Saving Income From 2026 Garnishment

right away upon filing, through the automatic stay. You lag on your mortgage and desire to keep your homeYour income is above the Colorado typical and you do not pass the Chapter 7 means testYou have non-exempt equity you wish to safeguard by paying its value into a strategy instead of losing the assetYou have debts that survive Chapter 7 (certain taxes, some domestic support financial obligations) that you require structured time to payYou have actually filed Chapter 7 too just recently to file again (see timing guidelines below)The methods test under 11 U.S.C.

apfsc.org

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

Numerous above-median filers still certify for Chapter 7 after these deductions. or you may still have options depending upon the kind of debt you bring (the means test just uses to filers whose debts are primarily consumer financial obligations). Due to the fact that the typical income figures and IRS expenditure standards alter two times a year, the precise numbers that applied when a friend or relative filed might not apply to your case today.

Chapter 13 isn't available to everyone regardless of income there are statutory debt ceilings under 11 U.S.C. 109(e). As of the most recent inflation modification (reliable April 1, 2025, through March 31, 2028), the limitations are separate for secured and unsecured debt, in the low 7 figures integrated. 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, especially if a big mortgage is what's pushing you over.

Saving Income From 2026 Garnishment

This is usually the deciding aspect for Colorado filers. Colorado's exemption statutes protect a set amount of equity in your home, vehicle, tools of trade, retirement accounts, and individual residential or commercial property. If your equity in an asset goes beyond the exemption, the trustee can offer it and pay you the exempt part however for the big majority of filers with average equity levels, whatever is protected and absolutely nothing is sold.

This is often why higher-equity property 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 ongoing trustee charge)Typically paid up front or shortly after filingFrequently paid through the strategy over timeStays ten years from filingStays 7 years from filingUnsecured financial obligation with no major properties at riskSaving a home, curing arrears, above-median income Chapter 13 Chapter 7 You usually need to wait 8 years for another Chapter 7 discharge, but might get approved for Chapter 13 earlier (timing guidelines are technical and case-specific) Chapter 13, to treat the default and keep the vehicle Often Chapter 13, though eligibility depends on the "routine earnings" requirement Chapter 13's co-debtor stay provides security Chapter 7 does notI invested years administering cases as the Trustee -seeing firsthand which choices held up and which ones backfired.

Submitting the incorrect chapter, or filing correctly however with an avoidable mistake, can suggest losing home you might have kept or paying years longer than required. If you're weighing Chapter 7 vs.

apfsc.org

Deciding Between Chapter 7 and Chapter 13 for 2026

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

It depends on your family income compared to Colorado's existing typical figures for your family size, plus enabled expense deductions if you're above median. Filing either Chapter 7 or Chapter 13 triggers the automatic stay, which right away stops most wage garnishments, collection calls, and claims.

Chapter 13 deals court-enforced defense that private financial obligation settlement does not supply, but it's a longer commitment. Bankruptcy law is fact-specific, and outcomes depend on your individual circumstances.