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Expenses Prior to Filing Bankruptcy in Utah

Submitted by Andrew T Curtis on February 2, 2015 - 5:56pm
Paralegal and client

Individuals considering filing bankruptcy in Utah should keep in mind that spending any cash that is not protected by bankruptcy exemptions (such as funds in your bank or a tax refund) will be reviewed by the bankruptcy Trustee shortly after you file your case. That's because there are some ways debtors could try to spend money in an effort to hide their assets or otherwise skew the bankruptcy court's perception. Spending money improperly prior to filing a bankruptcy can cause seriously problems in your case, ranging anywhere from having to answer a string of questions to facing fraud charges.

Below is a list of the generally approved and prohibited expenses prior to filing a bankruptcy in Utah. That said, this is for general awareness purposes only and should not be mistaken as legal advice. Our providing this information does not create a client-attorney relationship or otherwise obligate Lincoln Law to represent you.

 
Approved Expenses Prohibited Expenses
  1. Pay your attorneys fees to file your case
  2. If you don’t already have one, you may purchase a washer, dryer, refrigerator, freezer, stove and/or microwave
  3. You may purchase beds or bedding if needed for your family
  4. You may purchase items that would provide for your basic needs that would last up to 1 year (e.g. food supply, toilet paper, hygiene supplies etc.)
  5. If you are delinquent on home or auto loan payments and you are keeping the property after your bankruptcy, you may be able to catch up on the delinquent payments
  1. Pay or transfer money to family members or friends – this is one of the worst things you could do as it may be fraud or could allow the trustee to sue whomever received the money
  2. Pay any unsecured creditors (e.g. credit cards, medical bills, payday loans) – you are getting rid of this anyway
  3. Take a vacation purchase plane tickets or spend it on gambling or entertainment
  4. Purchase any electronics
  5. Pay any monthly day-to-day bills in advance (e.g. utility, cell phone rent etc.)
  6. Purchase gift cards

Here are some important considerations:

  1. This list is not all encompassing – if something is not listed above, we recommend you assume it is not approved until clearing it with your attorney
  2. There can be exceptions, so it's best to discuss your pre-bankruptcy expenses with your attorney
  3. If you have already paid for something on the Prohibited list, it's best to consult with an attorney on the best course of action

As you can see, bankruptcy isn't a 1-size-fits-all process. Bankruptcy is governed both by Federal and State laws and can be very complex, full of 'ifs' 'ands' 'ors' and 'buts'. The only advice we can give -- see an experienced bankruptcy attorney if you are considering bankruptcy, and talk to them about your expenses!

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