The Colorado Homestead Exemption

If you're considering filing for bankruptcy in Colorado, the Colorado homestead exemption will help you protect the equity in your home. This article explains how much Colorado's homestead exemption is and how to apply it in your bankruptcy case when you want to keep your house.

How Much Is the Homestead Exemption in a Colorado Bankruptcy?

In Colorado, you'll use Colorado's state exemptions because the federal bankruptcy exemptions aren't available (some states allow residents to choose between the two sets). You'll find Colorado's homestead exemption amount listed below.

What Property Can You Protect With the Colorado Homestead Exemption?

Under the Colorado exemption system, homeowners can exempt up to $250,000 of their home or other property covered by the homestead exemption. The homestead exemption is $350,000 if the homeowner, spouse, or dependent is disabled or 60 or older. In Colorado, spouses cannot double the homestead exemption.

Other Requirements for Keeping a Home in Bankruptcy

If you can't protect all of your home equity, you might not be able to keep your home. Typically, the Chapter 7 trustee appointed to your case would sell the house, return the exemption amount to you, pay off the mortgage, and pay creditors with the amount remaining after deducting the trustee's fee.

In Chapter 13, the trustee doesn't sell property, so you could keep it. However, that doesn't mean Chapter 13 filers get a break regarding how much equity they can retain. Instead, you'd need to pay creditors the value of the nonexempt equity through the Chapter 13 plan.

But that isn't all. Keeping your home requires being current on the mortgage when filing for Chapter 7. Otherwise, you could lose it to the lender through foreclosure, possibly even during the Chapter 7 case. If you're behind on payments when filing for Chapter 13, you have an option not available in Chapter 7. You can catch up on the payments over time through the plan.

Learn about other requirements you must meet in Your Home in Chapter 7 and Your Home in Chapter 13. Also, find out why filing for Chapter 13 is better than Chapter 7 when you're behind on payments and don't want to lose your house.

Claiming the Homestead Exemption

When completing your bankruptcy forms, you'll do the following:

• disclose your home on Schedule A/B: Property
• list your home and the homestead exemption law on Schedule C: The Property You Claim as Exempt, and
• if filing for Chapter 7, explain whether you plan to keep or surrender the home on the Statement of Intention for Individuals Filing Under Chapter 7.

Because your home is likely your most valuable asset, consider consulting with a bankruptcy lawyer to ensure you can protect it in bankruptcy.

Where to Find the Homestead Exemption Statute

Colorado's homestead exemption is in the Colorado Revised Statutes §§ 38-41-201, et. seq. To learn how to find state statutes, check Laws and Legal Research.

When You Can Use Bankruptcy Exemptions

You can file for bankruptcy in Colorado after living there for over 180 days. However, you must live in Colorado for at least 730 days before filing to use the current state's exemptions. Otherwise, you'd use the previous state's exemptions.

If you lived in multiple states during the two years before filing for bankruptcy, you'd use the exemptions of the state you lived in for most of the 180 days before the two years immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).)

However, that isn't the only requirement you must fulfill. Before taking advantage of your new state's generous homestead exemption, you must own your home in that state for at least 40 months before declaring bankruptcy. If you do not meet this condition, your homestead exemption is limited by federal law to $214,000. Additionally, using a homestead exemption is prohibited if a filer engages in certain criminal or fraudulent acts. (11 USC §§ 522(p), (q); amount will adjust on April 1, 2028.)

Learn more about filing for bankruptcy after moving to a new state, the current amount of the federal cap, and other essential exceptions to homestead exemptions.

Need More Bankruptcy Help?

Did you know Nolo has made the law accessible for over fifty years? It's true, and we wholeheartedly encourage research and learning. You can find many more helpful bankruptcy articles on Nolo's bankruptcy homepage. Information needed to complete the official downloadable bankruptcy forms is on the Department of Justice U.S. Trustee Program website.

However, online articles and resources can't address all bankruptcy issues and aren't written with the facts of your particular case in mind. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.