The Colorado Motor Vehicle Exemption in Bankruptcy
If you file for bankruptcy in Colorado, you can protect equity in your car using the motor vehicle exemption.
The Colorado motor vehicle exemption helps determine whether you can keep your car, truck, van, or other vehicle if you file for Chapter 7 bankruptcy. Here you’ll find information about the Colorado car exemption: how much it is, what types of vehicles it covers, how it works for married couples, how to find the applicable statute, and more.
(For more information about exemptions, including how they work and which ones you can use, see our Bankruptcy Exemptions area. For information specific to the motor vehicle exemption, see our Motor Vehicle Exemption in Bankruptcy area.)
The Colorado Motor Vehicle Exemption and Your Car
Colorado’s motor vehicle exemption plays a large role in determining whether or not the bankruptcy trustee can take your vehicle to repay your unsecured creditors. If the equity in your car is less than Colorado’s car exemption, then the trustee cannot sell it. If the equity in your car is significantly more than the applicable exemption amount, the trustee is likely to sell your car to repay your unsecured creditors. For details, see The Motor Vehicle Exemption: Can You Keep Your Car in Chapter 7 Bankruptcy?
Keep in mind that even if your car is safe from the bankruptcy trustee, the lender may be able to repossess your car during or after bankruptcy. To learn more, see Your Car in Chapter 7 Bankruptcy and If You Are Behind on Your Car Payments, Can Chapter 7 Help?
The Amount of Colorado’s Motor Vehicle Exemption
In Colorado, you can exempt up to $7,5000 in equity in your cars, bicycles, or other vehicles. If you or your spouse or dependents are elderly (60 years of age or older) or disabled, you can protect up to $12,500 in vehicle equity.
Some states require that you are named on the vehicle title in order to protect it, but Colorado does not require you to hold legal title to claim the exemption. You may use the Colorado exemption to protect qualifying vehicles that you keep and use.
The Federal Motor Vehicle Exemption
Some states allow bankruptcy filers to use the Federal Bankruptcy Exemptions instead of state exemptions, but Colorado is not one of these states.
Can Married Couples Double Colorado’s Motor Vehicle Exemption?
Some states allow married couples filing a joint bankruptcy petition to double the listed exemption amounts. If you file bankruptcy with your spouse in Colorado, you may double the motor vehicle exemption and protect up to $15,000 in equity in your vehicle or vehicles, or up to $25,000 if you and your spouse or dependents are elderly or disabled.
Learn more about joint bankruptcy options in Nolo's section on Bankruptcy Considerations for Married Couples.
What Vehicles and Insurance Are Covered by the Motor Vehicle Exemption?
You can use the Colorado exemption to protect bicycles and motor vehicles such as cars, vans or trucks. Colorado allows you to use the exemption amount to protect more than one vehicle, if necessary. Here are some additional protections:
Insurance proceeds. The Colorado exemption also protects insurance proceeds, up to the amount that would have been protected had the property not been damaged.
Tractors. Colorado has permitted debtors to use the motor vehicle to protect a tractor that was required for the operation of the household, even though it was not permitted to travel on public highways.
Trucks used for agriculture. In accordance with the Colorado statutes, you may also protect up to $50,000 of equity in trucks used for agricultural purposes. This exemption applies specifically to the household, therefore you cannot double it.
Vehicles necessary for your job. You may also protect up to $20,000 of equity per household in “tools of the trade,” or vehicles that are necessary to do your job. Like the agricultural exemption, you may not double the tools of the trade exemption.
Fuel. If you file bankruptcy in Colorado, you may also protect up to $600 of fuel for use or consumption by you or your dependents. You and your spouse may double the fuel exemption and protect up to $1,200 worth of fuel.
Health aids in your car. Colorado law also provides an exemption for professionally prescribed health aids, which might apply if your vehicle has been outfitted with devices to assist with injury or disability. Different courts treat this exemption differently, so if you believe this exemption might apply to you, you should consult with a qualified attorney.
Checking Colorado’s Exemption Laws
You can find Colorado’s motor vehicle exemption at Colo. Rev. Stat. 13-54-102.