Options

• As a sole proprietorship, you have a choice of filing for Chapter 7 or Chapter 13. If you plan to close the business, and have few assets, Chapter 7, or "liquidation," may present the best option. If you intend on continuing business operations Chapter 13, or "reorganization" allows you to continue running your business under the bankruptcy protection and a court-approved plan to repay your debtors. This represents the best choice for debtors who want to keep their business assets and home, car or other property.
  
  

Means Testing

• Debtors must qualify to file for Chapter 7 bankruptcy. The test compares your family income to the state median income for a similar family size. The median income for Utah residents as of May 2010 ranges from $50,388 for an individual to $69,741 for a family of four. Add an additional $6,900 for each additional person. You must subtract typical household expenses for your county and metropolitan region, such as housing, transportation, clothing, food, utilities and other costs to arrive at your "monthly disposable income." If you have a high disposable income, you may have to enter into Chapter 13 and a plan to repay your obligations.
  
  

Procedures

• Within 180 days before filing, you must complete a 90-minute pre-bankruptcy credit counseling session with an approved agency. Residents can file for bankruptcy in the Salt Lake City, Utah, federal courthouse. You must file a petition and other financial documents with the court clerk. You must also pay a fee, which you can remit in installment if you do not have all the money. The bankruptcy court will immediately issue an "automatic stay."
  
  This court order prohibits your creditors from taking any action to collect on your debts. Repossessions, evictions, foreclosure, harassing phone calls and other actions must come to a stop. A trustee takes over the case and your assets. The trustee schedules a "341 meeting" with the debtor and creditors 30 to 45 days after the filing of the bankruptcy petition. The debtor must answer questions about his or her financial situation.
  
  

Exemptions

• Utah allows a $10,000 homestead exemption for a single individual. Jointly owned property has a $20,000 exemption limit. No cap exists for disability, unemployment, medical or hospital-care benefits. Items, such as clothing, furniture, books, tools and other property must fall within the allowable limits. Creditors cannot attach this property.
  
  

Discharge

• You must complete an approved financial management course within 45 days after the 341 meeting. For Chapter 7 filers, the trustees will sell personal property that exceeds the exemption allowance and distribute the proceeds among your creditors. Within 60 to 90 days after the 341 meeting, most debtors receive discharges of their unsecured debt. You remain obligated to pay alimony, child support, secured debt, educational loans and some taxes and municipal obligations.
  
  Chapter 13 debtors must submit a debt repayment plan to the court for approval. Typically, the plan covers three to five years while the debtor remains under bankruptcy protection. Debtor must obtain approval from the when making certain financial decisions while under the plan.