Estimating Lawyer Fees for 2026

right away upon filing, through the automated stay. You lag on your home mortgage and wish to keep your homeYour income is above the Colorado mean and you do not pass the Chapter 7 indicates testYou have non-exempt equity you wish to safeguard by paying its worth into a plan instead of losing the assetYou have financial obligations that endure Chapter 7 (certain taxes, some domestic assistance financial obligations) that you need structured time to payYou have actually filed Chapter 7 too recently to file again (see timing rules listed below)The ways test under 11 U.S.C.

apfsc.org

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

Many above-median filers still receive Chapter 7 after these reductions. or you may still have options depending upon the kind of debt you carry (the ways test just uses to filers whose debts are mostly consumer debts). Because the mean income figures and IRS expense standards change two times a year, the exact numbers that applied when a friend or relative filed may not use to your case today.

Chapter 13 isn't readily available to everybody despite income there are statutory debt ceilings under 11 U.S.C. 109(e). As of the most current inflation adjustment (reliable April 1, 2025, through March 31, 2028), the limits are separate for protected and unsecured debt, in the low 7 figures integrated. There is active, bipartisan legislation pending in Congress that would raise and simplify these limits into a single combined threshold worth enjoying if you're near the present ceiling, especially if a big mortgage is what's pressing you over.

Strategic 2026 Bankruptcy Advice and Strategies

This is normally the deciding element 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 a property goes beyond the exemption, the trustee can sell it and pay you the exempt portion however for the big majority of filers with average equity levels, everything is safeguarded and nothing is sold.

This is typically why higher-equity house owners or company owner pick 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 continuous trustee charge)Typically paid up front or quickly after filingFrequently paid through the plan over timeStays ten years from filingStays 7 years from filingUnsecured financial obligation with no major possessions at riskSaving a home, treating arrears, above-median earnings Chapter 13 Chapter 7 You normally need to wait 8 years for another Chapter 7 discharge, but might get approved for Chapter 13 quicker (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 choices held up and which ones backfired.

Filing the incorrect chapter, or filing properly however with an avoidable error, can indicate losing home you could have kept or paying years longer than essential. Every financial circumstance is various, and the "ideal" chapter depends upon numbers and realities special to your family. If you're weighing Chapter 7 vs.

Yes, for the most part you can convert your case from Chapter 13 to Chapter 7 if your circumstances alter, based on certain restrictions and court approval. Not always. If you're present on your home loan and your home equity is within Colorado's exemption limitations, you can typically keep your home in Chapter 7.

It depends on your household earnings compared to Colorado's existing typical figures for your family size, plus enabled expenditure deductions if you're above average. These figures change two times a year, so an accurate answer needs inspecting the chart in effect on your filing date. Yes. Filing either Chapter 7 or Chapter 13 sets off the automated stay, which immediately stops most wage garnishments, collection calls, and claims.

Chapter 13 offers court-enforced protection that private financial obligation settlement does not offer, but it's a longer commitment. This post is for general educational purposes only and does not make up legal advice. Bankruptcy law is fact-specific, and outcomes depend upon your individual scenarios. Contact our office to discuss your circumstance straight.