The Colorado Homestead Exemption

Learn about the Colorado homestead exemption and how it can protect your home equity in bankruptcy.

By , Attorney · University of the Pacific McGeorge School of Law

In bankruptcy, a homestead exemption protects equity in your home. Here you'll find specific information about the homestead exemption in Colorado. For general information about how the homestead exemption works in both Chapter 7 and Chapter 13 bankruptcy, read The Homestead Exemption in Bankruptcy. You'll find detailed information about Colorado bankruptcies in Filing for Bankruptcy in Colorado.

How Much Is the Colorado Homestead Exemption Amount?

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.

Example 1. If you own a house worth $370,000 and have a mortgage balance of $330,000, you have $40,000 of equity in the property. If you file a Chapter 7 bankruptcy, you can use the Colorado homestead exemption to protect all equity.

Example 2. Assume your mortgage is only $20,000 and can only exempt $250,000 of your $350,000 of equity. The Chapter 7 bankruptcy trustee would likely sell your house, give you $250,000 from the proceeds for your exemption, and use any amount remaining after deducting sales costs to pay unsecured creditors. If you wanted to keep the home, you could file for Chapter 13 and pay the $100,000 nonexempt equity portion to unsecured creditors through the Chapter 13 plan.

What Does the Colorado Homestead Exemption Cover?

In Colorado, the homestead exemption applies to real property, such as your home or condominium. It will also protect a mobile home, manufactured home, or house trailer. You must occupy the property in order to take advantage of the homestead exemption.

The homestead exemption also applies to the sale proceeds of the property. The sale proceeds are exempt for two years after they are received. Also, a deceased owner's spouse or children can claim the homestead exemption.

Can I Use the Federal Homestead Exemption in Colorado?

Some states allow bankruptcy filers to use the federal bankruptcy exemptions instead of the state exemptions. Colorado is not one of those states. If you reside in Colorado, you must use the state exemptions. Find out more about choosing the correct bankruptcy exemptions.

Do I Need to File a Homestead Declaration in Colorado?

In Colorado, the homestead exemption is usually automatic, and you don't have to file a homestead declaration in order to claim the homestead exemption in bankruptcy. However, with regard to certain older obligations incurred prior to July 1, 1975, the homestead exemption might not be available unless a homestead declaration is recorded.

Where Do I Find the Colorado Homestead Exemption Statute?

Colorado's homestead exemption is found in the Colorado Revised Statutes § 38-41-201 through § 38-41-209. To learn how to find state statutes, check Laws and Legal Research.

Periodic Adjustments of Colorado Exemption Amounts

Colorado's exemption amounts, including the homestead exemption, are adjusted periodically for inflation. You can find Colorado's statutes here or consult a bankruptcy attorney for the current homestead amount.

Need More Bankruptcy Help?

Did you know Nolo has made the law easy for over fifty years? It's true, and we want to ensure you find what you need. Below you'll find more articles explaining how bankruptcy works. And don't forget that our bankruptcy homepage is the best place to start if you have other questions!

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We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.

Updated December 18, 2023

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