How to File for Bankruptcy in Colorado

Increasing unemployment and bankruptcy filings mark the Colorado economy along with most of the rest of the nation.  Moreover, even though her rates are lower than many, there are still thousands of Colorado citizens struggling to make debt payments.  Bankruptcy may be the answer for some citizens, but it is by no means the answer for everyone.  It takes informed and thoughtful consideration to understand the correct path for each individual.

Finding a Bankruptcy Attorney

That would be a daunting task without expert help, which can be found in the hands of a qualified bankruptcy attorney.  Not only do they know the bankruptcy laws and the benefits that each individual can take advantage of, they have become well versed in the financial elements.  However, finding that expert can take research and time, but it is well worth it to find a lawyer who can compile a successful bankruptcy petition.

Bankruptcy Options

One of the most important tasks comes early in the bankruptcy process.  Once it is determined that bankruptcy is the correct option, the debtor and their attorney must determine whether to file Chapter 7 or Chapter 13.

• Chapter 7 provides a means by which a debtor may have most of their consumer debt discharged, or erased.  Some property may have to be liquidated to pay off debt, but for those with few assets, they have little to lose
• Chapter 13 helps those who want to retain their property and pay off their debts, although they cannot do so in the amounts they currently face.  The bankruptcy trustee helps formulate a plan to pay off those debts over a three- to five-year period.

Colorado Exemptions

Only 15% of bankruptcy filings in Colorado fall under Chapter 13, while the remainder are Chapter 7 bankruptcies, with the possibility of property liquidation.  There are federal and state laws providing property exemptions in a variety of categories.  Colorado requires that filers use only state exemptions, but those exemptions include:

Filing the Petition

There are several steps to the bankruptcy petition, once the debtor has completed credit-counselling, beginning with a temporary stay mandated by the court preventing collection activities during the bankruptcy proceedings.  A bankruptcy trustee takes charge of the case, determining the next step:

• Chapter 7 - whether or not any property must be liquidated
• Chapter 13 – how to reorganize the debtor’s finances and create a plan to repay their debts in a reasonable amount of time

Shortly thereafter, there is a 341 meeting with the creditors to lay out those plans and answer any questions they may have.  Once the process is concluded, those filing Chapter 7 are often debt-free and can begin afresh to build a better financial future.  Those filing Chapter 13 must consistently meet the payment schedule to retain their property and become debt-free.