When you file chapter 7 bankruptcy in Colorado, the process is pretty smooth and helpful for everyone involved. There are many benefits to filing chapter 7 bankruptcy. The biggest benefit is the protection against wage garnishment. This means that your debtors will not be able to take part of your paycheck as a means to regain their money. Wage garnishment can be very tough to deal with, especially when money is tight enough as it is when you are in this kind of situation. Chapter 7 allows you to avoid this aspect of bankruptcy. It also allows you to keep certain debts through “Reaffirmation”, which will be discussed later.
First, the basics of a chapter 7 filing. In this type of bankruptcy, also more commonly called liquidation, your assets are sold off in an effort to regain money that will be used to pay off your various debtors. It can be a great option for both individuals as well as companies of any size. Chapter 7 helps provide a “fresh start” from your debts so you can move on and try again.
While it may be a great option for those to need to file, not everyone can file chapter 7 bankruptcy in Colorado. You must first pass the “means test”. This test shows whether or not you have the means to pay your debts. To pass the test, your income must be at or below the median income of a similar household in your town or area. If you earn more than that amount of money, they will look at how much disposable income you have available every month and consider that as part of your payment of debts. If there still is not enough money, you can file for chapter 7.
When someone files chapter 7 bankruptcy, a trustee is assigned to the case. This person is put in charge of overseeing the sale (or liquidation) of any assets that may be available and can be sold in order to pay off the debts. This can include nearly any valuables that can be sold. The profits are used for paying off related debts. Certain debts cannot be covered, such as alimony, child support, student loans and taxes. Some of the profits are also used for paying the trustee for their part in the filing process.
A note about co-signers on debts: they, too, may be held responsible for helping in the repayment effort. Because they signed on to the debt when it began, they are partially responsible as well. If they cannot pay the debt themselves, they may be required to file chapter 7, too. Be sure to talk to any co-signers you may have on your assets, such as for your home loan or car loan, to make sure they know what is going on.
Sometimes you really need to keep an asset and not sell it off, such as a vehicle or a house. These debts can be “reaffirmed”, where you sign a statement of reaffirmation that you will keep this debt and pay it. First, you must come up to date with the payments, paying off back-owed payments and related fees, before you can reaffirm the debt. You can’t liquidate that particular asset for another 8 years if you file for bankruptcy again in the future. This is a great option for those essential items in your life, or items that are integral to rebuilding your business after bankruptcy.
Chapter 7 bankruptcy is a great option for anyone or any company that is struggling with a mountain of debt that they cannot repay. This type of bankruptcy allows for a “fresh start” for those who need it. The process is relatively quick, usually only taking 3 to 6 months from start to finish. Chapter 7 bankruptcy has more benefits and less pitfalls than any other form of bankruptcy available.
Bankruptcy is sometimes necessary in order to rebuild your financial life, but it is best to seek legal advice before considering. Speak to a qualified law firm if you believe you are in need of bankruptcy assistance. There are many options available in the state of Colorado and each case is unique. No matter what your situation may be, the process can be surprisingly straight forward and many clients get to keep the majority of their assets. You can get your finances back on track sooner than you might expect, call Holland Law we are very experienced with filing in the state of Colorado and know every step of the process.