What Are the Utah Bankruptcy Exemptions?

What Are Bankruptcy Exemptions and Why Are They Important in a Chapter 7 Bankruptcy? 

Exemptions are important because they help you protect and keep your personal property and other assets during your Chapter 7 bankruptcy case. Though it’s very rare, if you own any property that isn’t covered by exemptions, the bankruptcy trustee can take that property, sell it, and give the proceeds to your creditors.  

When you prepare your bankruptcy petition, you’ll claim as many Utah bankruptcy exemptions as you can to protect your property from the risk of being sold. 

In Utah, married couples filing jointly can double the exemption values for jointly owned property. For instance, while single filers can exempt up to $1,000 for dining and kitchen tables and chairs, couples can exempt up to $2,000. This doubling only applies to jointly owned property. If only one spouse owns the property, the doubling rule doesn't apply. Keep this in mind if you and your spouse are filing for bankruptcy together.

Do You Have To Use Utah’s Bankruptcy Exemptions?

If you’ve been a Utah resident for at least two years, yes, you’ll need to use the state exemptions during your Chapter 7 case. Utah doesn’t permit its residents to use the federal bankruptcy exemptions. 

Along with the state exemptions, you can also use the federal non-bankruptcy exemptions, which help you protect your wages and other money benefits.

If you find this confusing, know that help is available! See if you’re eligible to use Upsolve’s free filing tool, which will help you prepare your bankruptcy petition, including dealing with exemptions. You can also schedule a free consultation with a bankruptcy attorney if you have concerns about how to best protect your property during the bankruptcy process.

What Are Utah’s Bankruptcy Exemptions?

Bankruptcy exemptions fall into three categories:

• Real property, including your home or land you may own

• Personal property, which includes things like household goods, furniture, and your vehicle

• Money benefits, which include things like retirement accounts, wages, and insurance

Real Property: The Utah Homestead Exemption

If you are filing Chapter 7 bankruptcy on your own (single filer), you can exempt up to $42,000 of equity in your primary residence. If you’re filing jointly as a married couple, you can double this amount. To calculate your equity, take the value of your home and subtract what you owe on your mortgage.

If you own non-residential property (e.g., land) and you don’t own a home, you can protect up to $5,000 of your equity in that property. Again, you can double this amount if you’re married, filing jointly, and are co-owners of the property.

Source: Utah Code §§ 78B-5-503, 78B-5-504

Motor Vehicle Exemption

One of the most common questions that bankruptcy filers have is, “Will I get to keep my car or truck?”

Utah has two state exemptions that address motor vehicles. The first allows single filers to exempt $3,000 in equity in their primary vehicle, as long as it isn’t a recreational vehicle. Couples who are married and filing jointly can exempt up to $6,000 in equity value in a shared primary vehicle. 

Vehicles may also be considered a tool of the trade. You can exempt up to $5,000 under the tools of the trade exemption, including motor vehicles as long as no other exemptions have been applied to them. Make sure these items are actually used in your main line of work.

Source: Utah Code § 78B-5-506(2)

Personal Property Exemptions

In addition to the motor vehicle and tools of the trade exemptions noted above, Utah bankruptcy exemptions allow filers to protect many other kinds of personal property. 

Unless otherwise noted, the full value of the following types of personal property are exempt:

• Animals, books, and musical instruments held for reasonable use by filers and their dependents (up to $1,000 in aggregate value)

• Beds and bedding for filers and dependents

• Burial plots for the filer and their family

• Carpets (in use)

• Clothing (excluding furs and jewelry)

• Food provisions (to feed filer and family for one year)

• Freezer (one)

• Health aids

• Heirlooms and items of particular sentimental value to the filer (up to $1,000 in aggregate value)

• Household furnishings (excluding tables and chairs as noted below) reasonably necessary for one household (up to $1,000 in aggregate value)

• Guns (excluding curio or relic firearms):

• One handgun and ammunition for the handgun not exceeding 1,000 rounds

• One shotgun and ammunition for the shotgun not exceeding 1,000 rounds

• One shoulder arm and ammunition for the shoulder arm not exceeding 1,000 rounds

• Kitchen tables, dining tables, and chairs reasonably necessary for one household (up to $1,000 in aggregate value)

• Microwave oven (one)

• Refrigerator (one)

• Sewing machine (one)

• Stove (one)

• Washer and dryer (one set)

• Works of art that depict the debtor or the debtor and the debtor's resident family, or that were produced by the debtor or the debtor and the debtor's resident family, excluding works of art held by the debtor as part of a trade or business

Source: Utah Code § 78B-5-505

Money Benefits

The Utah Code also broadly protects a number of benefits that individuals may be eligible for due to physical challenges, family circumstances, and/or lack of employment. Exemptions available for insurance proceeds and other “money benefits” are generally more qualified and subject to caps or other exceptions. 

Unless otherwise noted, the following assets are fully exempt for Chapter 7 bankruptcy filers in Utah:

• Alimony or spousal support

• Child support

• Crime victims’ compensation

• Disability benefits

• ERISA-qualified benefits, if the benefits have accrued or the contributions were made at least 12 months before filing

• Fraternal benefit society benefits

• Illness-related benefits

• IRAs and Roth IRAs to current adjusted amount as outlined in 11 U.S.C. § 522(b)(3)(C)(n) and §15-41-30(A)(13)

• Health and hospital benefits

• Higher education savings plans (not to exceed $200,000 aggregate and excluding payments made during the 18 months immediately before filing)

• Life insurance policy cash surrender value (excluding payments made on policy within 12 months before filing)

• Life insurance proceeds if the beneficiary is the insured’s spouse or dependent (if proceeds are necessary for support)

• Occupational disease disability benefits

• Personal injury recovery

• Public benefits and general assistance

• Public employee pensions

• Tax-exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans)

• Unemployment compensation

• Unmatured life insurance contract proceeds (excluding payments made on policy within 12 months before filing)

• Veterans’ benefits

• Workers’ compensation

• Wrongful death recovery (if the filer or filer’s dependent was a dependent of the deceased and damages are compensatory)

Finally, Utah allows filers to safeguard a specific amount of their earnings subject to two specific conditions:

• Earnings to the lesser of 

  • 75% of disposable income, or

  • 37 times the federal minimum wage per week — per R. Civ. Proc., Rule 64D(a)

• Unpaid earnings due as of the bankruptcy filing in an amount equal to 1/24 of the median Utah annual income if the filer is paid more than once per month and 1/12 if the filer is paid monthly — per §78B-5-505(1)(a)(xvi)

Source: Utah Code § 78B-5-505 and § 78B-5-513

Other Utah Exemptions

Unlike most other states, Utah does not offer a wildcard exemption. Generally, wildcard exemptions allow filers to safeguard property (up to a specific amount) that is not exempted by other provisions of the exemption scheme. As a result, if you can’t exempt your property using the rules noted above and you want to keep that property, you will probably have to pay your trustee the value of the non–exempt asset you wish to keep.

Need Help Filing Chapter 7 Bankruptcy?

Exemptions are an important way to protect what you own when you file Chapter 7 bankruptcy. If you’re feeling overwhelmed, remember that support is available. You can take Upsolve’s screener to see if you qualify to use our free bankruptcy filing tool. If you’d prefer to speak with an attorney, you can schedule a free consultation with an experienced bankruptcy lawyer near you.