Filing Bankruptcy Chapter 7 Colorado

How Much Does It Cost To File Bankruptcy In Denver

The cost of filing bankruptcy in Denver is $338. This includes the filing fee, which is $306, and the miscellaneous administrative fees, which are $32. The total cost will vary depending on the individuals circumstances. For example, if someone has to file an amended petition or motion with the court, there will be additional fees.

File Your Forms With The Colorado Bankruptcy Court

In some bankruptcy districts, only attorneys can file bankruptcy cases online. Thankfully, Colorado filers also have an electronic option. If youâre filing bankruptcy on your own in Colorado, here are your options for submitting your forms:

• You can mail them to the court.

• You can submit them in person at thecourthouse in Denver.

• You can file online using a system calledI-File. This was designed for folks filing without a bankruptcy attorney.

If you have access to a computer, using the I-File system is a good way to make sure your case is filed promptly. If you send your bankruptcy petition via mail, you risk delays or having the papers get lost in the mail.

In light of the COVID-19 pandemic, many courts, including Colorado’s, have altered their requirements and procedures. The clerkâs office may not be staffed depending on COVID-19âs current impact in Denver. However, a drop box is available whenever the court building is open. You can drop your forms off there or have someone else drop them off for you.

Rebuild Your Credit After Filing Bankruptcy

Unfortunately, Chapter 7 bankruptcy can negatively impact your credit and Chapter 13 can negatively impact your credit. That said, you have an opportunity to rebuild your credit shortly after bankruptcy. To assist, you can use our free credit rebuilding portal designed to help you increase your credit score by 100 points in less than 6 months.

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Secured Vs Unsecured Debt

If you are thinking about filing bankruptcy you must understand that your debts will be designated as either secured or unsecured. This designation plays a major role in bankruptcy because it dictates how much debt you can eliminate. Additionally, secured and unsecured assets are treated differently when you file for Chapter 7 or Chapter 13.

Keeping Your House In Chapter 7 Bankruptcy

How Chapter 7 Bankruptcy Works

When you file a Chapter 7 bankruptcy petition, the bankruptcy court assigns a trustee to administer your case on behalf of your creditors.

What Does a Bankruptcy Trustee Do?

The trustees job is to liquidate any unprotected assets you may own and pay the proceeds to your creditors. This might include your house, but only if you have more equity than your homestead exemption.

How the Homestead Exemption Applies During Bankruptcy

Example One

Let us assume that you file a Chapter 7 bankruptcy and that your house is worth $500,000 with a $350,000 mortgage. In this scenario, a bankruptcy trustee will not try to sell your home because the equity in your home is less than your homestead exemption of $250,000.

Here is how the math works:

If you were to sell your house for $500,000, you should expect to pay about $40,000 in realtor fees and closing costs. After paying off the mortgage, you would receive $110,000 from the sale. This is less than the homestead exemption, so the bankruptcy trustee would leave your house alone.

Example Two

Lets consider a scenario in which your house is worth more. Lets say you can sell your house for $800,000. You have $350,000 remaining on the mortgage. After closing costs and fees and paying off the mortgage, the net from the sale of the house would be $386,000.

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D Colorado Debt Payoff Planning

You may be able to get out of debt through debt payoff planning, which is often a combination of trying to reduce expenses and putting extra cash into specific debts to avoid interest. You may not be able to do this because of the size of the financial hardship, but if you are interested, we build the Savvy debt payoff planner to help prioritize your debts. The app saves about $2,000 in interest on average by using the savvy debt payoff method instead of the snowball debt payoff method.

Colorado Personal Property Exemption

Numerous other items of personal property are exempted by Colorado law under several subsections of C.R.S. § 13-54-102. They include:

• : Necessary clothing up to a value of $2,000.
• : Watches, jewelry, and similar items up to a value of $2,500.
• : A library, family pictures, and school books to the extent of $2,500.
• : Household goods such as furniture, dishes, appliances, musical instruments, and home electronics to the extent of $3,000.
• : The stock in trade, supplies, fixtures, equipment, and other business property used to carry on the debtors gainful occupation. If the gainful occupation is the debtors primary gainful occupation, this exemption covers up to $30,000 otherwise, it covers up to $10,000.
• : Professionally prescribed health aids.

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Commonly Asked Bankruptcy Questions

What is the difference between a Chapter 7 and Chapter 13 bankruptcy? Chapter 7 takes three months to receive a discharge Chapter 13 takes three to five years to complete most persons want to file Chapter 7 rather than Chapter 13. Chapter 7 discharges all unsecured debt, other than student loans and taxes incurred within three years of filing bankruptcy. To file Chapter 13, you must have disposable income , which you pay into the Chapter 13 Plan every month for three to five years. There are seven main reasons for filing Chapter 13: you owe significant taxes you owe student loans you want to cure a mortgage default through the Plan you do not have enough equity in your residence to cover a second mortgage and want to strip the second mortgage lien off the property, thereby making the second unsecured and dischargeable you own too much nonexempt property and want to keep it you filed Chapter 7 within eight years you are over the income cap for Chapter 7 and number of family members) and cannot pass the means test.

Can I keep my car and house in a Chapter 7 bankruptcy? Yes, as long as you are current on your loan payments, and the equity in the property is under the exemption amount .

When can I stop collection suits and garnishments? You can only stop them by filing the bankruptcy although the collection calls and threats often stop after retaining a bankruptcy attorney and referring collection calls to him/her.

A Colorado Trustee Is Assigned To Your Bankruptcy Filing

A bankruptcy trustee is assigned to your bankruptcy case to review the paperwork and look for non-exempt belongings that you may own. You have to submit such forms as a recent tax return to the trustee. If you have non-exempt belongings, the trustee may manage the sale and liquidation of those belongings.

See the Chapter 7 and Chapter 13 trustees in Colorado for bankruptcy district, name and contact information. As a Chapter 13 bankruptcy is much longer, you may have more interaction with the Chapter 13 trustee or someone from his/her office.

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Bankruptcy Myth #: I Will Not Be Able To Purchase Or Refinance A Home If I File Bankruptcy

This is one of the greatest concerns of our clients. The irony is that by the time you meet with an attorney you are likely so deep in debt that you generally would not be approved for a mortgage or refinance anyway. Furthermore, it would take years to get the debt under control so that you would qualify for a new loan.

It is even worse if you have fallen behind and you are not paying your debts. Missing payments result in negative credit marks being added to your credit report each month. Each negative mark becomes its own piece of credit history and generally takes 2 10 years before it drops off your credit report.

The more negative marks you create the harder it is to rebuild your credit. Filing bankruptcy stops further negative marks on your credit report. It wipes out dischargeable debts and gives you a fresh start. From the moment you file bankruptcy you can begin rebuilding credit and will receive offers in the mail from creditors that primarily lend to people who recently filed.

Additionally, the lending requirements for FHA, VA, HUD, and others generally allow the purchase of a new home or refinance of an existing residence within 2-3 years of filing bankruptcy. This is as long as you have no further issues with repaying debt after your case is filed.

Waiting 2-3 years is significantly faster for most people than trying to pay off debt or recuperate from the continually negative credit information hitting their credit report each month.

Bankruptcy Myth #: I Cannot Discharge My Irs Tax Debt

There is a common myth that you cannot get rid of tax debt in bankruptcy. This is not true. However, there are very specific rules that must be met in order to eliminate your tax debts in bankruptcy.

The general rules are as follows:

• The tax debt must be more than 3 years old,
• The tax return must have been filed at least 2 years prior to the bankruptcy filing and
• You cannot have been found guilty of fraud or tax evasion for the dischargeable tax years.

Tax situations can be more complicated than the basic rules mentioned above. It is advisable to seek the counsel of an experienced bankruptcy tax attorney to make sure you do not lose out on the advantages bankruptcy may provide in eliminating taxes.

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Alternatives To Filing Chapter 7 Bankruptcy

If you are wondering if you should file for bankruptcy, there are many nonprofit consumer credit counseling organizations that have the ability to negotiate more favorable terms with creditors. Its particularly effective with credit-card companies. The repayment program will be managed expertly and fees could be avoided.

Here are some options:

Debt Management Plan Entering into a debt management program can provide relief from interest rates, late fees and penalties from creditors. Under a DMP, which is negotiated by credit counselors, you promise to pay back the full principal over time in an efficiently managed manner.

The debt management program provides an organized monthly payment plan. It provides an opportunity to handle the debt more efficiently than trying to sort it out yourself. By keeping the payments on track, it will be good for your credit score.

Some caveats: There is generally an enrollment and maintenance fee and the DMP is never a guaranteed option. Creditors have no obligation to participate.

Debt Consolidation This option reduces interest rates and combines all of your debts into one manageable monthly payment. Under debt consolidation, you take out a loan, which is used to consolidate and pay off all of your other debts.

Personal Loan for Bad Credit Yes, you can get a personal loan with bad credit, depending on your situation. You can expect high interest rates and should only consider this option if you can truly afford the monthly payment.

Bankruptcy Myth #: Any Attorney Can Help Me File A Bankruptcy

Not just any attorney can capably handle a bankruptcy. Bankruptcy law is generally an elective class in law school and attorneys are not formally trained on anything but the theory of bankruptcy in their studies.

To truly understand how to handle a Colorado bankruptcy your attorney should be experienced in Colorado bankruptcy law and procedure or have an experienced senior attorney available to help on your case as needed.

Without an experienced attorney prepared to handle the nuances of Colorado bankruptcy law, you could lose assets or end up in a payment plan bankruptcy when you could have filed a Chapter 7.

An experienced attorney will make the process easier, reduce your stress with their knowledge, and help make your experience as efficient and effective as possible.

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Years Before Your Bankruptcy

You are ineligible for a Chapter 7 discharge until eight years from the date you filed a prior Chapter 7 and received a discharge. If you received a Chapter 13 or Chapter 12 discharge in a case filed within the previous six years, you will be eligible for a Chapter 7 discharge generally if, in the prior case, you paid at least 70 percent of your allowed unsecured claims, and your plan was proposed in good faith and was your best effort.

Collect Your Colorado Bankruptcy Documents

Gatheringimportant documents and getting organized early in the Chapter 7 bankruptcy process can help ease your stress and prevent you from feeling overwhelmed. Be aware that official bankruptcy forms require a lot of different information. While it’s not hard to obtain, it may take some digging on your part. Even if you hire an attorney, youâll need to collect the following:

• Your last two years oftax returns,

• Your paycheck stubs from the last 60 days, and

• A bank statement that covers your filing date.

Although theyâre not required, these documents will also be helpful to have:

• Bank statements for the last 6-12 months can help figure out your expenses.

• Letters from collection agencies or other third-party debt collectors because youâll need to list all your creditors.

• A recent credit report gives you a snapshot of all your credit accounts. You’re entitled toreceive a free report every 12 months from each one of the three consumer credit reporting agencies. If you file using Upsolveâs filing tool, it will pull your report for you.

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Year Before Your Bankruptcy

If you have tried to delay or defraud your creditors by transferring, hiding, or destroying your property within the 1-year period prior to your bankruptcy, the court may deny you a Chapter 7 discharge and even allow your creditors to recover the property that you transferred.

Also, if you pay back one of your creditors who is also a relative or close business associate at any time within the 1-year period prior to the filing of your bankruptcy case, the payment is an unlawful preference and the court may recover all such payments and distribute them to your other creditors.

If you had a prior bankruptcy case dismissed within one year of the time you file a Chapter 7 case, the Automatic Stay entered in the Chapter 7 case will be terminated within 30 days unless you can demonstrate that the Chapter 7 case was filed in good faith.

Filing Chapter 7 Bankruptcy

This page will explain the basics of Chapter 7 bankruptcy, one of five different chapters of the Bankruptcy Code under which a case may be filed. Each chapter is designed for its own specific situation. For most people, there are two choices: Ch. 7 or Ch. 13. About 85% of all bankruptcies filed in Colorado Springs are Ch. 7s. Click on Chapter 13 above for information on Ch. 13.

Chapter 7 bankruptcies are often referred to as liquidations or straight bankruptcies. With a liquidation, all of your Non-Exempt assets may be sold in order to pay your Creditors. Usually, all of your property will be exempt and you wont lose anything.

To start your case, you file a petition asking the court to discharge your debts. The basic idea is to discharge, your debts in exchange for your giving up some of your property, except for exempt property which you are allowed to keep. In most cases, all of your property will be exempt. But your non-exempt property can be sold, with the money distributed to your creditors. Chapter 7 bankruptcy does not require you to pay any of your wages to the Trustee or to any of your creditors.

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Am I Eligible For Bankruptcy In Colorado

There are two means tests used to determine whether you can file under Chapter 7 in Colorado. The first test is pretty straightforward: If your household income is less than the median income for households of the same size in Colorado, you qualify. According to census data, the median household income for a three-person Colorado family was $95,050 in November 2020.

If you determine that your income is above the state median, you may still be eligible for Chapter 7. The second means test is based on calculations of your monthly disposable income. You find that by subtracting your monthly expenses from your monthly income. If you are found to have little to no disposable income each month, you can file under Chapter 7.

To file under Chapter 13 you must have a steady income and unsecured debts of no more than $419.275. Your total secured debts cannot total more than $1.26 million.

Talk To An Experienced Denver Colorado Bankruptcy Attorney To See If Chapter 7 Or Chapter 13 Is Best For You

Whether or not you qualify for bankruptcy involves a thorough analysis. Our job is to help you understand the benefits and pitfalls of bankruptcy, including which chapter best meets your needs. To learn whether Chapter 7 or Chapter 13 is your best option, you can schedule a free, confidential bankruptcy consultation with an experienced Denver, Colorado bankruptcy attorney. Our online scheduling system allows you to schedule a consultation at a time that is convenient for you, or you can call 303.331.3403 to talk with an attorney.

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Bankruptcy Myth #: I Make Too Much Money To File Bankruptcy

Anyone can file a bankruptcy at any income level. However, the Chapter of bankruptcy may be determined by your income.

This does not mean people with high incomes do not qualify for Chapter 7 bankruptcy. There are people who qualify for Chapter 7 bankruptcy that make well over $100,000 a year or even more.

For example, a business owner with significant business debts may qualify for an exception from the income tests applied in a Chapter 7 bankruptcy. This exception along with proper review and advice on your expenses can result in receiving a Chapter 7 bankruptcy instead of a payment plan bankruptcy.

Work with an experienced bankruptcy attorney to determine what exceptions may apply in your case. Otherwise, you risk having to needlessly repay debts because your attorney does not know the rules. Experience counts and saves you money and further hardship.