Colorado Bankruptcy Laws should be known by every resident of the state of Colorado. A lot of Colorado residents have been continuously facing massive amounts of debt that are adding up because of their inability to pay their debts. Many contemplate other options like debt relief, but still others opt to file for bankruptcy. One of the fears an individual or a married couple has when filing for bankruptcy is losing essential assets like their house, vehicles, or their health insurance benefits. Before you make that big leap, know the Colorado bankruptcy laws to give you an overview of what will happen and what assets will be protected from creditors.
Before going to a lawyer, knowing the basics of bankruptcy laws is an advantage on your part. If you think you already know enough, you can then consult a lawyer to help you make the final decision of whether to file for bankruptcy or not.
There are two forms of bankruptcy you can apply for. The most common of these is Chapter 7 where all your non-exempt assets will be liquidated to pay your debts to the creditors. However, applying for this type of bankruptcy is not easy because a qualifying process should be followed. You have to prove that you are really up to your neck with your debts and your earnings should be below the mean income level based on US Census Bureau data. The advantage of filing Chapter 7 in Colorado is your most valuable asset, the house you live in, will still be yours even if you declare bankruptcy. Colorado bankruptcy laws specify that you can keep it to start anew.
Another form of bankruptcy you can apply for is Chapter 13. This is usually the next resort for individuals who applied for Chapter 7, but were declined for some reason or another. In Chapter 13, the debtor together with the assistance of his trustee will come up with a repayment plan to be implemented for 3 to 5 years. This repayment plan will have to be approved by the court and to be supervised by the trustee. The funds for payment will be sent to your trustee, and the trustee will distribute the payments according to the priority structure of the creditors as approved by the court, too.
What are exemption assets? These are assets protected from your creditors and you can keep after filing for bankruptcy. The state of Colorado has generous bankruptcy rules when it comes to exemption assets. These exemptions include:
• The house you are living in with an equity of up to $60,000, and increases to $90,000 if over 60 years old or disabled;
• Automobiles with an equity of up to $6,000, and increases to $10,000 if over 60 years old or disabled;
• Farm machinery and livestock of up to %50,000;
• Jewelry of up to $2,000;
• Family pictures and books amounting to $1,500 or lesser; and
• Other properties like life insurance policies, burial plot for each member, pension plan, and public benefits.
For individuals contemplating to apply for bankruptcy, Colorado’s generous asset exemptions is a tempting incentive; nevertheless, the final decision to file for bankruptcy should not depend solely on this.