Bankruptcy Exemptions in Colorado

Anyone who is considering filing bankruptcy has a great deal to consider, including if chapter 7 is appropriate for him or her.  While it provides the opportunity to erase many, and in some cases, all consumer debt, it may require the debtor to liquidate some of their property. 

To help consumers protect that property, both federal and state statutes provide exemptions the filer may claim.  In Colorado, the state does not allow consumers to claim federal exemptions, so it is important to know the protections the state exemptions provide.

How to Keep Your Car

State and federal exemptions differ in this area:

• Federal exemption – $3,225
• Colorado state exemption – $5,000 for bicycles and motor vehicles if used to travel to work (up to $10,000 if used by elderly or disabled debtors or their dependents)

In order to fully protect a vehicle that is security for a loan, however, the debtor must continue to make loan payments or face repossession.

How to Keep Your Home

• Federal homestead exemption - $20,200
• Colorado state exemption – $60,000 for real property
  • Up to $90,000 if a dependent, spouse, or owner is over 60 and disabled
  • Proceeds of a sale are exempt after 2 years have elapsed
  • Child or spouse of deceased property owner can also claim homestead exemption

When the exempt property is security for a mortgage or loan, the homeowner must continue payments in order to protect the property from foreclosure.

Colorado allows exemptions for other forms of personal property:

• Clothing – up to $1,500
• Health aids
• Household goods – up to $3,000
• Food and fuel – up to $600
• Burial site – up to 1 per person
• Jewelry and article of adornment – up to $2,000
• Family pictures and books – up to $1,500
• Proceeds for damaged exempt property
• Personal injury recoveries, security deposits
• Tools of the trade – up to $20,000
  • Libraries of professionals – up to $3,000
  • Farm animals, implements, and machinery – up to $50,000
  • National Guard members – personal military equipment

Filing Schedule C of a Bankruptcy Petition

In order to ensure that all property exemption claims are honored and the bankruptcy petition is not delayed, every filer must include a Schedule C form that includes the following details about each claim:

• A listing of the property or properties
• The state statutes that apply to each
• The exemption value of each
• The current assessed value of each claim (not the market value)

Getting Legal Help

Due to the number of decisions to be made and forms to be completed, it is extremely difficult for someone without a legal background to successfully and expeditiously file their petition for bankruptcy.  However, with the help of a bankruptcy attorney, they can find the legal and financial advice to complete the process, find relief from their creditors, and begin anew.