Please note that there are alternatives to bankruptcy such as Colorado debt relief, but these also have pros and cons, so it is important to consider them.
Thousands of people file for bankruptcy in Colorado each year. You may be wondering if you can eliminate your debt with a Chapter 13 bankruptcy in Colorado.
Filing for Chapter 13 bankruptcy is a big decision, even if you are potentially facing a Colorado Wage Garnishment. You commit to a bankruptcy repayment plan that could last up to five years.
This is why understanding the bankruptcy differences and understanding your Chapter 13 plan payment is crucial to make the most informed decision.
Chapter 13 versus Chapter 7 in Colorado
Deciding between Chapter 13 and Chapter 7 can be tricky. A typical assetless Colorado Chapter 7 Bankruptcy can be completed quickly. Chapter 7 cases cost less than a Chapter 13 case.
However, you must meet the income requirements to receive a Chapter 7 bankruptcy discharge (debt forgiveness). property could be sold by a Chapter 7 trustee.
Below Chapter 13 bankruptcy in Colorado, you can keep your property by paying a little more to the Chapter 13 trustee each month. You can also catch up on mortgage payments and car payments to avoid foreclosures and foreclosures. Some debtors may reduce car payments in a Chapter 13 plan.
With a Chapter 13 plan, you can combine debts into one monthly payment you can afford. Before you rush to file Chapter 13, it’s wise to consider some of the other aspects of Chapter 13.
Calculating Colorado Chapter 13 Plan Payments
Your Colorado Chapter 13 plan payment depends on your unique financial situation, so we’re building a Colorado Chapter 13 plan payment calculator below that you can use to estimate your Chapter 13 plan payment. The cost of filing for bankruptcy in colorado includes an application fee and other fees.
How much will your Chapter 13 plan payout be?
It can depend on many factors such as your assets, your disposable income, the type of debts you have and potentially even your recent financial transactions.
For example, if you have child support arrears, you may need to catch up on those payments in the Chapter 13 plan.
Colorado Bankruptcy Means Test
Before declaring bankruptcy, you must complete a Resource testing. The Colorado Means Test calculates your average monthly income based on the six months before you filed for bankruptcy. Your average monthly income determines your median annual income.
Your annual median income must be less than the Colorado median income to qualify for a Chapter 7 bankruptcy discharge.
However, if your income exceeds the median income, you can still file under Chapter 7 if your disposable income is below a certain amount. Disposable income is the money you have left each month after required payroll deductions and allowable living expenses.
Means test figures are updated to reflect current data from US individuals and households. Make sure to use current tables when calculating the resource test.
The current figures correspond to applications filed on or after May 15, 2022. Colorado Median Income Levels can be found on the Resource Review website.
Colorado Bankruptcy Exemptions
The equity in your property can increase the amount you have to pay under your Chapter 13 plan. Bankruptcy exemptions protect your net worth. If unprotected, equity can be used to pay off your unsecured debt (i.e. medical bills and credit card debt). Therefore, it is important to claim all permitted bankruptcy exemptions to reduce or eliminate the non-exempt equity in your property.
Some states allow debtors to choose between federal bankruptcy waivers and state bankruptcy exemptions. Colorado requires all debtors to use Colorado bankruptcy exemptions when filing for bankruptcy in that state. Colorado debtors can also use certain federal non-bankruptcy exemptions to protect certain Chapter 13 assets. For example, exemptions for retirement benefits, disability benefits, and survivor benefits.
Colorado Revised Statutes §38-41-201 covers Colorado homestead bankruptcy exemptions. Exemptions for other assets can be found in §13-54-102. Colorado bankruptcy exemption amounts are subject to change. To ensure that you have the most recent amounts, you can consult a bankruptcy attorney or check with the court.
Where is Colorado Bankruptcy Court located?
Colorado is a unique district for bankruptcy cases. In other words, all bankruptcy cases filed in the state are filed in the same court. The District of Colorado Bankruptcy Court is located in Denver at 721 19e Street (Phone: 720-904-7300).
341 meetings (first meeting of creditors) are hearings held by the Chapter 13 trustee assigned to your case. The Chapter 13 trustee asks you questions under oath about your bankruptcy filing and finances. After you file your case, you receive notice of the 341 meeting from the court clerk. Hearings are held across the state. Your hearing location is based on your county of residence.
Who Are the Chapter 13 Trustees in Colorado?
Colorado has two permanent Chapter 13 trustees. Trustees are assigned cases based on the county where the debtor resides. There are two Colorado Chapter 13 Administrators.
A Chapter 13 trustee administers your Chapter 13 case. In addition, the trustee receives your payments each month and distributes the money to your creditors according to the terms of your Chapter 13 plan. The Chapter 13 trustee is also responsible for review your tax returns each year, review claims filed in your case, and take other steps to ensure that you comply with the laws and rules of a Chapter 13 case.
Should I File a Colorado Chapter 13 Bankruptcy Case?
The answer depends on your unique financial situation. However, before choosing to file Chapter 13, it is best to weigh all of your options for seeking debt relief.
Please note that there are alternatives to bankruptcy such as Colorado Debt Reliefbut these also have advantages and disadvantages, so it is important to take them into account.
You might have one or more non-bankruptcy alternatives that give you the debt relief you need.