Bankruptcy in Colorado
In Colorado, you can find snow in July. It's unexpected, but it happens. Unfortunately, in Colorado, medical crisis, unemployment, business failure, and predatory lending practices, which are also unexpected, happen. Fortunately, there are warm blankets and hats for those cold Rocky Mountain nights and bankruptcy laws for financial storms.
In this article, we'll demonstrate how Colorado bankruptcy law differs from other states' laws; give you a head start on deciding whether you should file Chapter 7 or Chapter 13 bankruptcy; and provide insider tips on how to find and work with a qualified bankruptcy lawyer.
How Colorado Bankruptcy Law Differs from Other States Laws
When you work with a qualified bankruptcy attorney, you will likely keep all or most of your property because Colorado allows filers to exempt assets from the bankruptcy process. Expert attorneys know how to work, within the law, to make the most out of these exemptions, which are also known as "property rights".
If you have excess assets, and file Chapter 7 bankruptcy, those assets may be sold to pay off your debts. (Never fear. The sale of assets aka "liquidation" rarely happens and you don't have to file Chapter 7 unless you want to.)
Here are the Colorado exemptions that most clients ask about first. You can protect:
- $60,000 in equity in your home (i.e. "homestead exemption")
- $5,000 in equity in your car**
- Household goods up to a total of $3,000**
- $2,000 total for jewelry/watches**
**Doubled for married couples, filing bankruptcy jointly.
I'm in Colorado: Do I File Chapter 7 or Chapter 13?
Your bankruptcy attorney will help you to determine whether you qualify to file Chapter 7 or if Chapter 13 would better suit your individual situation. That being said, it's always a good idea to do some research ahead of time, so that you know what questions to ask and better understand your lawyer's explanations.
- In general, Chapter 7 is for people whose income falls below the median income for their state and can protect most of their assets with exemptions.
- The median income in Colorado is $47,361 for an individual and $79,905 for a four-member family. However, there is more than one way to qualify for Chapter 7. Get good legal advice before you disqualify yourself.
- Most unsecured debts are discharged in Chapter 7 and the legalities are all handled within approximately 6 months.
- If you don't qualify for Chapter 7, have excess assets that you don't want to lose, or have high debts that won't be discharged, you would likely file bankruptcy under Chapter 13 of the U.S. Bankruptcy Code.
How to Find a Bankruptcy Attorney
This is an important section. The first priority in finding and selecting a lawyer needs to be your comfort level. You need to be able to trust, respect, and feel safe with your bankruptcy attorney.
If a loved one or professional advisor says, "XX YY is the best bankruptcy lawyer out there", you've got it made.
If that doesn't happen, call your local bar association or do a Google search for "Find a Colorado Bankruptcy Attorney". Then, check out the results and narrow picks to about three attorneys.
To narrow the pack, focus on attorneys who focus their practice on bankruptcy, have experience, and will offer you a no-fee, no-obligation in-person or phone meeting so you can ask questions.
Simply pick whomever you're most comfortable with.
How to Prepare to Work with a Bankruptcy Attorney
Good pre-planning, which is planning before you actually file bankruptcy, is super important in protecting your assets and getting you to you goal of cleaning your slate and starting fresh.
The two keys to pre-planning are:
- Work with a qualified bankruptcy attorney (ASAP)
We've already provided tips to finding a qualified bankruptcy lawyer, so now it's time to talk "preparation." Get your thinking cap on and pull out all of your papers. If you wear reading glasses, put them on and make a list of:
- Payments made
Gather documentation for everything on this list and include contracts for your house, car, furniture purchase, time-shares, insurances, and any other contracts. Fill out your attorney provided forms to the best of your ability and ask questions about what you don't understand.
Your bankruptcy attorney will get you through this financial storm.