A Step-By-Step 2026 Bankruptcy Filing

immediately upon filing, through the automated stay. You lag on your home mortgage and desire to keep your homeYour earnings is above the Colorado mean and you don't pass the Chapter 7 implies testYou have non-exempt equity you wish to protect by paying its worth into a strategy rather of losing the assetYou have debts that make it through Chapter 7 (particular taxes, some domestic assistance financial obligations) that you require structured time to payYou have actually submitted Chapter 7 too just recently to submit once again (see timing guidelines below)The methods test under 11 U.S.C.

apfsc.org

Here's how it works in plain terms: The U.S. Trustee Program releases typical household earnings figures by family size, updated every April and November using Census Bureau information. If your average month-to-month earnings over the previous 6 months, annualized, falls at or below Colorado's typical for your home size, you pass the methods test instantly and might submit Chapter 7.

Many above-median filers still get approved for Chapter 7 after these deductions. or you might still have alternatives depending on the kind of financial obligation you bring (the means test only uses to filers whose financial obligations are mostly consumer financial obligations). Due to the fact that the median earnings figures and IRS expenditure requirements alter twice a year, the precise numbers that applied when a buddy or relative filed may not apply to your case today.

Chapter 13 isn't offered to everyone regardless of earnings there are statutory debt ceilings under 11 U.S.C. 109(e). Since the most recent inflation modification (effective April 1, 2025, through March 31, 2028), the limits are different for protected and unsecured debt, in the low seven figures combined. There is active, bipartisan legislation pending in Congress that would raise and streamline these limitations into a single combined threshold worth viewing if you're near the existing ceiling, especially if a big mortgage is what's pressing you over.

Key Consequences of 2026 Bankruptcy

This is usually the deciding element for Colorado filers. Colorado's exemption statutes protect a set amount of equity in your home, car, tools of trade, retirement accounts, and personal effects. If your equity in a possession surpasses the exemption, the trustee can offer it and pay you the exempt part however for the big majority of filers with average equity levels, everything is secured and absolutely nothing is offered.

This is often why higher-equity homeowners or company owner pick Chapter 13 even when they may technically pass the Chapter 7 suggests test. 34 months to discharge35 years to dischargeNoYes, per court-approved planLower, one-timeLower, one-time (plus ongoing trustee cost)Frequently paid up front or shortly after filingFrequently paid through the plan over timeStays ten years from filingStays 7 years from filingUnsecured financial obligation with no major properties at riskSaving a home, curing financial obligations, above-median earnings Chapter 13 Chapter 7 You normally must wait 8 years for another Chapter 7 discharge, but may get approved for Chapter 13 faster (timing guidelines are technical and case-specific) Chapter 13, to cure the default and keep the car Frequently Chapter 13, though eligibility depends upon the "regular earnings" requirement Chapter 13's co-debtor stay offers defense Chapter 7 does notI spent years administering cases as the Trustee -seeing firsthand which choices held up and which ones backfired.

Filing the wrong chapter, or filing properly but with a preventable error, can mean losing residential or commercial property you might have kept or paying years longer than necessary. If you're weighing Chapter 7 vs.

apfsc.org

Step-By-Step 2026 Chapter 13 Filing

Yes, in most cases you can convert your transform from Chapter 13 to Chapter 7 if your circumstances changeScenarios subject to certain restrictions particular court approval.

It depends upon your family income compared to Colorado's current mean figures for your household size, plus enabled expenditure reductions if you're above mean. These figures change two times a year, so a precise answer requires inspecting the chart in effect on your filing date. Yes. Filing either Chapter 7 or Chapter 13 triggers the automated stay, which immediately stops most wage garnishments, collection calls, and lawsuits.

Chapter 13 deals court-enforced protection that private debt settlement doesn't provide, however it's a longer commitment. This post is for basic informative purposes just and does not make up legal recommendations. Insolvency law is fact-specific, and outcomes depend on your individual situations. Contact our office to discuss your scenario directly.