Step-By-Step 2026 Bankruptcy Support

right away upon filing, through the automatic stay. You're behind on your home mortgage and wish to keep your homeYour earnings is above the Colorado mean and you do not pass the Chapter 7 indicates testYou have non-exempt equity you wish to secure by paying its value into a strategy instead of losing the assetYou have financial obligations that endure Chapter 7 (certain taxes, some domestic support defaults) that you need structured time to payYou've submitted Chapter 7 too recently to file again (see timing rules listed below)The means test under 11 U.S.C.

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Here's how it works in plain terms: The U.S. Trustee Program releases mean family earnings figures by home size, upgraded every April and November utilizing Census Bureau data. If your typical regular monthly income over the prior 6 months, annualized, falls at or listed below Colorado's median for your home size, you pass the methods test instantly and might file Chapter 7.

Lots of above-median filers still qualify for Chapter 7 after these reductions. or you might still have options depending on the kind of financial obligation you bring (the ways test only applies to filers whose debts are mainly customer debts). Because the typical earnings figures and IRS expenditure standards alter two times a year, the specific numbers that applied when a buddy or relative filed may not use to your case today.

Chapter 13 isn't readily available to everybody no matter earnings there are statutory financial obligation ceilings under 11 U.S.C. 109(e). Since the most current inflation change (effective April 1, 2025, through March 31, 2028), the limits are different for protected and unsecured financial obligation, in the low seven figures combined. There is active, bipartisan legislation pending in Congress that would raise and streamline these limits into a single combined limit worth seeing if you're near the existing ceiling, especially if a big home loan is what's pressing you over.

Potential Financial Results of 2026 Bankruptcy

This is normally the deciding factor for Colorado filers. Colorado's exemption statutes safeguard a set amount of equity in your home, car, tools of trade, retirement accounts, and individual home. If your equity in a possession goes beyond the exemption, the trustee can offer it and pay you the exempt portion however for the big bulk of filers with typical equity levels, everything is safeguarded and absolutely nothing is offered.

This is typically why higher-equity homeowners or organization owners pick 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 continuous trustee fee)Typically paid up front or shortly after filingFrequently paid through the plan over timeStays ten years from filingStays 7 years from filingUnsecured debt without any significant assets at riskSaving a home, treating defaults, above-median earnings Chapter 13 Chapter 7 You generally should wait 8 years for another Chapter 7 discharge, but may qualify for Chapter 13 sooner (timing rules are technical and case-specific) Chapter 13, to treat the default and keep the car Typically Chapter 13, though eligibility depends on the "routine income" requirement Chapter 13's co-debtor stay uses security Chapter 7 does notI spent years administering cases as the Trustee -seeing direct which choices held up and which ones backfired.

Filing the wrong chapter, or filing properly however with an avoidable mistake, can imply losing residential or commercial property you might have kept or paying years longer than needed. Every financial circumstance is different, and the "right" chapter depends upon numbers and truths distinct to your family. If you're weighing Chapter 7 vs.

Yes, for the most part you can convert your case from Chapter 13 to Chapter 7 if your situations change, based on particular constraints and court approval. Not necessarily. If you're current on your home mortgage and your home equity is within Colorado's exemption limitations, you can usually keep your home in Chapter 7.

It depends on your home earnings compared to Colorado's current average figures for your household size, plus enabled expenditure deductions if you're above median. Filing either Chapter 7 or Chapter 13 triggers the automated stay, which instantly stops most wage garnishments, collection calls, and lawsuits.

Chapter 13 offers court-enforced defense that personal debt settlement does not supply, but it's a longer dedication. This post is for general informative functions only and does not constitute legal suggestions. Personal bankruptcy law is fact-specific, and results depend on your specific scenarios. Contact our office to discuss your scenario directly.