Bankruptcy Laws and Procedures in Colorado

When it comes to filing for bankruptcy in Colorado, the rules that apply to your filing will change depending on your place of residence. In Colorado, the bankruptcy process begins by filing paperwork in Denver, in federal district court. The bankruptcy can be filed in person or by mail. Also, some attorneys are authorized to file electronically.

Chapter 7 or Chapter 13?

Before filing for bankruptcy, Colorado residents must determine if Chapter 7 or Chapter 13 bankruptcy is more appropriate for their needs. In Chapter 7, your nonexempt assets can be liquidated by the court to pay off your debts. You are eligible for Chapter 7 if your income is less than Colorado's median monthly income (this figure changes several times a year and based on how many people are in your household). Individuals with higher income levels can still file for Chapter 7 in Colorado if they are able to pass a complicated means test.

In Chapter 13, debtors create a court-approved payoff plan, which shows how the debts will be paid within a limited period of time. Average monthly income will dictate the terms of the Chapter 13 payoff plan. Chapter 13 plans generally require debt repayment within 36 months, but they can also last as long as 60 months.

Available Bankruptcy Exemptions in Colorado

Under federal bankruptcy law, states are permitted to opt out of federal exemptions and provide their own set of exemptions. Colorado is one of the states that has done this, so it is important that Colorado bankruptcy filers familiarize themselves with the exemptions that apply to them here.

Before discussing exemptions, it is important to note that bankruptcy proceedings are not supposed to leave Colorado residents destitute with nothing left to their names. Quite the contrary, bankruptcy is intended to help individuals get back on firm financial feet, paying off as many debts as possible, and wipe their slate of debts clean to become responsible and prosperous participants in the economy again. In this sense, bankruptcy exemptions allow individuals to keep the possessions that are vital to their economic success.

In Colorado bankruptcy exemptions include a variety of personal items like jewelry, school books, clothing, family pictures, one motor vehicle, burial sites and tools of trade up to specific maximum values. The value of these items is determined based on the amount of equity held in the item instead of its actual market value.

In addition to the above, Colorado will exempt a maximum of $60,000 for homesteads occupied by the property owner or his or her family members. If the homestead is occupied by a disabled or elderly person the maximum exemption goes up to $90,000. For Colorado residents who have not resided in the state for at least two years, different state rules could apply to the bankruptcy.

Getting Help from a Colorado Bankruptcy Attorney

Bankruptcy can be a difficult process to navigate, no matter how simple you think your bankruptcy is. Some Colorado residents are able to successfully complete the process without the aid of an attorney, but every case is different, and sometimes an attorney can prove extremely valuable in helping individuals categorize their property under various exemptions so they can keep as many of their possessions as possible. A bankruptcy lawyer can also help you decide if bankruptcy is right for you at this time and what sort of bankruptcy will help you to achieve your goals.

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