestead Exemption in the State of Utah is very generous. Up to $20,000.00 of equity per person is protected in your primary residence at the time of filing.

Example: John and Linda Smith’s home is valued at $150,000. They owe $120,000 on the first and only mortgage against their home. They therefore have $30,000 of equity in their home. They are entitled to a total of $40,000 Homestead Exemption on their home, so the equity in their home is fully protected. If the equity in John and Linda Smith’s home exceeded the Homestead Exemption, we would have advised them to file Chapter 13 to protect their home.

If you quit making timely mortgage payments, the mortgage company can commence foreclosure proceedings, but as long as you continue to pay the mortgage payments, you can keep the home.

If you desire to keep your home you must be current in your mortgage payments or bring them current as quickly as possible after you file. As long as you stay current in payment of your home mortgage, your mortgage lender cannot take your home. If you are delinquent in payment of your home mortgage at the time of filing, the Mortgage Creditor may seek Court permission to recommence or begin foreclosure proceedings. You may bring your home mortgage current at any time before the foreclosure sale to save your home and to stop the foreclosure process. Oftentimes, your Mortgage Creditor will work with you to assist you in bringing your mortgage payments current. If they refuse to work with you, you have the option of converting your case to a Chapter 13 or filing a Chapter 13 after your Chapter 7 case is closed. In a Chapter 13 case, you are legally permitted to cure home mortgage arrears over a period of months or years if necessary.

No, it will not. If you believe you may have judgment liens against your home, you should obtain a title report and consult with your attorney about filing the necessary paperwork to remove these liens. Otherwise, when you seek to refinance or sell your home, you will need to pay the judgment liens. If a judgment is entered against you in the State of Utah, it becomes an automatic lien on any real property you own in the county in which the judgment is entered.

Yes. After you initiate your bankruptcy case, Mortgage Creditors are barred from taking any action to continue or begin proceedings to foreclose on real estate. If foreclosure proceedings are underway at the time your case is filed, the proceedings are terminated. Mortgage Creditors must thereafter file Motions with the Court to get Court permission to begin or recommence foreclosure proceedings following a bankruptcy filing. (The Motions are generally titled, “Motion for Relief from Automatic Stay”.) If a Mortgage Creditor elects to file a Motion, the Mortgage Creditor must file the original copy of the Motion with the Court, and mail a copy to you and to our offices. Be assured that we will receive a copy of any Motion you receive from any Mortgage Creditor at the same time you do. If you Desire to Surrender your Home - If you have informed us of your desire to let your home go, we will not respond to the Motion and any hearing scheduled on the Motion will be cancelled within approximately18 days from the date the Motion was mailed out as indicated on the last page of the motion. The Mortgage Creditor will then be free to begin or recommence foreclosure proceedings. Another option available to Mortgage Creditors is to wait until your bankruptcy case is closed at which time they are also free to begin or recommence foreclosure proceedings.

The foreclosure process, which cannot even be commenced without Court permission or until your case is closed, takes a period of time to accomplish, depending on where the Mortgage lender was at in the process at the time of filing. It could be as short as about 30 days following the date the Mortgage Creditor obtains Court permission to recommence foreclosure proceedings, or as long as four to six months if the Mortgage Creditor is just beginning the process. Your attorney can help you pinpoint the precise date you will be required to vacate your home. If you opt to continue to reside in your home during the foreclosure process, you must properly maintain the home while you are living there and may not do anything to damage or deteriorate the premises. The last event in the foreclosure process is the foreclosure sale. The Mortgage Creditor is required to give you 30 days advance notice of the foreclosure sale. After your home is sold in a foreclosure sale, you must vacate the premises. Again, we will help you identify the date of any pending foreclosure sale as far in advance of the sale as possible.

You should contact the Creditor and make arrangements to either return it to them or have them pick it up. Most individuals make arrangements to return the vehicle if it is operable. When you return the vehicle, make sure you obtain a receipt of some type from the lending institution, acknowledging your return of the vehicle.

If I intend to surrender (return) a vehicle to a Creditor, when am I required to do so?

The absolute deadline is 45 days following the §341 Hearing; although the Creditor can force you to return it earlier by obtaining relief from stay (Court permission).

After you initiate your bankruptcy case, Creditors are prohibited from taking any action to repossess vehicles or other assets securing the debt you have with them without first obtaining Court permission. If a Creditor obtains Court permission, they can immediately repossess a vehicle

How can a Creditor obtain Court approval to repossess my vehicle or other similar asset?

Creditors must file a Motion with the Court and schedule it for hearing before a Judge to obtain Court permission to go forward with a repossession. (The Motions are generally titled, “Motion for Relief from Automatic Stay”.) If a Creditor elects to file such a Motion, the Creditor must file the original copy of the Motion with the Court, and mail a copy to you and a copy to our offices. Be assured that we will receive a copy of any Motion you receive from any Creditor at the same time you do.

If you Desire to Surrender the Vehicle or Other Asset - If you have informed us of your desire to return to the secured creditor the vehicle or other asset addressed in their Motion, we will not oppose the Motion and any hearing scheduled on the Motion will be cancelled within approximately18 days from the date the Motion was mailed out. You will not need to attend the hearing. The Motion will be granted based on your non-opposition, and the Creditor will be free to repossess the vehicle or asset (unless you have already returned it to them) and to proceed to sell the vehicle or asset. A secured creditor may not sell a vehicle or asset you return to them during your bankruptcy case without first getting Court permission or relief from the automatic stay. Otherwise, they must wait until your case is closed before they can sell the vehicle or other asset.

If you Desire to Keep the Vehicle or Asset - If you desire to retain possession of the vehicle or other asset addressed in the Motion, you must be current in your payments on the vehicle or bring them current as quickly as possible following receipt of the Motion. We will contact the Creditor on your behalf and either inform them you are current, or make arrangements with them to bring the obligation current within a particular period of time. Some Creditors are willing to work with individuals in this regard, others are not.

If you desire to retain an asset subject to a security interest, such as a vehicle, it is NOT necessary for you to execute a reaffirmation agreement. Provided you remain CURRENT IN PAYMENT of the debt against the secured asset, the Creditor cannot repossess the asset, and the Court will not grant them permission to repossess. We do not advise our clients to sign reaffirmation agreements unless the Creditor is offering a reduction in terms of the underlying debt such as a reduction in the loan balance or interest rate which we will attempt to negotiate on your behalf if you desire. Similarly, you can opt to continue to pay any Creditor included in your bankruptcy without signing a reaffirmation agreement, although you will have no legal obligation to do continue to pay.

My vehicle is worth less than I owe on it. Can I re-negotiate the debt with the Creditor and reduce it based on the actual value of the vehicle?

Creditors generally will not reduce debt against vehicles; although sometimes they will lower interest rates if you agree to sign a reaffirmation agreement. You do, however, have the absolute right to redeem a vehicle from a Creditor for fair market value. This means that the Creditor must sell the vehicle to you for fair market value (which we will negotiate for you). The glitch to this is that the Creditor is not required to provide financing for the purchase; you must obtain your own financing. Various companies we can refer you to offer financing for redemptions, but the interest rates tend to be high.

If a Creditor repossesses my vehicle and sells it for less than I owe on it, am I responsible to pay the deficiency remaining on the debt?

Within about 10 days following the date we file your bankruptcy case, you and each of your Creditors you listed in your bankruptcy schedules will receive a Notice from the Bankruptcy Court in the following format, informing you and your Creditors of relevant dates and information pertaining to your case. Please make note of the dates identified and make arrangements to attend the Meeting of Creditors at the date, time and place specified in the Notice.

Your bankruptcy hearing will be held in the Ken Garff Building at 405 South Main Street on the 2^nd Floor, Salt Lake City, Utah, in Hearing Room 250-A. The building is situated on the southeast corner of the intersection at 400 South and Main Street. Metered parking is available on 400 South, Main Street and other streets around the building.

Take the 24th Street Ogden Exit (345) off I-15 and travel east to Grant Street. Turn South on Grant Avenue one block to 25th Street. The Federal Building is on the Northeast corner of 25th Street and Grant Avenue.

Take the Provo Centre Street Exit off I-15. Find your way to University Avenue. The library is on the South side of University Avenue. The meeting room is on the ThirdFloor – accessible by stair from the Second Floor.

Confirmation Hearings are conducted in the Federal Courthouse at about 350 South Main on the West side of Main Street. If you are traveling to the hearing on I-15, take the 400 South Exit and travel East to Main Street. Metered parking is available on streets near the Boston Building, and on the North side of 400 South between Main Street and West Temple.