Updated May 29, 2019
If you’re having trouble making ends meet, filing a Colorado bankruptcy can give you the fresh start you need. The first step is educating yourself about the differences between filing for Chapter 7 or Chapter 13 bankruptcy.
There’s specific Colorado bankruptcy information you’ll need to know before you start completing your bankruptcy paperwork, too, such as:
- exemption laws used to protect property
- means testing figures used to qualify for Chapter 7
- where to find the official bankruptcy forms and credit counseling providers, and
- your local Colorado bankruptcy court.
In this article, you’ll learn about some of the details of filing bankruptcy in Colorado.
Colorado Bankruptcy Information
If you’re newly deciding whether you want to file for bankruptcy, you’ll want to learn about the two most commonly-filed bankruptcy types. Since federal law governs bankruptcy filings, the overall process is the same in all states. You’ll find a lot of good bankruptcy information here.
Even so, you’ll still need to be aware of Colorado law and procedures. Here’s what you’ll need to know.
Colorado Bankruptcy Exemptions
One of the first things that people want to know is whether they’ll lose everything that they own. You won’t. In fact, you might not lose anything at all.
Finding out which of your assets you can protect is as simple as looking at Colorado’s exemption laws. You can keep property that appears on Colorado’s exemption list and the federal nonbankruptcy exemption list. What will happen to nonexempt property will depend on the chapter the debtor files. Here’s how it works:
- In a Chapter 7 bankruptcy, the trustee appointed to manage your matter will sell any property that isn’t exempt for the benefit of your creditors.
- By contrast, you can keep all of your property in a Chapter 13 bankruptcy. But, there’s a catch. You must pay the nonexempt property value to your creditors through the three- to five-year Chapter 13 repayment plan.
Here are some commonly used Colorado property exemptions (spouses filing together can double the amount of the property that they own together, with the exception of the homestead exemption).
Colorado Homestead Exemption
Filers can protect up to $75,000 of equity in a home or other property covered by the Colorado homestead exemption, such as a mobile home. The amount increases to $105,000 if the homeowner, spouse, or dependent is disabled or 60 years of age or older. The proceeds from a sale are exempt under certain conditions. (Colo. Rev. Stat. §§ 38–41–201(1)(a),(b); 38–41–201.6; 38–41–202; 38–41–207; 38–41–209.)
Colorado Motor Vehicle Exemption
A debtor can use this exemption to protect up to $7,500 in motor vehicles. The amount increases to $12,500 for an elderly or disabled debtor, spouse, or dependent. (Colo. Rev. Stat. § 13–54–102(1)(j).)
Other Colorado Bankruptcy Exemptions
- Cemeteries and burial property. Burial sites and mausoleum spaces are exempt to the extent of one site or space for the debtor and each dependent; cemetery property used or owned by a corporation is exempt. (Colo. Rev. Stat. §§ 13–54–102(1)(d) and 7–47–106.)
- Child and domestic support. Exempt if kept segregated from other cash assets. (Colo. Rev. Stat. §§ 13-54-102(1)(u); 13-54-102.5; 13-54-102(4).)
- Crime victims’ compensation. 100%. (Colo. Rev. Stat. §§ 13–54–102(1)(q); 24–4.1–114.)
- Fraternal benefit society benefits. 100%. (Colo. Rev. Stat. §§ 10–14–122, 403.)
- Insurance benefit. Group life insurance proceeds are 100% exempt. Subject to limitations, the cash surrender value of life insurance is exempt up to $100,000 and a debtor can exempt up to $4,000 per month in sickness and accident insurance benefits during the debtor’s disability. (Colo. Rev. Stat. §§ 10–7–205; 10–16–212; 13–54–102(1)(l).)
- Partnership property. Certain partnership property is exempt. (Colo. Rev. Stat. § 7–60–125.)
- Pension and retirement benefits. Firefighters, police officers, and public employee pension and retirement benefits. (Colo. Rev. Stat. §§ 13–54–104 and 24–51–212.)
- Tax-exempt retirement accounts. Exempt under federal rules, including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined-benefit plans (11 U.S.C. § 522(b)(3)(C).) For current amounts, see Your Retirement Plan in Bankruptcy.
- Personal property. Up to $3,000 in household goods; $2,000 in clothing; $2,500 in jewelry; $2,000 in books and family pictures; prescribed health aids; personal injury recoveries except those incurred for treatment of injuries; compensation for damaged property if the underlying property would have been exempt; $600 in food and fuel; an aggregate of $50,000 for livestock and tools. (Colo. Rev. Stat. §§ 13–54–102 and 13–54–103.)
- Public assistance. 100%. (Colo. Rev. Stat. § 26–2–131.)
- Tools of the trade. Up to $30,000 of trade implements used in debtor's primary occupation; up to $10,000 in a secondary occupation; a professional library up to $3,000; livestock, animals, machinery, tools, and seed owned by the person engaged in agriculture up to $50,000. (Colo. Rev. Stat. §§ 13–54–102(1)(i); 13–54–102(1)(k).)
- Unemployment compensation. Exempt as long it’s not commingled with other funds; however, it’s subject to child support orders. (Colo. Rev. Stat. § 8–80–103.)
- Veterans’ benefits. Exempt subject to child support and spousal support orders. (Colo. Rev. Stat. §§ 13–54–102(1)(h); 13–54–102(2).)
- Wages. Up to 30 times the federal or state minimum hourly wage or 75% of disposable earnings per week, whichever is greater. (Colo. Rev. Stat. § 13–54–104.)
- Workers’ compensation benefits. Exempt other than employer reimbursement and court-ordered support. (Colo. Rev. Stat. § 8–42–124.)
Colorado Means Testing and Credit Counseling Information
You’ll find two types of state-specific information on the U.S. Trustee website: figures to complete the means test and information for approved credit counseling providers.
- Means testing information. To file a Chapter 7 bankruptcy, you’ll have to meet income qualifications by passing the “means test.” If your family income is lower than the median income of your state, you pass and can file a Chapter 7 case. You might still pass the means test after subtracting certain standard expenses. You’ll find the necessary income charts and expense guidelines on the U.S. Trustee’s website (select “Means Testing Information”). To determine your Chapter 13 bankruptcy payment, you’ll do a similar calculation.
- Bankruptcy education providers. Individual filers must take two financial courses—one before filing and another before receiving a discharge (debt forgiveness). Approved providers are listed under “Credit Counseling & Debtor Education” on the U.S. Trustee’s website (be sure to scroll down to your district).
Bankruptcy Costs, Filing Fees, and Forms
Most people have to pay some amount to file for bankruptcy, but it’s usually worth the cost. Here’s what you can expect.
- Official bankruptcy forms. Before the Colorado bankruptcy court wipes out qualifying debt, you must disclose all aspects of your financial situation—income, expenses, property, debt, and property transactions—on official bankruptcy forms. These forms are free. After filling out the bankruptcy forms online on the U.S. Bankruptcy Court forms web page, you’ll file your paperwork in your local bankruptcy court (more below) along with a filing fee or fee waiver.
- Bankruptcy filing fees or fee waiver. You’ll pay a filing fee when you file your paperwork with the court unless you qualify for a fee waiver. Find out about both in Bankruptcy Filing Fees and Costs.
- Bankruptcy lawyer fees. The cost to hire a lawyer varies depending on the area. Find out the benefits of being represented by an attorney.
Colorado Bankruptcy Court Website and Location
Chief Judge Michael E. Romero presides over Colorado’s bankruptcy court located at:
United States Bankruptcy Court
721 19th Street
Denver, Colorado 80202
You’ll find instructions for filing your paperwork, as well as the local rules, on the District of Colorado Bankruptcy Court website.
Consult With an Attorney
Before filing, you should understand what will happen to your assets in bankruptcy. Also, additional Colorado exemptions exist, and all Colorado exemption amounts are subject to change. You should check for any updates at the Colorado Secretary of State or meet with a knowledgeable bankruptcy attorney.
This overview cannot provide all of the information you’ll need to file a bankruptcy case. For more detailed information, consider buying a self-help book such as How to File Chapter 7 Bankruptcy by Attorney Cara O’Neill and Albin Renauer J.D.