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Colorado Bankruptcy Laws
Only 15% of bankruptcy filings in Colorado fall under Chapter 13, while the remaining cases 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 clients use only state exemptions, but those exemptions include:
Homestead
Up to $60,000, $90,000 for the disabled or those over 60
Personal Property
Household goods up to $3,000; jewelry and watches up to $2,000; motor vehicles up to $3,000 ($6,000 for the elderly or disabled); personal books and family pictures; wearing apparel up to $1,500; burial plot; health aids
Tools of Trade
Up to $20,000
Insurance
Life insurance cash surrender value
There are several steps to the bankruptcy petition, once the debtor has completed credit-counseling, 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.
