Bankruptcy on the rise in Utah

The Utah Legal Services provides free legal aid for citizens who want to file bankruptcy

by MICHELLE SCHMITT

Bankruptcy filings are on the rise in Utah as the entire nation copes with job loss, credit card debt and uncertain economic times.

Medical bills and loss of work that have led to credit card debt is a common thread that has sent many Utah families down the path to bankruptcy. Some worry about losing their car, and worse, losing their home.

“People are losing their jobs, that is why they are calling,” said Sylvia Bosen, a paralegal who works for the Utah Legal Services, an organization that provides legal help for low-income Utahns.

Utah Legal Services is an organization that assists in a wide array of legal help to direct citizens through the complicated court system. Bosen works in the bankruptcy division. She helps Utah Legal Services with necessary documents and even appoints lawyers, free of charge.

Bosen said many citizens do not understand certain rights and exemptions they may have. “A lot of them have equity in their home [and] they [are eligible] to get a certain amount,” she said.

Bosen said most of the calls she receives are from families, rather than from individuals. She said people are afraid they will lose assets essential to their family’s way of life.

“When a person or business find [themselves] in a financial pit from which [they] cannot escape without help, bankruptcy may be an alternative,” said Matthew Boley, chair of the bankruptcy section at the Utah State Bar .

Boley has participated in discussions with Utah Legal Services and the Utah Bankruptcy Lawyers Forum in an effort to encourage lawyers to participate in pro bono work.

Those who go to the Utah Legal Services will have to meet the eligibility requirements that are determined based on monthly income. Then, if qualified, a representative will walk the client through the bankruptcy process and offer a pro bono attorney to assist with documents and court.

Kai Wilson is the executive director of “…And Justice for All,” a nonprofit association that serves as an umbrella organization over Utah Legal Services, the Disability Law Center and the Legal Aid Society of Salt Lake. Wilson said Utah Legal Services faces some challenges.

“[There have been] huge drops in support from banks,” Wilson said, which causes worries because financial institutions usually provide a lot of monetary support for the legal organizations. In addition, state and federal budget cuts will most likely take even more money out of Utah Legal Services and the other legal aid foundations. Utah Legal Services receives about 80 percent of its budget from government grants.

It is important to provide these services because “so many people can’t get in [to the justice system],” Wilson said. “Our system of law is extraordinary, but access to it is very limited.”

According to a booklet published by Utah Legal Services and “…And Justice for All”, roughly 80 percent of low-income citizens are not aware of their option to acquire free legal assistance. And many of those who know about these services do not think they would qualify for help.

Bosen said as the rate of bankruptcy rises among citizens, it is important to understand available options. The right to file for bankruptcy as a tool to consolidate debt and seek financial relief is a legal alternative in difficult financial times.

She said many people don’t know their benefits and rights as citizens. A lot of individuals worry about being sent to jail for not paying bills and don’t understand that certain exemptions apply, like unemployment and retirement benefits.

“If a person or business receives competent bankruptcy advice and good representation, there should not be any mistakes,” Boley said. “Each individual, married couple or business that may be considering bankruptcy should consult with a qualified and experienced bankruptcy attorney that can explain the bankruptcy process, the costs in time, expense and credit and alternatives to bankruptcy.”

Utah Legal Services provides a bankruptcy hotline that Utahns can call to find basic information and learn about procedures and their rights: (801) 374-6766, ext. 3446.