Use Tax Refund to pay for Bankruptcy

Every year around tax season our clients ask us how bankruptcy will impact the tax refund they are expecting. Some of the questions posed include: Can I spend my tax refund before filing? Can I use my tax refund to pay for the costs of bankruptcy? Should I file bankruptcy before receiving my tax refund? These are all great questions and we will address them here. Read more

What To Expect At Your 341 Meeting

What To Expect at Your 341 Meeting in Utah

341 Meeting Instructions

Your section 341 meeting of creditors is approaching, so to help ensure a smooth meeting this video will provide you with instructions relating to that meeting. We’ll cover several things: first, who’s involved; second, what to wear; third, what to bring with you; fourth, how the meeting is conducted; and fifth, what happens after the meeting. So let’s get started.

Read more

What Happens to Rental Property in Bankruptcy


One of the most important concerns many of our clients have is how bankruptcy will impact their lease on an apartment of home.  This concern arises in one of two scenarios: (1) the client-debtor has arrearages and is filing bankruptcy, at least in part, to avoid paying the past-due rent and perhaps avoid immediate eviction; 0r (2) the client-debtor is current and wants stay in the property. We’ll address each scenario in this article. Read more

Should I Sign A Reaffirmation Agreement

What Is a Reaffirmation Agreement?

A reaffirmation agreement is an agreement by which the debtor agrees to remain personally liable for a debt post-bankruptcy.   A reaffirmation agreement essentially eliminates the benefit of filing for bankruptcy for that one specific debt.  Because reaffirming a debt undermines the most basic benefit of filing for bankruptcy, we generally discourage our clients from signing a reaffirmation agreement, unless required to do so by the lender to keep the property. If you are inclined to sign one, you should seek counsel from an experienced bankruptcy lawyer before entering into a reaffirmation agreement.  Read more

Are Federal or State Taxes Dischargeable in Bankruptcy?

One of the most frequently asked questions that we hear in our Utah bankruptcy practice is whether taxes can be discharged in bankruptcy. The answer to such a seemingly simple question is actually quite complicated. Some federal and state income taxes may be eligible for discharge under Chapter 7 or Chapter 13 of the bankruptcy code under certain circumstances. Read more

Can I File Bankruptcy Without My Spouse?

Frequently clients need to file for bankruptcy, but want to do so without his or her spouse being affected.  That raises the questions: Can a married person file bankruptcy alone? How is the non-filing spouse impacted when their spouse files bankruptcy alone? Read more

Should I Sign A Reaffirmation Agreement?

A reaffirmation agreement is an agreement by which the debtor agrees to remain personally liable for a debt post-bankruptcy.   A reaffirmation agreement essentially eliminates the benefit of filing for bankruptcy in Salt Lake or one specific debt.  Because reaffirming a debt undermines the most basic benefit of filing for bankruptcy in Salt Lake, you should seek counsel from an experienced Salt Lake bankruptcy lawyer before entering into a reaffirmation agreement.  A Salt Lake Chapter 7 bankruptcy lawyer must review your financial position following bankruptcy in Salt Lake and certify to the bankruptcy court that entering into the reaffirmation agreement will not cause an undue financial hardship.  The Salt Lake bankruptcy judge must also approve the agreement.

As a Salt Lake Bankruptcy lawyer, it is difficult to predict a person’s financial future.  Therefore, our experienced Salt Lake bankruptcy lawyers generally discourage our clients from entering into a reaffirmation agreement…unless absolutely necessary.

Most secured creditors with whom a reaffirmation agreement would arise arise—automobile lenders—generally allow you to keep the secure property (automobile) without entering into a formal reaffirmation agreement, so long as you keep your payments current.  We call this the “pay and retain” method.  While a creditor is not legally obligated, our experience is that most secured creditors will agree to the pay and retain method.

While the pay and retain method works well with most secured creditors, there are a minority of creditors who take the extreme position to repossess the secured property even if you are current.  America First Credit Union is one of these creditors.  In cases that deal with AFCU or other creditors who take the same position, it may be necessary to enter into the reaffirmation agreement in order to retain possession of the secured asset.

As mentioned, the best way to ensure that your rights and best interest is protected is to consult with an experienced Salt Lake bankruptcy lawyer.  Schedule your free consultation today.

What Should I expect in My Chapter 7 Bankruptcy?

So you’ve decided that you need to file a Utah chapter 7 bankruptcy and you’re wondering: What Should I Expect in my Chapter 7 Bankruptcy? Here’s an overview to answer that question.

When Will I Go To Court?
You won’t, unless something really unusual happens in your case.  Most Utah chapter 7 bankruptcies never have any hearings or appearances with the Utah bankruptcy court.  A bankruptcy judge will be assigned to your case, but usually the only interaction you will formally have with your bankruptcy is a meeting called a meeting of creditors and the judge will not be present.  Your bankruptcy attorney will likely refer to the meeting as a 341 meeting. Read more

Can I Discharge Federal or State Taxes in Bankruptcy?

“I heard that I can discharge my tax debt, is that true?”  The preceding question is one that is frequently posed in our Utah bankruptcy practice.   Federal and State income taxes may be eligible for discharge under Chapter 7 or Chapter 13 of the bankruptcy code under certain circumstances.

Chapter 7 bankruptcy provides for a full discharge of allowable debts.  Chapter 13 bankruptcy is a debt consolidation and a partial repayment of debts over a period of time; allowable debts that are unpaid after completion of the repayment plan are then discharged.  As a result, under either Chapter 7 or Chapter 13 may be discharges, so long as the requirements are met for discharge.

There are five rules that determine dischargeability of tax liabilities:

  1. The due date for filing the tax return is at least three years prior to the filing of the bankruptcy petition.
  2. The tax returned was “filed” at least two years prior to the filing of the bankruptcy petition.
  3. The tax assessment is at least 240 days old (as of the date of filing the petition).
  4. The tax return was not fraudulent.
  5. The taxpayer is not guilty of tax evasion.

First, the tax debt must arise from a tax return that was due at least three years prior to filing the bankruptcy petition.  This requirement includes any extensions.  So, if you filed for an extension, the time period is calculated from the due date of the extension.

Second, the debtor must have filed a return.  This requirement is met when a debtor participates in (provides information and documentation) or signs off on a return, pursuant to Internal Revenue Code section 6020(a).  This requirement apparently does not include, however, a service-filed return pursuant to Internal Revenue Code section 6020(b) where the filing is not done with the debtor’s cooperation and is based on information obtained by the taxing authority on its own.

Third, the taxing authority must assess the tax at least 240 days before filing the petition.  This is when the taxing authority sends you a notice of assessment or the IRS issues a certificate of assessment.

Fourth, the tax liability is only dischargeable if you did not file a fraudulent return.

Fifth, your tax liability cannot be discharged if you are guilty of intentionally trying to evade taxes.

If the five requirements listed above are met, the taxes are dischargeable.  In some cases it may be advantageous to wait to file the bankruptcy petition until the tax liabilities are dischargeable.  If taxes are not dischargeable, but the debtor cannot wait to file for bankruptcy, the Chapter 13 bankruptcy may provide for additional benefits for dealing with the tax debt.  To assess a particular situation and determine the dischargeability of tax debt, you should consult with an experienced bankruptcy attorney.