Are you struggling to keep up with your monthly bills every month? Are you in danger of losing your home or car because of missed or past-due payments? If any of this sounds familiar, you are certainly not alone. Thousands of people in Colorado are currently experiencing financial stress, often through no fault of their own. Some of the more common reasons for these kinds of issues include medical expenses stemming from an unexpected injury or illness, poorly performing investments, job loss, or the overutilization of credit. No matter what the reason for your financial struggles, filing bankruptcy may be able to help.
We are committed to helping people who have fallen on hard times obtain a fresh financial start through bankruptcy. When you work with one of our Colorado bankruptcy lawyers, he or she will thoroughly evaluate your financial situation for free and determine whether bankruptcy is right for you, and if it is, select the type of bankruptcy that would benefit you the most. To schedule your consultation, call us today.
What is a Chapter 7 Bankruptcy in Colorado?
If you have started to look into bankruptcy at all, you have undoubtedly learned that there are different types of bankruptcy for which you can file. Chapter 7 is the most commonly filed type of personal bankruptcy in the United States, and is often also called a “liquidation bankruptcy.” This is because, in Chapter 7, a debtor’s non-exempt assets are liquidated (sold), and the proceeds are used by the bankruptcy trustee who is assigned to your case to pay off your creditors.
So, does this mean that filing for Chapter 7 will completely clean you out? Far from it. Notice that only a debtor’s “non-exempt” assets are liquidated. Fortunately, Colorado law provides significant exemptions for debtors, including those for a certain amount of equity in the debtor’s residence (homestead), and specific values of personal property like vehicles, household goods, tools, and clothing, as well as wages and pensions. In fact, most Chapter 7 bankruptcies in the United States are “zero asset” bankruptcies, which means that the person filing has no assets that are reachable for liquidation by the court.
This brings us to the most important part (for debtors) of Chapter 7 bankruptcy: the discharge.
Once a bankruptcy is complete, your leftover debts will usually be wiped out, or “discharged,” by the court. Here are some of the kinds of debts that are typically eliminated by Chapter 7:
- Credit card bills
- Past-due rent
- Utility bills
- Medical debts
- Auto loans
- Personal loans
- Civil judgments
- Certain tax debts
- Business debts
In zero-asset bankruptcies, people who file receive the full benefit of the discharge without having to part with any of their personal assets. As a result, as soon as their bankruptcy is completed, they are in a better financial position than they were before they filed. Importantly, however, there are certain categories of debts, like unpaid child support, that cannot be eliminated through Chapter 7. The best way to learn whether you can benefit from filing is to speak with a Colorado bankruptcy attorney as soon as you can.
Is Chapter 13 Bankruptcy Right for You?
Chapter 13 bankruptcy involves a significantly different process than Chapter 7. Instead of liquidating your available property to pay your creditors, the bankruptcy court will require that you participate in a repayment plan that will last three to five years. While waiting this long for a discharge while making payments may not seem desirable, Chapter 13 can be the beneficial choice for many people.
First, if you have too much income and do not qualify for Chapter 7, filing under Chapter 13 is your next best option. In addition, our attorneys will fight to ensure that your payments are manageable based on your income and expenses and can seek to have your payments adjusted during your case if your financial situation changes.
In addition, some people who qualify for Chapter 7 may have inherited or acquired assets and property that are important to them, but that are not covered by any bankruptcy exemptions. To protect the assets and property they do have, they may choose to file for Chapter 13 bankruptcy, as their property will not be an issue in the case.
The payments in a Chapter 13 repayment plan are consolidated payments you make to the court. The bankruptcy trustee then prioritizes your debts and distributes payments to your creditors as the trustee sees fit. Payments can go toward mortgage or auto loan arrears to halt a foreclosure or repossession—an issue that cannot directly be handled through a Chapter 7 case. Finally, at the end of a Chapter 13 case, if you make all required payments, the remainder of your qualified debts will be discharged and you will have no further obligation to pay them.
Whether Chapter 7 or Chapter 13 is right for you is a personal decision that should always be made with the guidance and advice of a highly experienced bankruptcy attorney.
Call a Colorado Bankruptcy Lawyer Today for a Fresh Start
Financial problems can affect nearly every aspect of your life and can take a significant toll on your mental and physical health. Whether you are worried about keeping your home or just keeping the lights on, you owe it to yourself to determine whether bankruptcy is right for you. When you work with us, you will receive a completely free case evaluation performed by an experienced lawyer who will explain all of your legal options. Your unique situation will be treated with the respect it deserves, and we strive to ensure that all of our clients obtain the best possible outcome at the end of their case. To schedule your free consultation with a Colorado bankruptcy attorney, send us an email through our online contact form or call our office today.