Guide to 2026 Chapter 13 Support

immediately upon filing, through the automated stay. You lag on your mortgage and wish to keep your homeYour earnings is above the Colorado mean and you do not pass the Chapter 7 suggests testYou have non-exempt equity you desire to protect by paying its value into a strategy rather of losing the assetYou have financial obligations that survive Chapter 7 (specific taxes, some domestic support defaults) that you need structured time to payYou've filed Chapter 7 too recently to submit again (see timing rules listed below)The methods test under 11 U.S.C.

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

Numerous above-median filers still qualify for Chapter 7 after these deductions. or you may still have choices depending on the kind of debt you bring (the methods test only applies to filers whose financial obligations are primarily customer debts). Because the average income figures and IRS expenditure requirements alter two times a year, the exact numbers that used when a buddy or relative submitted 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). As of the most recent inflation change (effective April 1, 2025, through March 31, 2028), the limits are separate for protected and unsecured financial obligation, in the low 7 figures combined. There is active, bipartisan legislation pending in Congress that would raise and simplify these limitations into a single combined threshold worth watching if you're near the present ceiling, particularly if a large mortgage is what's pushing you over.

Comparing Chapter 13 Vs Chapter 7 in 2026

This is generally the choosing element for Colorado filers. Colorado's exemption statutes safeguard a set amount 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 offer it and pay you the exempt part but for the big majority of filers with typical equity levels, whatever is safeguarded and absolutely nothing is sold.

This is often why higher-equity house owners or company owners pick Chapter 13 even when they might technically pass the Chapter 7 indicates 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 strategy over timeStays ten years from filingStays 7 years from filingUnsecured debt with no significant possessions at riskSaving a home, curing financial obligations, above-median earnings Chapter 13 Chapter 7 You usually should wait 8 years for another Chapter 7 discharge, however might get approved for Chapter 13 sooner (timing guidelines are technical and case-specific) Chapter 13, to cure the default and keep the automobile Frequently 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 wrong chapter, or filing properly but with an avoidable mistake, can suggest losing residential or commercial property you might have kept or paying years longer than necessary. If you're weighing Chapter 7 vs.

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New Filing Requirements for 2026 Bankruptcy

Yes, in most cases the majority of can convert your case from Chapter 13 to Chapter 7 if your circumstances changeScenarios alter to certain restrictions particular limitations approval.

It depends on your family income compared to Colorado's existing median figures for your family size, plus enabled expense deductions if you're above average. These figures alter twice a year, so an accurate response requires checking the chart in effect on your filing date. Yes. Filing either Chapter 7 or Chapter 13 activates the automated stay, which immediately stops most wage garnishments, collection calls, and suits.

Chapter 13 offers court-enforced defense that personal debt settlement does not supply, however it's a longer commitment. Insolvency law is fact-specific, and results depend on your individual scenarios.