What is bankruptcy?
Bankruptcy is a legal process through which you can be protected from your creditors and relieved of your debts.   Bankruptcy law is based on Federal law and was first provided for in the United States Constitution.

How do I know if I need to file bankruptcy?
No one but you can decide if you need to file bankruptcy.  You understand your financial situation better than anyone.   My best advice is for you to be honest with yourself in assessing your financial situation.  The simple fact is that no one wants to file bankruptcy, but many people do file bankruptcy because to do so is better than the alternative.   The following is a list of questions for you to ask yourself when making your self-assessment:

  •  Are you overwhelmed by debt?
  • Are you afraid of losing your home or your vehicle?
  •  Are you being harassed or sued  by your creditors?
  •  Are your wages being garnished?
  • Do you feel like you have no control of your financial situation?
  • Do you feel like you will never be out of debt?
  • Are you stressed out and losing sleep?
  • Do you wish you could just “start over” again financially?

If the answer to one or more of these questions is yes, you should consider bankruptcy as an option.

How will bankruptcy help me?
Bankruptcy can be a tremendous benefit for those who are overwhelmed by debt.   Bankruptcy will protect you from your creditors.  By filing a bankruptcy you can stop lawsuits, garnishments, repossessions, phone calls, and even a foreclosure of your home.  Bankruptcy can provide you with an opportunity to start your financial life over again.  In short, bankruptcy puts you in control of your life, rather than your creditors being in control of your life.

Do I qualify to file bankruptcy?
Nearly everyone can file some type of bankruptcy.  Even if you have a filed a bankruptcy within the last eight years you still have the option of filing a chapter 13 bankruptcy.

How much will it cost?
The cost of your bankruptcy will depend on many factors, including the type of bankruptcy you file and the complexity of your case.   These factors include the number of creditors you have, whether you are filing your case by yourself or with your spouse, if you have been sued by your creditors.  Our office has low flat fees for most bankruptcy cases, and we also offer very flexible payment plans.

What are the different types of bankruptcy?

Chapter 7 is the liquidation chapter of the Bankruptcy Code. Chapter 7 cases are often referred to as “straight bankruptcy” or “liquidation” cases. They may be filed by an individual, a corporation, or a partnership. Under Chapter 7, a trustee is appointed to collect and sell all property that is not exempt and to use any proceeds to pay creditors. In the case of an individual, the debtor is allowed to claim certain property as exempt pursuant to federal bankruptcy law and Colorado law. An individual debtor gets a discharge, which means the debtor does not have to pay certain types of debts.

Chapter 13 is the debt repayment chapter for individuals with regular income whose debts do not exceed a certain amount.  Chapter 13 generally allows a debtor to keep property by repaying creditors out of future income. Each Chapter 13 debtor proposes a repayment plan which must be approved by the Court. The payments are made to the Chapter 13 Trustee, who distributes the funds for a small fee. Some nondischargeable debts can be paid over time in a Chapter 13 plan. After the completion of all the plan payments, over three to five years, Chapter 13 debtors receive a discharge of most debts.

Chapter 12 is for use by those who qualify as “family farmers” under the Bankruptcy Code.. Family farmers must propose a plan to repay their creditors from future income over a period of time. The plan must be approved by the Court.

Chapter 11 is the reorganization chapter available to businesses and individuals who have substantial debts or income to restructure and repay their debts.  Chapter 11 is typically used for large corporation and and businesses.

What kind of bankruptcy should I file?
The main factor that determines which type of bankruptcy you can file is your income.   By far the most common type of bankruptcy is chapter 7, which accounts for approximately 85% of all bankruptcy cases that are filed.   Sometimes chapter 7 is referred to as a “fresh start” bankruptcy.   Typically, people in chapter 7 bankruptcy can rid themselves of the most common type of debts such as credit card, medical bills, cash advance loans and other unsecured debts.  In order to file chapter 7 bankruptcy you must demonstrate that your monthly expenses (not including the debts that are part of your bankruptcy) meet or exceed your monthly income.  Chapter 13 is most commonly used by people who want to save their homes from foreclosure but it is also used when your monthly income exceeds your monthly expenses.   In Chapter 13 you will pay back at least part of your debt in the form of a monthly payment that you make to the bankruptcy court.  Typically the monthly payment is based on your budget (what you can afford to pay), rather than the amount of debt you have. In the vast majority of chapter 13 cases you will only pay back a part of the debt that you owe to your creditors.

Why would I want to file a chapter 13 instead of a chapter 7?
Most commonly chapter 13 is used by people who want to stop a pending foreclosure.  Chapter 13 will stop foreclosure and will give you up to five years to bring your mortgage payments current.  Chapter 13 also provides benefits for repayment of taxes and in some cases allows you to pay the value of your vehicle (rather than what you owe on your vehicle).

Are there debts I cannot get rid of in bankruptcy?
There are certain types  of debt that are not discharged in bankruptcy such as child support, maintenance, student loans, court fines, restitution, and most tax obligations.

Will bankruptcy hurt my credit?
When you file bankruptcy that fact will be reported on your credit report for ten years.   The question of whether this will hurt your credit depends on your current financial situation.   If you have a good or excellent credit score when you file bankruptcy your credit score will drop sharply.  For the vast majority of people who file bankruptcy, however, bankruptcy does not actually cause a large drop in a credit score.  The simple truth is that if you are late on your credit card payments, car payments, house payments, or if you have been sued by a creditor your credit score has already been severely impaired and filing a bankruptcy may reduce your credit a little, but it won’t cause a large drop because your credit score has already been damaged.  In fact, most people that file bankruptcy actually see their credit score increase because bankruptcy clears out unsecured debts, which improves the debt to income ratio on a credit report.  In essence, if your credit is already damaged then filing a bankruptcy is in most cases the best way to wipe out any unresolved debt and begin to rebuild your credit.  If you want to obtain a copy of your credit report I recommend www.annualcreditreport.com.

Creditors are calling me.  Can you make them stop?
Yes, once you have begun the process of filing with our firm you can tell your creditors to call me.  Once your bankruptcy case is filed creditors are legally prevented from calling you or contacting you in any way.

Will a bankruptcy stop a lawsuit, a garnishment, or a repossession?
Yes, bankruptcy will stop all collection efforts against you, including phone calls, lawsuits, garnishments, repossessions, and foreclosures.

Can I  keep my home and my vehicles?
In most cases you may keep your home and your vehicles in bankruptcy.   If your vehicle is paid for it can be worth a maximum of $15,000.00 ($25,000.00 if you are disabled or elderly).  If your car is still financed you may keep it as long as you are not over the exemption limit and you are current on your payments.  You are allowed to have up to $250,000.00 of equity in your home ($350,000.00 if you are disabled or elderly).   See the exemption table below for more information on exemptions.

Can I protect my assets when I file bankruptcy?
In a bankruptcy case you are allowed to keep common assets such as furniture, appliances, TV, clothing, basic jewelry, and vehicles as long as the value of those items do not exceed a certain value.  The law provides exemptions for your assets, which specify the amount of each type of property you can own. As long as the value of your property is within these limits it is protected.

Exemption laws are based on Colorado law.  You may or may not qualify for Colorado exemptions.  The following is a list of some of the most common bankruptcy exemptions for Colorado residents  

Item                                                             Exemption   

Vehicle                                                          $15,000.00

Vehicle (elderly/disabled)                           $25,000.00

Home                                                            $250,000.00 Equity

Home (elderly/disabled)                             $350,000.00 Equity

Household goods                                        $6,000.00

Clothing                                                        $2,000.00

Jewelry                                                          $2,500.00

IRA, 401k, Pension                                      100%

Work Tools, Equipment                              $60,000.00

What is the means test?
The means test is used in cases where the Chapter 7 individual debtor’s current monthly income exceeds the state’s median family income. It is used to determine if a debtor has the ability to repay a minimum level of general unsecured debt after the payment of allowable monthly expenses. If the means test shows a debtor has such an ability to repay, there is a “presumption of abuse.” In other words, if the debtor receive a Chapter 7 discharge, this would be an abuse of the bankruptcy process, because the debtor may have the ability to repay debts outside of bankruptcy or through a Chapter 13 repayment plan over time. The analysis involves application of certain IRS guidelines for expenses in determining the ability to repay as well as a review of income from the previous six months to determine if the debtor is above the median income for the state where they reside. The links to the IRS guidelines and median income information are found on the United States Trustee’s website at http://www.usdoj.gov/ust/ under Means Testing Information.

How many years will a bankruptcy show on my credit report?
Under the Fair Credit Reporting Act, 15 U.S.C. §1681, a bankruptcy can remain on a credit report for ten years. If you have additional questions visit the website of the Federal Trade Commission, at http://www.ftc.gov/index.shtml.   You may be able to obtain a free credit report with information found at https://www.annualcreditreport.com