Thousands of people file for bankruptcy in Colorado each year. You may be wondering whether you can eliminate your debt through a Chapter 13 bankruptcy in Colorado. Filing Chapter 13 is a big decision. You are committing to a bankruptcy repayment plan that could last for up to five years.
This is why understanding the bankruptcy differences and understand your Chapter 13 plan payment is crucial to making the most informed decision. Let’s get started.
Chapter 13 vs. Chapter 7 in Colorado
Deciding between Chapter 13 and Chapter 7 can be difficult. A typical no-asset Chapter 7 case can be completed quickly. Chapter 7 cases cost less than a Chapter 13 case. However, you must meet income requirements to receive a bankruptcy discharge (debt forgiveness) under Chapter 7. Also, if bankruptcy exemptions do not protect all the equity in a piece of property, then some of your property could be sold by a Chapter 7 trustee.
Under Chapter 13, you can keep your property by paying a little more to the Chapter 13 trustee each month. You can also catch up on back mortgage payments and car payments to avoid foreclosures and repossessions. Some debtors can lower car payments in a Chapter 13 plan. Through a Chapter 13 plan, you can combine debts into a monthly payment that you can afford. Before you rush to file Chapter 13, it is wise to consider some of the other aspects of Chapter 13.
Calculating Colorado Chapter 13 Plan Payments
Your Chapter 13 plan payment in Colorado depends on your unique financial situation, which is why we build a Colorado Chapter 13 Plan Payment calculator below that you can use to estimate your Chapter 13 plan payment.
Factors used when calculating a Chapter 13 plan include, but are not limited to:
- Disposable Income — The amount of income you have each month after subtracting allowable payroll deductions and allowable living expenses from your gross monthly income.
- Assets — In some cases, the value of your assets could increase the amount of your Chapter 13 plan if your assets have large amounts of non-exempt equity. We discuss Colorado bankruptcy exemptions in more detail below and how exemptions impact your Chapter 13 plan.
- Debts — Some debts must be paid in full through the Chapter 13 plan (priority unsecured debts such as taxes, alimony, child support, and administrative costs). Other creditors may receive partial payments, including unsecured debts, such as medical bills, credit card debt, and personal loans. Chapter 13 plans typically include back mortgage payments and car loan payments.
- Recent Financial Transactions — Some recent financial transactions could impact your Chapter 13 plan.
You can also explore detailed information about Chapter 13 by reading our article entitled “Chapter 13 Bankruptcy – Everything You Need to Know.”
Colorado Bankruptcy Means Test
Before filing bankruptcy, you must complete a Means Test. The Colorado Means Test calculates your average monthly income based on the six months before filing a bankruptcy petition. Your average monthly income determines your annual median income.
Your annual median income must be below the Colorado median income to qualify for a bankruptcy discharge under Chapter 7. However, if your income exceeds the median income, you can still file under Chapter 7 if your disposable income is less than a certain amount. Disposable income is the money you have remaining each month after required payroll deductions and allowed living expenses.
Figures for the Means Test are updated to reflect current data for U.S. individuals and homes. Make sure to use the current tables when calculating the Means Test.
The current figures correspond to cases filed on or after May 15, 2021. The Colorado median income levels for households are as follows. Please add $9,000 for each person over nine household members per the table below.
|# of People||Annual Income|
Colorado Bankruptcy Exemptions
The net equity in your property can increase the amount you must pay through your Chapter 13 plan. Bankruptcy exemptions protect your net equity. If not protected, then equity can be used to repay your unsecured debts (i.e. medical bills and credit card debts). Therefore, it is important to claim all allowable bankruptcy exemptions to lower or eliminate non-exempt equity in your property.
Some states allow debtors to choose between federal bankruptcy exemptions and state bankruptcy exemptions. Colorado requires all debtors to use Colorado bankruptcy exemptions when filing a bankruptcy case in that state. Debtors in Colorado may also use certain non-bankruptcy federal exemptions to protect some property in Chapter 13. For example, exemptions for retirement benefits, disability benefits, and survivor’s benefits.
Colorado Revised Statutes §38-41-201 covers the Colorado bankruptcy homestead exemptions. Exemptions for other assets can be found in §13-54-102. Colorado bankruptcy exemption amounts are subject to change. In order to ensure you have the most recent amounts, you may want to consult a bankruptcy attorney or check with the court.
Where is the Colorado Bankruptcy Court Located?
Colorado is a single district for bankruptcy cases. In other words, all bankruptcy cases filed in the state are filed through the same court. The Bankruptcy Court for the District of Colorado is located in Denver at 721 19th Street (Telephone: 720-904-7300).
341 Meetings (First Meeting of Creditors) are hearings held by the Chapter 13 trustee assigned to your case. The Chapter 13 trustee asks you questions under oath about your bankruptcy filing and your finances. After filing your case, you receive notice of the 341 Meeting from the Clerk of Court. Hearings are held throughout the state. Your hearing location is based on your county of residence.
Who are the Chapter 13 Bankruptcy Trustees in Colorado?
Colorado has two standing Chapter 13 trustees. Trustees are assigned cases based on the county where the debtor resides. The current Colorado Chapter 13 trustees are:
|Adam Goodman||(303) 830-1971|
|Douglas B. Kiel||(720) 398-4444|
A Chapter 13 trustee administers your Chapter 13 case. Also, the trustee receives your payments each month and distributes the money to your creditors according to the terms of your Chapter 13 plan. The Chapter 13 trustee is also responsible for reviewing your tax returns each year, reviewing claims filed in your case, and taking other steps to ensure you comply with the laws and rules for a Chapter 13 case.
Should I file a Colorado Chapter 13 Bankruptcy Case?
The answer depends on your unique financial situation. However, before choosing to file Chapter 13, it is best to weigh all your options for seeking debt relief. You might have one or more non-bankruptcy alternatives that provide you with the debt relief you need. Ascend helps you explore ways to get out of debt. From debt consolidation and debt settlement to Chapter 13 or Chapter 7, we explore options that can get rid of your debt and give you the fresh start you need to recover after a financial crisis. We also created the video below to summarize a Chapter 13 bankruptcy in Colorado.