There are many aspects that are linked to financial issues. Several common reasons include

personal debt, illness, divorce, foreclosure, or sudden unemployment.

In fact, the average credit card debt in Colorado is a whopping $6,017 per person. In addition, foreclosure rates are also as staggering, one out of every 4,760 CO homes is currently in foreclosure.

If you can relate to the scenarios above, then you are probably battling other personal issues that come with living in debt. The fear of losing your vehicle, home or your money can drain a person emotionally & physically. You have probably even considered Claiming Bankruptcy .

If you are thinking “Should I File Bankruptcy?” you are certainly not alone. Just under a million people file bankruptcy each year in the United States. Bankruptcy is a tool created by the US Government to help struggling Americans find relief from substantial debt. You may want to consider personal bankruptcy if it’s best for you.

What Is Bankruptcy?

Bankruptcy offers people the chance to resolve their debt while still working with lenders in a legal capacity. It is initiated by an individual filing a Petition with their nearest bankruptcy court. The Petition can be filed by an individual or by spouses jointly. When the bankruptcy is done, the filer will ‘exit’ and will have a chance for a fresh start on their finances.

Throughout the bankruptcy, a trustee is appointed to oversee the deatils of the matter. His or her duties differ and depend on whether the person has filed for Chapter 7 or Chapter 13 bankruptcy.

Did you know that Colorado ranks #17 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 341 out of every 100,000 residents.

What Is The Difference Between Chapter 7 And Chapter 13?

Individuals or couples in Colorado, who claim bankruptcy, can choose to file under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code. Want to know the difference? Take a look at the descriptions below for more information:

Chapter 7

In exchange for dissolving all past due debts, the trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding.

Debtors that were listed on the bankruptcy filing will be repaid with the proceeds collected during liquidation

Chapter 13

A Chapter 13 Bankruptcy plan is reserved for people who have the means to pay some of their debts through a restructuring. You will be allowed to keep your valuable assets over a 3- to 5-year period.

In order to determine which chapter an individual can file, they will have to assess their ability to repay using the Bankruptcy Means Test.

What Is A Bankruptcy Means Test?

The goal of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It considers your:

  • income and expenses
  • household size and composition
  • debt-to-income ratio

If you do not qualify for Chapter 7 bankruptcy, you will be able to file for Chapter 13, as above-described.

What Are Bankruptcy Exemptions?

Specific states have certain exclusions that are enacted by congress as federal bankruptcy exemptions for filers. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.

Here are some commonly used Colorado property exemptions:

  • Cemeteries and burial property. Burial sites and mausoleum spaces are exempt to the extent of one site or space for the debtor and each dependent; cemetery property used or owned by a corporation is exempt.
  • Child and domestic support. Exempt if kept segregated from other cash assets.
  • Crime victims’ compensation. 100%.
  • Fraternal benefit society benefits. 100%.
  • Homestead or residential property. Up to $75,000 of equity in a home or other property covered by the Colorado homestead exemption; $105,000 if the homeowner, spouse, or dependent is disabled or 60 years of age or older. Proceeds from the sale of the exempt under certain conditions.
  • Insurance benefit. Group life insurance proceeds are 100% exempt. Subject to limitations, the cash surrender value of life insurance is exempt up to $100,000 and a debtor can exempt up to $4,000 per month in sickness and accident insurance benefits during the debtor’s disability.
  • Motor vehicle. Up to $7,500 in motor vehicles; $12,500 for an elderly or disabled debtor, spouse, or dependent.
  • Partnership property. Certain partnership property is exempt.
  • Pension and retirement benefits. Firefighters, police officers, and public employee pension and retirement benefits.
  • Tax-exempt retirement accounts. Exempt under federal rules
  • Personal property. Up to $3,000 in household goods; $2,000 in clothing; $2,500 in jewelry; $2,000 in books and family pictures; prescribed health aids; personal injury recoveries except those incurred for treatment of injuries; compensation for damaged property if the underlying property would have been exempt; $600 in food and fuel; an aggregate of $50,000 for livestock and tools.
  • Public assistance. 100%.
  • Tools of the trade. Up to $30,000 of trade implements used in primary occupation; up to $10,000 in a secondary occupation; a professional library up to $3,000; livestock, animals, machinery, tools, and seed of person engaged in agriculture up to $50,000.
  • Unemployment compensation. Exempt as long it’s not commingled with other funds; however, it’s subject to child support orders.
  • Veterans’ benefits. Exempt subject to child support and spousal support orders.
  • Wages. Up to 30 times the federal or state minimum hourly wage or 75% of disposable earnings per week, whichever is greater.
  • Workers’ compensation benefits. Exempt other than employer reimbursement and court-ordered support.

Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.

Filing Bankruptcy Alone vs. Filing With An Attorney

Current laws do not require individuals to hire a lawyer to declare bankruptcy relief. People are permitted to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Going it alone is not for the faint of heart.

Filing Bankruptcy without an Attorney

A basic Chapter 7 case that doesn’t have a lot of debtors or assets may be easy to manage on your own.

A basic bankruptcy that doesn’t require an attorney might look like:.

  • Your income is below the state median;
  • You have no property;
  • Your debts will be considered dis-chargeable.

Working With An Attorney

Generally speaking, it is usually in one’s best interest to work with a bankruptcy attorney. A bankruptcy attorney is there to represent you and not in the interest of creditors.

An attorney is also accustomed with exemption laws. In addition, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.

While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.

What Does Bankruptcy Include?

Once you file for bankruptcy in CO, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.

In any event, Bankruptcy will be able to include:

  • credit card debt
  • protection from eviction
  • avoidance of foreclosure
  • utility bills
  • medical expenses

Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.

Final Thoughts And Considerations On Filing For Bankruptcy In Colorado

As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.

Bankruptcy Courts In Colorado

United States Custom House
721 19th Street
Denver,CO 80202
Colorado Bankruptcy Court


Additional Colorado Resources

Foreclosure Help Program

Disability SSDI Benefits