The most frequent type of bankruptcy is Chapter 7, which is also referred to as a liquidation bankruptcy, that cancels out your debts. The entire legal process takes about three months, costs $299 in court filing fees, and commonly requires only one visit to a hearing. The court proceedings will liquidate any non-exempt belongings of the borrower. Examples of exempt belongings that will avoid liquidation can be a house, car, tools of a business, or a number of approved, personal items. However, the exemption differs from the state and federal laws, so it recommended to clarify your state s laws before filing. Once the non-exempt belongings are liquidated, the amount gained from selling the borrower s assets are distributed amongst the creditors involved, in order to pay off the debt. After the proceedings, the court frees the borrower of all their dischargeable debts, giving them a fresh financial start.

Sometimes referred to as bankruptcy s magic wand, the automatic stay puts into effect an Order For Relief upon filing, which immediately puts a stop to most creditors who are trying to collect what you owe them. They cannot garnish your wages, go after your house or car, or cut off your utilities or welfare benefits.

Under the new bankruptcy laws, you must measure your current monthly income over the last six months against the median income of a family your size in your state. If your income is equal or less than the median income, you are eligible to file for a Chapter 7. If your income is over the median, you must pass the means test”. The purpose of the means test” is to judge whether you have enough disposable income to repay a portion of your debt over a five year period. If you have already obtained a discharge of your debts within the last eight years from a Chapter 7, or within six years of a successful Chapter 13 filing, you won't be able to file for Chapter 7 bankruptcy.

To file for Chapter 7 bankruptcy, you will need to fill out a number of forms and file them with the bankruptcy court in your area. The forms will ask you to describe your property, income, living expenses, debts, personal property, and money spent and property owned and sold within the last two years. It is recommended that the first thing you do is call an accredited attorney in your area for a free debt consultation.

If you are seriously considering bankruptcy and you live in Utah, you need to consult with a Utah bankruptcy attorney. While the process appears complicated, a Utah bankruptcy lawyer will be able to help you understand your options and avoid making bad decisions that you could later regret. If you are over-burdened with bills and cannot see any light at the end of the tunnel, bankruptcy may be the best option to help you get that much needed clean slate and allow you to rebuild your future.

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