Financial Support for 2026 Bankruptcy Filers

immediately upon filing, through the automated stay. You're behind on your mortgage and desire to keep your homeYour income is above the Colorado median and you don't pass the Chapter 7 indicates testYou have non-exempt equity you desire to protect by paying its worth into a strategy rather of losing the assetYou have financial obligations that endure Chapter 7 (particular taxes, some domestic support defaults) that you need structured time to payYou have actually filed Chapter 7 too recently to file once again (see timing rules below)The ways test under 11 U.S.C.

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Here's how it operates in plain terms: The U.S. Trustee Program releases mean family income figures by home size, upgraded every April and November using Census Bureau information. If your average month-to-month income over the previous six months, annualized, falls at or below Colorado's mean for your family size, you pass the means test immediately and might submit Chapter 7.

Lots of above-median filers still certify for Chapter 7 after these deductions. or you might still have alternatives depending upon the kind of financial obligation you carry (the means test just uses to filers whose debts are mainly customer financial obligations). Since the typical earnings figures and IRS expense standards alter two times a year, the exact numbers that used when a friend or relative submitted might not use to your case today.

Chapter 13 isn't available to everybody regardless of earnings there are statutory debt ceilings under 11 U.S.C. 109(e). Since the most recent inflation change (effective April 1, 2025, through March 31, 2028), the limitations are separate for protected and unsecured debt, in the low 7 figures combined. There is active, bipartisan legislation pending in Congress that would raise and simplify these limitations into a single combined limit worth viewing if you're near the present ceiling, especially if a large mortgage is what's pressing you over.

A Guide to 2026 Bankruptcy Support

This is typically the choosing aspect for Colorado filers. Colorado's exemption statutes secure a set quantity of equity in your home, automobile, tools of trade, retirement accounts, and personal effects. If your equity in a possession exceeds the exemption, the trustee can sell it and pay you the exempt portion however for the big bulk of filers with typical equity levels, everything is secured and nothing is sold.

This is typically why higher-equity house owners or company owner choose Chapter 13 even when they might technically pass the Chapter 7 indicates test. 34 months to discharge35 years to dischargeNoYes, per court-approved planLower, one-timeLower, one-time (plus ongoing trustee fee)Often paid up front or quickly after filingFrequently paid through the strategy over timeStays 10 years from filingStays 7 years from filingUnsecured debt with no significant possessions at riskSaving a home, treating arrears, above-median earnings Chapter 13 Chapter 7 You generally must wait 8 years for another Chapter 7 discharge, however might receive Chapter 13 earlier (timing rules are technical and case-specific) Chapter 13, to cure the default and keep the car Often Chapter 13, though eligibility depends upon the "routine income" requirement Chapter 13's co-debtor stay provides protection Chapter 7 does notI spent years administering cases as the Trustee -seeing direct which decisions held up and which ones backfired.

Submitting the incorrect chapter, or filing properly but with a preventable mistake, can mean losing residential or commercial property you could have kept or paying years longer than required. Every monetary circumstance is different, and the "right" chapter depends on numbers and realities distinct to your family. If you're weighing Chapter 7 vs.

Yes, in many cases you can convert your case from Chapter 13 to Chapter 7 if your situations change, subject to particular constraints and court approval. Not always. If you're current on your home loan and your home equity is within Colorado's exemption limits, you can usually keep your home in Chapter 7.

It depends on your home earnings compared to Colorado's present mean figures for your household size, plus enabled expense deductions if you're above typical. Filing either Chapter 7 or Chapter 13 triggers the automated stay, which right away stops most wage garnishments, collection calls, and lawsuits.

Chapter 13 deals court-enforced security that personal debt settlement does not provide, but it's a longer dedication. This post is for basic informational functions just and does not constitute legal suggestions. Personal bankruptcy law is fact-specific, and results depend upon your individual situations. Contact our office to discuss your scenario straight.