Stop Wage Garnishment Through 2026 Bankruptcy

right away upon filing, through the automated stay. You're behind on your home loan and desire to keep your homeYour earnings is above the Colorado mean and you do not pass the Chapter 7 means testYou have non-exempt equity you wish to protect by paying its value into a strategy instead of losing the assetYou have financial obligations that endure Chapter 7 (particular taxes, some domestic assistance financial obligations) that you need structured time to payYou have actually filed Chapter 7 too recently to submit again (see timing guidelines 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 publishes typical household earnings figures by home size, updated every April and November using Census Bureau data. If your average regular monthly income over the prior 6 months, annualized, falls at or listed below Colorado's mean for your family size, you pass the means test automatically and might file Chapter 7.

Numerous above-median filers still get approved for Chapter 7 after these deductions. or you might still have alternatives depending on the type of debt you bring (the means test only uses to filers whose financial obligations are mostly consumer debts). Since the average earnings figures and internal revenue service expenditure standards change two times a year, the exact numbers that applied when a friend or relative submitted might not use to your case today.

Chapter 13 isn't available to everybody despite earnings there are statutory financial obligation ceilings under 11 U.S.C. 109(e). As of the most current inflation modification (efficient April 1, 2025, through March 31, 2028), the limitations are different for protected and unsecured financial obligation, in the low 7 figures integrated. There is active, bipartisan legislation pending in Congress that would raise and simplify these limitations into a single combined threshold worth watching if you're near the current ceiling, particularly if a large home mortgage is what's pushing you over.

Navigating Bankruptcy Fees in 2026

This is normally the deciding aspect for Colorado filers. Colorado's exemption statutes safeguard a set amount of equity in your home, automobile, tools of trade, pension, and personal effects. If your equity in an asset surpasses the exemption, the trustee can offer it and pay you the exempt part but for the big majority of filers with typical equity levels, everything is secured and absolutely nothing is sold.

This is frequently why higher-equity property owners or entrepreneur pick Chapter 13 even when they may technically pass the Chapter 7 means test. 34 months to discharge35 years to dischargeNoYes, per court-approved planLower, one-timeLower, one-time (plus continuous trustee charge)Typically paid up front or shortly after filingFrequently paid through the plan over timeStays 10 years from filingStays 7 years from filingUnsecured financial obligation with no significant properties at riskSaving a home, treating arrears, above-median income Chapter 13 Chapter 7 You normally need to wait 8 years for another Chapter 7 discharge, but may certify for Chapter 13 faster (timing rules are technical and case-specific) Chapter 13, to cure the default and keep the automobile Often Chapter 13, though eligibility depends upon the "routine earnings" requirement Chapter 13's co-debtor stay uses security Chapter 7 does notI spent years administering cases as the Trustee -seeing firsthand which decisions held up and which ones backfired.

Filing the incorrect chapter, or filing properly however with an avoidable error, can suggest losing residential or commercial property you might have kept or paying years longer than required. Every financial circumstance is different, and the "ideal" chapter depends upon numbers and truths distinct to your household. If you're weighing Chapter 7 vs.

Yes, in a lot of cases you can transform your case from Chapter 13 to Chapter 7 if your situations change, based on particular restrictions and court approval. Not necessarily. If you're present on your home mortgage and your home equity is within Colorado's exemption limits, you can generally keep your home in Chapter 7.

It depends on your family earnings compared to Colorado's existing mean figures for your household size, plus permitted expenditure deductions if you're above typical. These figures alter two times a year, so an accurate response requires examining the chart in effect on your filing date. Yes. Filing either Chapter 7 or Chapter 13 triggers the automated stay, which immediately stops most wage garnishments, collection calls, and lawsuits.

Chapter 13 offers court-enforced protection that private debt settlement doesn't provide, however it's a longer dedication. This post is for basic informational purposes only and does not make up legal advice. Insolvency law is fact-specific, and outcomes depend on your individual circumstances. Contact our office to discuss your scenario directly.