A Sobering Look into Utah’s Bankruptcy Statistics

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Picturesque landscapes may surround Utah, but a crisis is unfolding. The rising cost of living casts a shadow over the financial well-being of many Utahns. From housing and healthcare to other essentials, these expenses push many to the brink of debt. Some are even progressing toward bankruptcy. 

However, this is no surprise because the Utah bankruptcy rate used to be one of the highest in the US.

Fortunately, this number has gradually improved over the years. But it’s still worth looking into because these facts can help you get a better glimpse of the Utah bankruptcy statistics, how it came to be, and how you can prevent experiencing this financial crisis.

What is Bankruptcy?

Bankruptcy is a legal process that gives relief to those struggling with crushing financial burdens. It helps debtors restructure or eliminate their debts while offering a framework for creditors to receive a fair distribution of assets.

This legal status is not a symbol of financial failure but rather a tool that grants another chance for individuals and businesses to regain control of their financial future. There are several types of bankruptcy. Although their main objective is to alleviate debt, they have their distinctions. The most common kinds for individuals filing for bankruptcy are Chapter 7 and 13. 

Chapter 7

Better known as liquidation or straight bankruptcy, an appointed trustee sells the debtor’s non-exempt assets to repay creditors. While this may result in the discharge of most unsecured debts, it also means surrendering certain possessions. Chapter 7 is typically suitable for individuals with limited income. But it’s important to note that this doesn’t erase debts like taxes and student loans.

Chapter 11

In contrast, businesses facing financial challenges utilize Chapter 11 bankruptcy. However, individuals with significant debts can also use this. Chapter 11 allows the reorganization of debts and business operations to facilitate a more sustainable financial structure. Unlike Chapter 7, the debtor retains control over the assets while working toward a feasible repayment plan.

Chapter 13

For individuals with a regular income seeking to reorganize their debts without liquidating assets, Chapter 13 is the likelier solution. Debtors develop a repayment plan spanning three to five years, during which they make scheduled payments to creditors. Chapter 13 is often the alternative for those who want to protect valuable assets, such as homes, from being sold off during bankruptcy.

An Overview of Utah’s Bankruptcy Statistics

This section breaks down key details to better grasp the state’s financial standing. In 2023, there were a total of 6,024 filed bankruptcy cases. Of these, 3,616 were Chapter 7 bankruptcy cases and 2,373 were Chapter 13. The US Bankruptcy Court also recorded 35 cases of Chapter 11 in the business sector.

Type of Bankruptcy Number of Cases
Chapter 7 3,616
Chapter 11 35
Chapter 13 2,373

According to Statista, Utah has 149.4 bankruptcies per 100,000 people. This figure puts the state in the top 13th spot in the country. 

There are various causes of bankruptcy among Utah’s residents, but the most common one is healthcare concerns. About 7 in 10 Utahns faced at least one healthcare affordability challenge in the past year, while 4 in 5 are anxious about future medical bills.

Even well-to-do individuals are feeling the squeeze. According to Healthcare Value Hub, 81% of those earning $100,000 yearly worry about such costs. Many Utahns go into debt because of medical and other arrears, which could eventually lead to bankruptcy if not addressed

How to Avoid Bankruptcy

Even if you make a lot of money, things that are out of your control can still lead to bankruptcy. Potential threats include emergencies, calamities, and sudden job loss. The rising cost of living and committing financial mistakes also factor into this problem. But here are strategic tips to prevent or overcome these challenges, reducing the risk of bankruptcy:

Avoid big financial swings

Effective money management is at the heart of it all, particularly toward cash outflows. Spending too much on luxury and outlandish possessions too quickly can put your finances in dire straits should the economy not cooperate in your favor. 

Likewise, it would help to scrutinize every investment you make. While risky endeavors can be lucrative, they can also cause significant losses when not properly managed. It’s best to have a consistent and realistic budget to buffer against unexpected financial woes.

Restructure debt when possible

Negotiate with creditors to establish more manageable repayment plans, or consider consolidating debts. Be proactive and explore other options. Restructuring allows for a more sustainable approach to debt repayment, preventing the accumulation of insurmountable financial burdens.

Sell off assets you don’t need

This simple yet practical tip can provide a valuable influx of funds to redirect toward debt repayment. It can even help build savings or an emergency fund. Evaluate your assets and identify non-essential or underutilized ones so you can make money from them.

Seek professional help from the start

A credit consultant or a financial advisor can provide expert insights specially tailored to your situation. These professionals can also educate you regarding a strategic and informed approach to managing your finances. Here, early intervention can help identify viable solutions for preventing financial issues from escalating to the point of bankruptcy.

Safeguarding Your Financial Horizon

With Utah’s past and current economic landscape, it’s crucial to secure your finances. From understanding the basics of bankruptcy and its types to implementing proactive measures, each step can reduce your chances of monetary issues. A realistic budget, debt restructuring, and proper asset management can help preserve your financial well-being.

Talking to a financial advisor early on can also be a game-changer. Luckily, Tencap offers Wealth Coaching to educate anyone who wants to broaden their knowledge about finances. Our experts can help you weather storms and thrive in the face of financial uncertainties. Take charge of your financial future today.

Photo of Nick Carrigan
Nick Carrigan
Wealth Advisor

Nick trains and develops families in creating, maintaining, and growing wealth. This includes educating clients on the science and academics of investing, comprehensive financial planning, and ongoing coaching to ensure discipline for a lifetime. Nick has seen this create incredible levels of freedom, fulfillment, and love for the families he works with.

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