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immediately upon filing, through the automatic stay. You're behind on your home loan and wish to keep your homeYour income is above the Colorado average and you don't pass the Chapter 7 implies testYou have non-exempt equity you wish to secure by paying its worth into a plan rather of losing the assetYou have debts that endure Chapter 7 (particular taxes, some domestic support financial obligations) that you need structured time to payYou've filed Chapter 7 too recently to file again (see timing rules listed below)The means test under 11 U.S.C.

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Here's how it operates in plain terms: The U.S. Trustee Program publishes typical household earnings figures by household size, upgraded every April and November using Census Bureau information. If your average monthly earnings over the prior 6 months, annualized, falls at or listed below Colorado's median for your family size, you pass the ways test automatically and might submit Chapter 7.

Lots of above-median filers still qualify for Chapter 7 after these deductions. or you may still have alternatives depending on the kind of debt you carry (the means test only applies to filers whose debts are mainly consumer debts). Due to the fact that the mean income figures and internal revenue service expense requirements alter twice a year, the specific numbers that used when a good friend or relative submitted may not use to your case today.

Chapter 13 isn't available to everybody no matter earnings there are statutory debt ceilings under 11 U.S.C. 109(e). As of the most current inflation modification (reliable April 1, 2025, through March 31, 2028), the limits are separate for protected and unsecured financial obligation, 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 limit worth viewing if you're near the existing ceiling, especially if a large mortgage is what's pressing you over.

Strategic 2026 Bankruptcy Advice and Strategies

This is usually the deciding factor for Colorado filers. Colorado's exemption statutes safeguard a set quantity of equity in your home, lorry, tools of trade, retirement accounts, and personal effects. If your equity in an asset goes beyond the exemption, the trustee can offer it and pay you the exempt portion however for the big majority of filers with typical equity levels, everything is safeguarded and nothing is offered.

This is typically why higher-equity house owners or company owner choose Chapter 13 even when they may technically pass the Chapter 7 implies test. 34 months to discharge35 years to dischargeNoYes, per court-approved planLower, one-timeLower, one-time (plus continuous trustee charge)Frequently paid up front or shortly after filingFrequently paid through the plan over timeStays 10 years from filingStays 7 years from filingUnsecured financial obligation without any significant possessions at riskSaving a home, curing arrears, above-median income Chapter 13 Chapter 7 You usually must wait 8 years for another Chapter 7 discharge, however might receive Chapter 13 earlier (timing rules are technical and case-specific) Chapter 13, to treat the default and keep the car Frequently Chapter 13, though eligibility depends on the "regular income" requirement Chapter 13's co-debtor stay offers security Chapter 7 does notI invested years administering cases as the Trustee -seeing direct which decisions held up and which ones backfired.

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

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Saving Wages From 2026 Bankruptcy Garnishment

Yes, in most cases many can convert your case from Chapter 13 to Chapter 7 if your circumstances change, alter to certain restrictions particular limitations approval.

It depends on your home income compared to Colorado's present mean figures for your family size, plus enabled expense reductions if you're above average. Filing either Chapter 7 or Chapter 13 activates the automated stay, which right away stops most wage garnishments, collection calls, and suits.

Chapter 13 deals court-enforced protection that private debt settlement doesn't supply, but it's a longer commitment. This post is for general educational functions only and does not make up legal advice. Bankruptcy law is fact-specific, and results depend on your individual situations. Contact our workplace to discuss your scenario directly.