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Will you be left with nothing after bankruptcy?

On Behalf of | Jan 8, 2024 | Bankruptcy

Millions of Americans struggle to get a handle on their debt obligations. Housing costs, utilities, student loans, car loans, and credit card debt can quickly consume you, leaving you with very little, if anything, after you pay off your bills. If you’re like many, then you’ve even taken on a second job to try to get ahead, only to find yourself falling farther behind.

This is nothing short of tragic, but the good news is that you don’t have to let your current financial woes derail your future. In fact, by pursuing bankruptcy, you might be able to shed yourself of crushing debt while securing the fresh financial start that you need.

But if you’re like a lot of people who are struggling with debt, then you’re worried about where bankruptcy will leave you when all is said and done. There are several misconceptions about the bankruptcy process out there, including that you’ll have to start over from scratch once your bankruptcy is finalized. But this simply isn’t the truth.

How bankruptcy exemptions help you maintain stability

Although you might have to sell some of your assets through a Chapter 7 bankruptcy filing, you’ll still have assets at the end of the day to ensure that you have some stability moving into your post-bankruptcy life. Pursuant to Utah law, you can utilize the following bankruptcy exemptions to ensure that you have a foundation to build upon once your bankruptcy is finalized:

  • Homestead exemption: In Utah, you can keep a little more than $40,000 worth of equity built into your primary residence. You can also exempt about an additional $5,000 in real estate that doesn’t serve as your primary residence. You might have to sell your home to keep this equity, but at least you’ll have funds to give you some stability moving forward.
  • Vehicle exemption: You can keep several thousands of dollars in any vehicle that you own, whether it’s a car, truck, motorcycle, or recreational vehicle.
  • Retirement accounts: Most retirement accounts can’t be touched during the bankruptcy process. This includes traditional IRAs, Roth IRAs, public employee pensions, and ERISA benefits.
  • Personal property: There are many types of personal property that are exempt from the bankruptcy process by Utah law. This includes up to $1,000 in books, musical instruments, and animals. However, you’ll also get to keep up to $1,000 in heirlooms, your clothing, up to $1,000 in furniture, your firearms, your bedding, your appliances, up to $5,000 worth of goods tied to your trade, health equipment, and enough food to last you a year.
  • Insurance benefits: Though seeking bankruptcy, you’ll also get to keep certain insurance benefits, such as life insurance proceeds from your spouse or child, as well as any healthcare or disability benefits and the cash surrender value of your life insurance policy.

As you can see, there’s a lot that you can keep by utilizing Utah’s bankruptcy exemptions. And this doesn’t even cover all of them that may be available to you. So, as you consider whether bankruptcy is the right option for you, don’t let a fear of being left with nothing prevent you from moving forward.

Is pursuing personal bankruptcy the right option for you?

Only you can answer that question. However, the process might give you the financial relief that you’ve been working so hard to obtain.