If you are considering bankruptcy in the state of Colorado, it’s likely that you are already armed with a plethora of questions regarding the process of bankruptcy, the results, and the circumstances under which filing bankruptcy is the best solution. Unfortunately, however, bankruptcy is one of the procedures that must be taken with one, careful step at a time.
Once you’ve determined that bankruptcy is the best option for you and your family, it’s time to then begin to understand how the process works and how you can get started.
Understand What Filing for Bankruptcy Does
Bankruptcy serves two goals: 1. to give debtors a chance to start from a “clean slate” by relieving you of most or all of your debts, and 2. to repay creditors to the extent that your assets will reasonably allow while maintaining your needs. Essentially, bankruptcy exists to eliminate or negate the legal obligation that a debtor has to pay off a creditor’s loan, stop foreclosure on your home, and so forth.
That being said, it is possible that bankruptcy will not immediately eliminate all of your debts. If you earn over a certain amount of money on a yearly basis and fit into a certain living situation category under the Colorado Means Test, you may not be eligible to file for a Chapter 7 bankruptcy.
A Chapter 7 bankruptcy is the option that would likely do the most to eliminate all of your debts. Chapter 7 bankruptcy is typically only available to those who meet a certain low-income level under the Means Test. If you do not meet the Colorado Means Test, however, you may still be able to file a Chapter 13 bankruptcy. A Chapter 13 bankruptcy will most likely reduce your debt and enable you to work out a payment plan with your creditors.
While Chapter 7 and Chapter 13 bankruptcies are most common, not everyone finds themselves in the same situation. It is best to seek a specialist, such as a bankruptcy attorney to assist you with determining what bankruptcy filing is best for you.
Make Sure That You Are Eligible to File for Bankruptcy in Colorado
Not anyone can simply cross the state-line and file for bankruptcy in Colorado. In order to file for bankruptcy in Colorado, you must have lived in the state for at least 91 days.
Obtain Credit Counseling
Colorado law requires that those filing for bankruptcy receive credit counseling within the first 180-days before filing for bankruptcy. While some credit counseling agencies may charge a small fee for their service, many of the credit counseling sessions across Colorado are offered on a reduced or waived-fee rate on a case-by-case basis. Once you complete the credit counseling sessions, you will receive a certification which you will file with the court alongside your initial bankruptcy application.
If you are incapacitated, disabled, or on active military duty, you may be able to request a waiver of the credit counseling requirement from the court.
Get Your Paperwork Together
Unfortunately, paperwork is one of the most important aspects of filing for bankruptcy. It is important that you have documentation of all recent major financial purchases and transactions, a record of your monthly living expenses, records of any assets or possessions that you own (including any bank accounts, real possessions, and so forth), as well as your tax returns from the past several years.
Knowing this information and having all of the relevant documents will help you to illustrate your financial need to the court while assuring that your bankruptcy moves quickly and painlessly.
While bankruptcy is certainly not something to be taken lightly, as it can have serious long-term consequences on your personal and financial life, it is important to know that you are not alone. Every year, thousands of Americans across the country just like you find themselves in the position of filing for bankruptcy.
If you are one of the many Americans that has determined that you are ready to begin filing for bankruptcy in Colorado, contact our bankruptcy law specialists today to ensure that each step of your bankruptcy filing process is done correctly and efficiently.
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