How to Filing for Chapter 7 in 2026

instantly upon filing, through the automated stay. You're behind on your mortgage and desire to keep your homeYour earnings is above the Colorado typical and you don't pass the Chapter 7 implies testYou have non-exempt equity you wish to safeguard by paying its value into a plan instead of losing the assetYou have debts that survive Chapter 7 (certain taxes, some domestic support arrears) that you require structured time to payYou have actually submitted Chapter 7 too just recently to file again (see timing rules below)The ways test under 11 U.S.C.

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Here's how it works in plain terms: The U.S. Trustee Program publishes typical household income figures by household size, updated every April and November utilizing Census Bureau data. If your typical regular monthly income over the prior 6 months, annualized, falls at or below Colorado's typical for your family size, you pass the means test immediately and may submit Chapter 7.

Lots of above-median filers still receive Chapter 7 after these reductions. or you might still have alternatives depending upon the type of financial obligation you bring (the ways test just uses to filers whose financial obligations are mostly consumer financial obligations). Since the median earnings figures and internal revenue service expenditure requirements change two times a year, the precise numbers that used when a buddy or relative filed may not apply to your case today.

Chapter 13 isn't available to everybody no matter income there are statutory debt ceilings under 11 U.S.C. 109(e). Since the most current inflation modification (efficient April 1, 2025, through March 31, 2028), the limitations are different for secured and unsecured financial obligation, in the low seven figures integrated. There is active, bipartisan legislation pending in Congress that would raise and streamline these limitations into a single combined limit worth seeing if you're near the current ceiling, especially if a big home mortgage is what's pressing you over.

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This is generally the deciding element for Colorado filers. Colorado's exemption statutes protect a set quantity of equity in your house, automobile, tools of trade, retirement accounts, and personal effects. If your equity in a possession surpasses the exemption, the trustee can sell it and pay you the exempt portion however for the big bulk of filers with average equity levels, whatever is safeguarded and nothing is offered.

This is often why higher-equity house owners or entrepreneur choose Chapter 13 even when they might technically pass the Chapter 7 implies test. 34 months to discharge35 years to dischargeNoYes, per court-approved planLower, one-timeLower, one-time (plus ongoing trustee charge)Often paid up front or soon after filingFrequently paid through the strategy over timeStays 10 years from filingStays 7 years from filingUnsecured financial obligation without any significant assets at riskSaving a home, treating arrears, above-median earnings Chapter 13 Chapter 7 You normally must wait 8 years for another Chapter 7 discharge, but may qualify for Chapter 13 faster (timing rules are technical and case-specific) Chapter 13, to treat the default and keep the cars and truck Typically Chapter 13, though eligibility depends on the "regular income" requirement Chapter 13's co-debtor stay offers defense Chapter 7 does notI spent years administering cases as the Trustee -seeing direct which choices held up and which ones backfired.

Submitting the wrong chapter, or filing correctly however with an avoidable mistake, can indicate losing residential or commercial property you could have kept or paying years longer than required. If you're weighing Chapter 7 vs.

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New Legal Steps for 2026 Bankruptcy

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

It depends on your home income compared to Colorado's current typical figures for your household size, plus permitted cost deductions if you're above typical. These figures change twice a year, so a precise response needs checking the chart in impact on your filing date. Yes. Filing either Chapter 7 or Chapter 13 triggers the automatic stay, which immediately stops most wage garnishments, collection calls, and lawsuits.

Chapter 13 deals court-enforced protection that personal debt settlement does not supply, however it's a longer dedication. Bankruptcy law is fact-specific, and outcomes depend on your individual situations.