Navigating Between Chapter 7 and 7 for 2026

right away upon filing, through the automatic stay. You're behind on your mortgage and want to keep your homeYour earnings is above the Colorado average and you don't pass the Chapter 7 means testYou have non-exempt equity you want to protect by paying its worth into a plan rather of losing the assetYou have debts that survive Chapter 7 (specific taxes, some domestic assistance arrears) that you need structured time to payYou've submitted Chapter 7 too just recently to submit once again (see timing guidelines below)The means test under 11 U.S.C.

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

Lots of above-median filers still get approved for Chapter 7 after these reductions. or you might still have options depending upon the type of debt you carry (the means test just applies to filers whose debts are mostly customer debts). Because the average earnings figures and internal revenue service expense standards change two times a year, the specific numbers that applied when a pal or relative submitted might not apply to your case today.

Chapter 13 isn't offered to everybody no matter earnings there are statutory financial obligation ceilings under 11 U.S.C. 109(e). As of the most current inflation modification (effective April 1, 2025, through March 31, 2028), the limitations are different for secured and unsecured debt, in the low seven figures integrated. There is active, bipartisan legislation pending in Congress that would raise and simplify these limitations into a single combined threshold worth viewing if you're near the existing ceiling, especially if a large home loan is what's pressing you over.

Choosing Chapter 13 Vs Chapter 13 in 2026

This is usually the choosing aspect for Colorado filers. Colorado's exemption statutes safeguard a set amount of equity in your home, car, tools of trade, pension, and personal effects. If your equity in a property exceeds the exemption, the trustee can sell it and pay you the exempt part however for the large majority of filers with typical equity levels, everything is protected and absolutely nothing is sold.

This is often why higher-equity house owners or company owner select 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 continuous trustee cost)Typically paid up front or soon after filingFrequently paid through the plan over timeStays ten years from filingStays 7 years from filingUnsecured debt without any significant properties at riskSaving a home, curing arrears, above-median earnings Chapter 13 Chapter 7 You generally must wait 8 years for another Chapter 7 discharge, but may certify for Chapter 13 earlier (timing guidelines are technical and case-specific) Chapter 13, to treat the default and keep the car Often Chapter 13, though eligibility depends upon the "routine earnings" requirement Chapter 13's co-debtor stay uses defense Chapter 7 does notI spent years administering cases as the Trustee -seeing firsthand which decisions held up and which ones backfired.

Submitting the incorrect chapter, or filing properly however with an avoidable error, can suggest losing property you could have kept or paying years longer than necessary. Every monetary situation is different, and the "right" chapter depends upon numbers and realities unique to your home. If you're weighing Chapter 7 vs.

Yes, in most cases you can convert your case from Chapter 13 to Chapter 7 if your scenarios alter, subject to particular restrictions and court approval. Not necessarily. If you're current on your home loan and your home equity is within Colorado's exemption limits, you can generally keep your home in Chapter 7.

It depends upon your family earnings compared to Colorado's present average figures for your household size, plus permitted expenditure deductions if you're above median. These figures alter two times a year, so a precise answer requires inspecting the chart in result on your filing date. Yes. Filing either Chapter 7 or Chapter 13 triggers the automatic stay, which instantly stops most wage garnishments, collection calls, and lawsuits.

Chapter 13 offers court-enforced protection that personal debt settlement doesn't provide, however it's a longer dedication. This article is for general educational functions only and does not make up legal guidance. Bankruptcy law is fact-specific, and results depend upon your private scenarios. Contact our workplace to discuss your scenario straight.