What are Utah Bankruptcy Exemptions?

Almost everyone who comes in for a free initial bankruptcy consultation asks me if they are going to lose a car or a house because they are filing bankruptcy. They think that they will have their property taken away as some kind of punishment for filing. That is not how it works.

Most of my clients get to keep their car and their house. They also get to keep all of their clothing, appliances, beds and bedding, and food and provisions. Chapter 7 Bankruptcy and Chapter 13 Bankruptcy is supposed to be a “fresh start” for people. To make sure that happens, the United States Bankruptcy Court, District of Utah, allows people to keep a certain amount of property when they file. Each state gets to decide how much its citizens get to keep. What you get to keep is called your Exempt Assets, or your Protected Property. In Utah, the Exemption Statute is found in Utah State Code Section 78B-5-505.

How Do Utah Bankruptcy Exemptions Work?

In Utah, each person gets to keep a home with up to $20,000 in equity. So, a couple gets to keep a home with up to $40,000 in equity. To find out your home’s equity, find out what the home is worth, then subtract off the amount of any mortgages and other liens. The amount left over is your equity. Each person filing also gets to keep a car worth up to $2,500 in equity. Again, find out what the car is worth, subtract off the amount of your loan, the rest is equity. A 401(k) and proceeds of a whole life insurance contract are also exempt, except any amounts you’ve contributed in the last 12 months. To get the complete list, check out the Utah Statute, or speak with an experienced bankruptcy attorney.

Contact an Experienced Utah Bankruptcy Attorney

Contact an experienced lawyer at Pearson Butler today at (800) 265-2314 and schedule a complimentary bankruptcy consultation.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

For More information on Utah Bankruptcy Exemptions:

Title 78B - Judicial Code

Chapter 5 - Procedure and Evidence

Section 502 - Definitions

78B-5-502. Definitions.

As used in this part:

(1) “Debt” means a legally enforceable monetary obligation or liability of an individual, whether arising out of contract, tort or otherwise.
(2) “Dependent” means the spouse of an individual and the grandchild or the natural or adoptive child of an individual who derives support primarily from that individual.
(3) “Exempt” means protected, and “exemption” means protection from subjection to a judicial process to collect an unsecured debt.
(4) “Judicial lien” means a lien on property obtained by judgment or other legal process instituted for the purpose of collecting an unsecured debt.
(5) “Levy” means the seizure of property pursuant to any legal process issued for the purpose of collecting an unsecured debt.
(6) “Lien” means a judicial, or statutory lien, in property securing payment of a debt or performance of an obligation.
(7) “Liquid assets” means deposits, securities, notes, drafts, unpaid earnings not otherwise exempt, accrued vacation pay, refunds, prepayments, and other receivables.
(8) “Security interest” means an interest in property created by contract to secure payment or performance of an obligation.
(9) “Statutory lien” means a lien arising by force of a statute, but does not include a security interest or a judicial lien.
(10) “Value” means the fair market value of an individual’s interest in the property, exclusive of valid liens.

Title 78B - Judicial Code

Chapter 5 - Procedure and Evidence

Section 503 - Homestead exemption — Definitions — Excepted obligations — Water rights and interests — Conveyance — Sale and disposition — Property right for federal tax purposes.

78B-5-503. Homestead exemption — Definitions — Excepted obligations — Water rights and interests — Conveyance — Sale and disposition — Property right for federal tax purposes.

(1) For purposes of this section:

(a) “Household” means a group of persons related by blood or marriage living together in the same dwelling as an economic unit, sharing furnishings, facilities, accommodations, and expenses.
(b) “Mobile home” is as defined in Section 57-16-3.
(c) “Primary personal residence” means a dwelling or mobile home, and the land surrounding it, not exceeding one acre, as is reasonably necessary for the use of the dwelling or mobile home, in which the individual and the individual’s household reside.
(d) “Property” means:
(i) a primary personal residence;
(ii) real property; or
(iii) an equitable interest in real property awarded to a person in a divorce decree by a court.
(2) (a) An individual is entitled to a homestead exemption consisting of property in this state in an amount not exceeding:
(i) $5,000 in value if the property consists in whole or in part of the property which is not the primary personal residence of the individual; or
(ii) $20,000 in value if the property claimed is the primary personal residence of the individual.
(b) If the property claimed as exempt is jointly owned, each joint owner is entitled to a homestead exemption; however
(i) for property exempt under Subsection (2)(a)(i), the maximum exemption may not exceed $10,000 per household; or
(ii) for property exempt under Subsection (2)(a)(ii), the maximum exemption may not exceed $40,000 per household.
(c) A person may claim a homestead exemption in either or both of the following:
(i) one or more parcels of real property together with appurtenances and improvements; or
(ii) a mobile home in which the claimant resides.
(d) A person may not claim a homestead exemption for property that the person acquired as a result of criminal activity.
(3) A homestead is exempt from the judicial lien and from the levy, execution, or forced sale except for:
(a) statutory liens for property taxes and assessments on the property;
(b) security interests in the property and judicial liens for debts created for the purchase price of the property;
(c) judicial liens obtained on debts created by the failure to provide support or maintenance for dependent children; and
(d) consensual liens obtained on debts created by mutual contract.
(4) (a) Except as provided in Subsection (4)(b), water rights and interests, either in the form of corporate stock or otherwise, owned by the homestead claimant are exempt from execution to the extent that those rights and interests are necessarily employed in supplying water to the homestead for domestic and irrigating purposes.
(b) Those water rights and interests are not exempt from calls or assessments and sale by the corporations issuing the stock.
(5) (a) When a homestead is conveyed by the owner of the property, the conveyance may not subject the property to any lien to which it would not be subject in the hands of the owner.
(b) The proceeds of any sale, to the amount of the exemption existing at the time of sale, is exempt from levy, execution, or other processes for one year after the receipt of the proceeds by the person entitled to the exemption.
(6) The sale and disposition of one homestead do not prevent the selection or purchase of another.
(7) For purposes of any claim or action for taxes brought by the United States Internal Revenue Service, a homestead exemption claimed on real property in this state is considered to be a property right.
Amended by Chapter 131, 2010 General Session