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Utah Debt Relief: Your Guide to State Laws and Managing Debt

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Utah is the 11th-largest state in the country, in terms of square miles. With nearly three million residents, the median household income is $65,325, higher than the national average.

However, that higher income doesn’t mean that Utah residents don’t carry debt. Thousands of people struggle with credit card debt, student loan balances, medical bills, and car loans. If you’re drowning in debt, it’s important to understand Utah’s laws regarding debt collections, debt relief programs, and how to file for bankruptcy, if necessary. By learning about these laws, you can make informed choices to manage your outstanding balances.

Debt in Utah: At a glance

Utah debt
Type Per capita balance, 2018 U.S. per capita balance Rank out of 50 states
Credit card debt $3,050 $3,220 26
Student loan debt $4,350 $5,390 42
Auto debt $5,220 $4,700 11
Mortgage debt** $43,310 $33,680 8
*No. 1 is the highest
**First-lien debt only
Source: Federal Reserve Bank of New York, March 2019

Debt collection in Utah

If you’ve missed several payments on a loan, such as a car or personal loan, the lender can send your debt into collections. A collection agency or lawyer will then work to collect the money that you owe to the lender. Debt collection is a serious process; it can cause significant damage to your credit score.

In Utah, the lender needs to follow the below process before they can collect on the debt:

  • The lender notifies the debtor: Before the debt collector can take you to court, they have to send you a notification that lists how much you owe, the name of the creditor, and instructions on how to dispute the debt. You have 30 days to dispute or request verification of the debt.
  • The lender potentially pursues a debt collection case: Once the 30 days are over, the debt collector can proceed with filing a complaint with the court. A copy of the complaint and summons must be served on the debtor.
  • The defendant responds to the case: In the court case summons, the document will outline when you have to file a response to the complaint. If you were served in Utah, you typically have 21 days to respond; if you were served outside the state, that’s extended to 30 days. This is your opportunity to dispute each claim in the creditor’s complaint. If you don’t respond, the court may issue the creditor a default judgment.
  • Both parties go through disclosure and discovery: If you and the creditor decide to go to trial, you will have to go through disclosure and discovery, meaning there’s certain information you must proactively provide and there’s some information you must provide upon request. For example, you must submit your payment history, balance statement, or bill of sale. If asked, you’d also have to present sworn testimony.
  • The court issues a judgment: If the creditor wins the case, they can proceed with collecting the money owed to them.

In the state of Utah, the creditor can ask the court to issue a judgment that allows them to garnish your wages or even seize property to recoup the money owed.

  • Wage garnishment: With this approach, the debt collector can take up to 25% of your disposable earnings
  • Bank levy: In Utah, Bank levies are known as a writ of garnishment, meaning the creditor can take money from your bank account and use it to pay off the outstanding debt.
  • Lien: If a lien is placed on your property — such as your home — you are required to pay the judgment out of the proceeds of the sale of that property.
  • Writ of Execution: Under a writ of execution, the debt collector can seize property to settle outstanding debt.

Responding to collection letters

If you receive a notice from a debt collector, it’s a good idea to request a debt validation letter. A debt validation letter will detail what you owe, who it’s owed to, and verifies that you legally owe the debt.

Review that information to ensure it’s correct. In some cases, they may send you a notice in error. If that’s the case, send the lender a cease and desist letter to tell them to stop contacting you.

If the debt validation letter shows a legitimate debt under your name, you may be able to negotiate with the lender. You could pay less than the full amount you owe, or you could enter into a payment plan. Or, you can instead go to trial to plead your case in court.

If you are not sure how to proceed, it’s wise to contact an attorney who is knowledgeable about debt collection laws in Utah. You can find a lawyer through the Utah State Bar Lawyer Referral Service.

Your rights when dealing with debt collectors

When dealing with debt collectors, it’s important to know that there are protections in place for you. Under the Fair Debt Collection Practices Act (FDCPA), debt collectors can’t use abusive, unfair, or deceptive practices to collect money owed.

For example, debt collectors can’t contact you before 8 a.m. or after 9 p.m., unless you allow them to do so. They also can’t call you at work if they’re told you can’t receive calls there.

A debt collector can’t share information about your debt to anyone but you or your spouse, or an attorney if you decide to have a lawyer represent you. They also can’t threaten you with violence or harm, use obscene language, or falsely claim legal action against you.

If a debt collector violates your rights, contact the Utah State Attorney General’s Office, the Federal Trade Commission, or the Consumer Financial Protection Bureau.

Understanding Utah’s statute of limitations

If you’re struggling with debt, it’s important to understand your state’s statute of limitations. When it comes to debt, the statute of limitations is the amount of time a creditor has to sue a borrower to recoup money owed. Once the statute of limitations runs out, creditors can’t pursue you for the debt in court.

Utah Statute of Limitations on Debt
Mortgage debt 6 years
Medical debt 6 years
Credit card 6 years
Auto loan debt 4 years
State tax debt 3 years

In Utah, state tax debt has the shortest statute of limitations at just three years; most other forms of debt, such as credit cards and medical debt, have a statute of limitations of six years.

If you think a debt collector is contacting you about debt that is past its statute of limitations, don’t make a payment or agree to a payment plan; that can restart the clock on your debt. Instead, ask them if the debt is beyond the statute of limitations. The lender is required to answer you truthfully. If they can’t answer, contact an attorney or a non-profit credit counseling agency to discuss next steps.

Utah Debt Relief programs

Dealing with debt can be overwhelming. However, you don’t have to deal with it alone. There are organizations in Utah that offer free assistance.

  • Fair Credit Foundation is a nonprofit organization that offers services like budgeting assistance, debt management programs and financial counseling.
  • Upsolve is a legal aid organization that helps low income Americans get a fresh start through Chapter 7 bankruptcy at no cost.

Nonprofit credit counseling agencies can help you develop a debt management plan, where they work with your creditors to reduce your interest rates and consolidate your debt. They can also help you develop a budget, establish regular financial counseling sessions, or even assist you with buying a home. National nonprofits include the National Foundation for Credit Counseling and the Financial Counseling Association of America.

Payday lending laws in Utah

Payday loans are short-term, high-cost loans some people use to cover the cost of emergencies or to tide them over until their next paycheck. While you can get cash quickly with a payday loan, they can be prohibitively expensive.

According to the Center for Responsible Lending, a typical payday loan in Utah would have an APR of 652.00%, causing you to pay back hundreds more than you originally borrowed.

In Utah, the following rules for payday loans apply:

  • Maximum loan amount: None
  • Maximum loan term: 10 weeks
  • Maximum finance rate and fees: None

The payday lender is required to post a schedule of fees, and disclose the APR and fees. The loan can’t be extended beyond 10 weeks from its initial disbursement date, and the lender can’t charge interest after 10 weeks from the loan’s execution.

The lender can’t issue you a new loan on the day you pay off your old one if the combined loans will result in you paying more than 10 consecutive weeks of interest. The lender also can’t issue you a loan if the proceeds will be used to pay off an existing loan.

If you take out a payday loan and then change your mind, you have until 5 p.m. on the next business day to return the loan. Afterward, any finance charges will be rescinded.

If you have a problem with a payday lender, you should contact the Utah Department of Financial Institutions at 801-538-8830.

Tips to tackle debt in Utah

If you’re currently carrying debt, it’s important that you don’t get discouraged. There are things you can do to make your debt more manageable.

Consolidate your debt

If you have high-interest debt, such as credit card balances, one way to take charge of your debt is to consolidate it. With this approach, you take out a personal loan for the amount of your current debt. Ideally, the new debt will have a much lower interest rate, so more of your payment goes toward principal rather than interest, helping you save money and get out of debt faster. Also, debt consolidation loans come with fixed repayment terms and fixed rates, meaning you’ll know exactly how long you have until the debt is repaid and then don’t have to worry about your rate changing.

While consolidation can be an effective tool, it’s not for everyone, nor is it a magical solution. If you don’t change your financial habits, you’ll just rack up more debt. And if you have poor credit, you’re unlikely to qualify for a low-interest loan, making consolidation unrealistic.


If you have student loans, a car loan, or a mortgage, you can save money by refinancing your debt. With refinancing, you work with a lender to take out a loan for the amount of your current debt. The new loan has different repayment terms, including interest rate, length of repayment, and monthly payment. With a lower interest rate, you can save money over the length of your loan.

If you decide to refinance, it’s important to come up with a sensible repayment plan to avoid ending up with more debt. For student loan debt, keep in mind that refinancing may not be the wisest choice if you have federal loans, as you would be forfeiting the chance to participate in repayment or forgiveness programs.

Use a balance transfer card

If you have-interest credit card debt but have good credit, you could save money by completing a balance transfer. With a balance transfer, you move your credit card balance to a new card that offers a 0% introductory APR for a set time period (usually 12 to 21 months). That gives you several months to pay off your balance without worrying about interest charges.

Not everyone will qualify for a balance transfer; you need good to excellent credit. You also need to be disciplined and have a repayment strategy to avoid building up credit card debt again once the promotional rate expires. Additionally, these cards usually come with a balance transfer fee, usually 3 to 5% of the transfer amount balance.

Filing for bankruptcy in Utah

There are some cases where your debt has gotten so bad, there’s no real way to get out of it. If that’s the situation you’re facing, you’ve likely considered declaring bankruptcy, a process where you eliminate your debt and get a clean slate. If you’ve tried other debt relief approaches but haven’t made progress, declaring bankruptcy might be right for you. There are two types of bankruptcy filings for consumers:

  • Chapter 7 bankruptcy is where your assets are sold to pay off the money you owe to creditors. If you don’t have enough in assets to cover the cost of your debt, most of your debt will be discharged within three to five months with Chapter 7 bankruptcy. Keep in mind that this doesn’t apply to certain types of debt, such as child support and certain tax debts.
  • Chapter 13 bankruptcy is for individuals who earn income but can’t repay all of their debt. Under Chapter 13 bankruptcy, you get on a repayment plan to pay back your creditors in installments over the course of three to five years. During this repayment period, debt collectors are unable to pursue collection.

Deciding to enter into bankruptcy is a serious decision with long-lasting consequences. It can dramatically affect your credit score, and a bankruptcy will stay on your credit report for up to 10 years from the date filed, making it difficult to qualify for other types of credit. However, if you’re struggling to stay afloat, bankruptcy can be a useful tool.

In Utah, you aren’t required to have an attorney; you can file for bankruptcy on your own on the United States Bankruptcy Court website. However, it may make sense to consult an attorney to ensure everything is handled correctly. If you plan on filing for bankruptcy in Utah, you may qualify for free legal assistance from Utah Legal Services. You can contact them by calling 800-662-4245.

The bottom line

If you are dealing with a significant amount of debt, it can feel like a crushing burden. However, by understanding Utah’s laws regarding debt and the statute of limitations, you can make informed decisions on how to handle your outstanding balances. By utilizing debt relief services and different credit strategies, you can take charge of your debt and get back on your feet.

The information in this article is accurate as of the date of publishing. 


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