Chapter 13 Bankruptcy in Colorado: Eligibility & Costs (2026)

Chapter 13: At a Glance

• Chapter 13 allows Colorado debtors to keep their house and car while repaying their debt over 3–5 years. Unlike Chapter 7, which may require selling property, Chapter 13 bankruptcy allows filers to stop foreclosure and repossession proceedings immediately and repay creditors through a court-approved plan.

• To qualify for Chapter 13 in Colorado in 2026, secured debt must be under $1,580,125, and unsecured debt under $526,700. Eligibility also requires steady disposable income, up-to-date state and federal tax filings for the past four years, and credit counseling.

• Colorado's Ch. 13 repayment plan length depends on household income versus the state median. Filers earning above Colorado's median income for their family size must use a 60-month plan; those below the median may qualify for a shorter 36-month plan.

• Hiring a Colorado bankruptcy attorney significantly improves Ch. 13 success rates. Nationally, only 33–50% of Chapter 13 filers complete their plan and receive a discharge, and many Colorado bankruptcy courts won't even accept a D-I-Y Chapter 13 case.

A Chapter 13 bankruptcy is a debt reorganization. Unlike Chapter 7 bankruptcy, where property can be sold off to pay your creditors, Chapter 13 lets you keep your property and repay your debts over three to five years. This means you’ll develop a repayment plan that you must adhere to rigorously. If you do, you can discharge the rest of your debt and get the fresh start you need to rebuild your finances.

A Chapter 13 bankruptcy is a more involved process than a Chapter 7 filing. Filing a Chapter 13 petition requires the expertise and strategic acumen of an experienced bankruptcy lawyer. The right attorney can save you thousands of dollars and is an investment well worth the expense. Your legal fees can be paid back over time, like the debts included in the filing.

Chapter 13 bankruptcy is often the most viable option for individuals or families who fit one or more of these conditions:

• You make too much money to qualify for Chapter 7 bankruptcy

• There is a looming foreclosure or repossession of property you wish to keep

• You have sizable equity in a small business or other assets

• You owe taxes that cannot be discharged in bankruptcy

• You have filed for Chapter 7 bankruptcy within the past eight years

In addition to individuals and families, people who are self-employed or run an unincorporated business may also find relief through Chapter 13 if they meet the debt threshold. Beyond debt amounts, other factors such as your income and taxes determine whether you qualify for Chapter 13.

As of 2026, the Chapter 13 debt threshold for secured debts is less than $1,580,125, and the debt limit for unsecured debts is less than $526,700.

What’s the Difference Between Secured Debt and Unsecured Debt?

Secured debts require collateral to get the loan. Home mortgages and auto loans are two of the most common types of secured debt. If you fall behind on these loan payments, the creditors can seize the property to satisfy the debt.

Tax liens are another form of secured debt, as the IRS can also file a lien against your property if you don’t pay your income taxes.

Unsecured debt is not backed by collateral. Credit card debt is the most common type of unsecured debt in the U.S. Other types of unsecured debt include:

• student loans

• medical bills

• personal loans

• child support

Chapter 13 bankruptcy was once known as the “wage earner’s plan” because only people who earned a living from an employer qualified. This was to ensure that the individual filing Chapter 13 had a steady income to pay back their debt. Today, Chapter 13 can be an option for people who are self-employed or operate as a sole proprietor. The key, though, is to demonstrate you have the income to meet your monthly expenses and enough left over to apply to the debts included in your bankruptcy.

You must submit proof that you have filed state and federal tax returns for the past four years. If you can’t do this, your case may be delayed until you can. Ultimately, your case will be dismissed if you do not document your tax returns.

You are ineligible for Chapter 13 bankruptcy if any of the following apply to you:

• You've had a prior bankruptcy petition dismissed within the previous six months due to your willful failure to appear before the court or comply with court orders. 11 U.S. Code § 109(g)

• You voluntarily dismissed a previous bankruptcy petition after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. 11 U.S. Code § 362(d) and (e)

• You did not get the required credit counseling within the past six months from an agency approved by the U.S. Department of Justice. 11 U.S.C. §§ 109, 111 (The court may make an exception in an emergency, or if the bankruptcy trustee has determined that there are not enough approved agencies to provide the required credit counseling.)

When properly used, a Chapter 13 filing helps debtors avoid some of the least desirable consequences of bankruptcy. Below are some of the advantages of filing under Ch. 13.

Keep Your House

It’s a scary feeling when you learn you could lose your home. Foreclosure is expensive and stressful, and it can have lasting effects on your credit and financial future. Chapter 13 can stop ongoing foreclosure proceedings and help you develop a plan to make up your missed mortgage payments over time. Keep in mind you’ll still have to keep up with your regular mortgage payments.

Keep Your Car

The last thing you need when you’re already behind on your bills is to lose your transportation. Chapter 13 stops creditors from repossessing your car. Chapter 7 only offers temporary protection — creditors can still petition the court for permission to repossess your vehicle.

Get Creditors Off Your Back

Chapter 13 automatically stays all collection efforts. This means your creditors are required by law to stop harassing phone calls, letters, and threats of lawsuits. Chapter 13 bankruptcy consolidates your debt and allows you to make a single payment to the bankruptcy trustee assigned to your case. The trustee then distributes those payments to creditors.

As long as you’re under Chapter 13 protection, you won’t have direct contact with creditors. Once you have solidified your finances, creditors can resume debt collection attempts.

More Time and Flexibility

You wouldn’t be considering bankruptcy if your debt didn’t feel insurmountable. Chapter 13 gives you the time and flexibility to catch up on payments and get your finances on track. You may be able to reschedule your secured debts (other than a mortgage for your primary residence) and extend them over the life of your Chapter 13 plan. Doing this may even lower the payments.

Possibly Remove Second and Third Mortgages

In certain circumstances, you can eliminate a second mortgage on your home by filing Chapter 13. You may be able to strip your second (and third) mortgage if your first mortgage balance exceeds the value of your home. However, if your house is worth more than your first mortgage alone but not more than the combined balance of your first and second mortgages, you can only strip your third mortgage.

Lenders find Chapter 13 More Attractive

Future lenders may look more favorably upon a Chapter 13 bankruptcy filing than a Chapter 7. Completing a Chapter 13 bankruptcy plan demonstrates that you have reliably made payments for several years and have eliminated most, if not all, of your debt. This reassures the lender that you will be able to repay them.

Release Otherwise Non-dischargeable Debts

Some debts are all but impossible to get rid of except through a Chapter 13 bankruptcy. If you qualify for Chapter 13, you may be able to discharge:

• debts for willful and malicious injury to property (not a person)

• debts incurred to pay non-dischargeable tax obligations

• debts arising from property settlements in divorce or separation proceedings 11 U.S.C. § 1328(a)

For all its perks, Chapter 13 bankruptcy is not without some pitfalls. However, many of the downsides are avoidable, especially if you have a Chapter 13 bankruptcy attorney supporting you along the way. Here are some common hurdles we can help you easily clear.

Only 33-50% of people who file Chapter 13 are successful — meaning they completed their repayment plans and received their discharge. Why do so many people fail to complete their repayment plans? Many reasons. One reason is life. A lot can happen during the three to five years you’re paying back your debt. You might:

• have a child

• get married or divorced

• change jobs or get laid off

• take a pay cut

Any one of these events has the potential to derail a Chapter 13 payment plan.

Here’s How I Set Clients Up to Succeed

I cannot take all the credit for my clients’ Chapter 13 successes. After all, they’re the ones sticking to the plan, making the payments, and probably making a lot of sacrifices along the way. But I do make sure they are set up for success before they begin their repayment plans.

A lot of prep work goes into reviewing my clients' income budget and plan prior to our filing. I really delve into my client’s finances and financial position. In most cases, I will not file a case if I don’t have supporting information that encourages me that they can fund the payment plan and succeed.

Many bankruptcy trustees will tell you they have never seen a successful self-filed Chapter 13 bankruptcy. In fact, in my experience, many judges will not even hear your Chapter 13 case if you don’t have an attorney.

According to legal information publisher Nolo, a Chapter 13 attorney, in 2026, can cost you between $2,500 and $5,000, depending on where you live and who you work with. That’s roughly twice the cost of filing for Chapter 7, according to Nolo. That may sound like a lot of money to shell out when you’re swimming in debt, but, depending on your goals, paying for a Chapter 13 attorney could be quite advantageous.

Why a Bankruptcy Attorney is Worth the Investment

If you want to keep your house and your car, then you need to put yourself in the best position to achieve this goal. A D-I-Y Chapter 13 is not the way to do that. Handling a Chapter 13 on your own may cost you more money in the long run than hiring an attorney. More because you’re at greater risk of having your case dismissed. Here's why:

Chapter 13 Bankruptcy is More Complex Than a Chapter 7

The repayment plan itself has to be built and confirmed by the court, which means calculating disposable income, prioritizing secured debts, tax obligations, and priority claims, and structuring monthly payments that a judge will actually approve — often after objections from creditors or the trustee that require negotiation or amendment.

If your case is dismissed after you’ve already begun repayment, you could find yourself further behind on your debts since the payments you make during the repayment period are typically lower than what you contractually owe. If you’re concerned about how much you’ll spend on an attorney, talk to him or her about paying the fees over time.

Live on a Tight Budget – You'll have to rein in the spending during the repayment period. It will be tough, but keep your eye on the end goal. It will be worth it.

Credit Score Takes a Hit – Your credit score will drop. But if your score is already bad, you have a chance to rebuild it. People tend to see their credit scores improve within about two years of filing. Some people can even get back to the 700s, which is good.

Colorado bankruptcy exemptions can include clothing, household items and furniture, and equity you may have in a home or vehicle. If an item is completely covered by an exemption, you will be able to keep it.

Exemptions look slightly different in a Chapter 13 bankruptcy than in a Chapter 7 bankruptcy. Filing under Chapter 13 allows you to keep your assets and develop a repayment plan to pay off your debts. Therefore, you do not need an exemption to avoid losing certain property.

However, exemptions affect your monthly payments under the Chapter 13 repayment plan. The value of your non-exempt property dictates how much you will pay each month.

First, tally your income, property, debts, and expenses. To determine your disposable income, add up your monthly income and subtract your living expenses from it. Then multiply the result by the number of months in your repayment plan, which ranges from 36 to 60 months (three to five years).

Meanwhile, you'll have to determine which assets are exempt so you can subtract their value from the total amount of your property. In some cases, an asset may be only partially exempt if it is worth more than the value of the exemption.

Filing a Chapter 13 petition initiates a detailed process with specific documents, disclosures, and deadlines. But knowing what to expect — and having help gathering the right information — can make it far less overwhelming.

A Chapter 13 bankruptcy case begins when you file a petition with the U.S. Bankruptcy Court for the District of Colorado. Along with your petition, you must also submit:

• assets and liabilities schedule

• current income and expenses schedule

• executory contracts and unexpired leases schedule

• Financial Affairs Statement Fed. R. Bankr. P. 1007(b).

• a credit counseling certificate and a copy of any debt repayment plan developed through credit counseling

• evidence of payment from employers within the 60 days before filing

• a monthly net income statement and any anticipated increase in income or expenses after filing

• a record of any interest you have in federal or state qualified education or tuition accounts 11 U.S.C. § 521.

• a copy of your most recent tax return and returns filed during the case (This includes tax returns for prior years that you had not filed when the case began.)

Information You'll Need to Gather

Beyond the documents you file with the court, you'll also need to have the following information on hand, since it forms the basis for your schedules and plan:

• a list of all your creditors, including the amounts and nature of their claims

• the source, amount, and frequency of your income

• a list of all of your property

• a detailed list of your monthly living expenses, including food, clothing, shelter, utilities, taxes, transportation, medicine, etc.

If you are married, you must gather this information for your spouse, even if you are not filing a joint petition. The court, trustee, and creditors need to know your spouse’s income and expenses so that they can accurately evaluate your household’s financial position.

You will create your own repayment plan, which you must submit to the bankruptcy court for approval. The plan should outline your income, property, expenses, and debts, along with how you intend to repay them.

Chapter 13 doesn't treat all debts the same way. You will be required to pay some in full, but not all. The judge and trustee will review your outstanding debts and rank them in order of importance, with the most significant being paid off first.

Repayment plans are generally divided into the following three categories:

• Priority debts

• Secured debts

• Unsecured debts

Priority Debts

As the name indicates, priority debts must be addressed before any other claims. You are required to pay the full balance of these debts, which typically include:

• child support

• alimony

• criminal fines

• unpaid federal income tax obligations less than three years old (and sometimes older)

• federally backed student loans

You cannot automatically discharge federal student loans through bankruptcy like non-priority debts. However, you may be able to discharge these debts by engaging in a separate procedure called an “adversary proceeding” in conjunction with your bankruptcy filing. You will be required to show that you made a good-faith effort to pay the loan, and that being forced to repay it would cause hardship for you or your family.

Secured Debts

Many secured debts, such as home mortgages and auto loans, are considered non-priority debts under bankruptcy law. You may be permitted under Chapter 13 bankruptcy to make up past-due payments on a secured loan, which allows you to retain the property as long as you keep up with future payments (or arrange to buy the property outright in a lump-sum payment).

Unsecured Debts

Unsecured debts — such as credit cards, personal loans, and medical bills — are last in the Chapter 13 hierarchy. It’s totally possible that these debts will not be paid in full by the end of your repayment plan. If they are not, those debts may eventually be discharged.

This depends on your average monthly income (AMI). To calculate your AMI, begin by reviewing your household income during the six months before you file your case. Next, divide the total by 6 to get your average monthly income.

For example, let’s say there are five people in your family, and your combined income over the past six months was $25,000. Your AMI would be $5,000. Now that you have your AMI, you will multiply it by 12. Using the above example, your annual income is $60,000.

If your income exceeds the Colorado median income level for a family of your size, you must submit a 60-month repayment plan. If your household income is below the median income in Colorado, you may qualify for a 36-month repayment plan.

The median income in Colorado bankruptcy cases is set by the trustee’s office. The office periodically revises the data, so be sure to check the means-testing website.

Using the above example, you would compare the $60,000 for a family of 5 with the table below. If it’s higher, you may have to submit a five-year repayment plan. If it’s lower, you could only be required to make payments for three years.

For cases filed on or after July 15, 2026, the median family income in Colorado is:

• $87,940 for one earner

• $109,497 for a two-person family

• $130,850 for a three-person family

• $153,501 for a four-person family

Add $11,000 to the median family income for every person in your household in excess of four. Source: U.S. Census Bureau

You can modify your payment plan before or after it is confirmed. If you fall behind on payments, you risk having your Chapter 13 case dismissed altogether. If unforeseen circumstances pop up, such as a divorce or job loss, it's best to inform your trustee before you miss any payments. Then you can ask the court to reduce your monthly payments to a more manageable amount.

Here's an example where the Colorado bankruptcy court agreed to modify a couple's Chapter 13 repayment plan.

CO Bankruptcy Filers Request Change to Payment Plan

A Douglas County couple’s initial Chapter 13 repayment plan required them to pay $8,072 to unsecured creditors and $27,588 on secured claims collateralized by two trucks.

The couple’s financial situation shifted, and they asked the court to reduce their monthly payments from $949 to $500. Under their proposed new plan, their unsecured claims were reduced to $1,758, and their secured claims to $24,320.

Trustee Argues Against Modification

The bankruptcy trustee argued that the couple’s most recent projected expenses were “not reasonable and necessary” and questioned their “good faith and sincerity” in offering to repay less than $2,000 to unsecured creditors who had filed claims totaling roughly $136,000.

The wife testified that one of the couple’s vehicles had been totaled in an accident, forcing them to purchase a used car with a monthly car payment. Their children also required supervised activities and care when they were not in school.

Bankruptcy Court Approves Payment Changes

Despite the trustee’s objections, the U.S. Bankruptcy Court for the District of Colorado approved the debtors’ modifications, finding the couple's testimony to be "credible."

“The evidence does not show the arrangements the Debtors have made for their children are unreasonable in the circumstances of this case. Similarly, although the Debtors use their vehicles to drive relatively long distances to and from their employment, the evidence does not support a finding that the Debtor’s transportation costs are extravagant. In addition, the Debtors have children attending schools near their residence, and do not drive new or luxury vehicles. It appears impractical and unreasonable to suggest they must move closer to their jobs or obtain new jobs in order to demonstrate good faith.” In re Racine, No. 08-24812 MER (Bankr. D. Colo. Feb. 1, 2013)

A Hardship Discharge May Be Possible

If you experience a serious injury or illness while making payments under Chapter 13, you may qualify for a hardship discharge. The court will only grant this kind of discharge if:

• the hardship was beyond your control,

• creditors received at least as much as they would under Chapter 7, and

• modifying the plan isn’t possible.

The trustee assigned to your Chapter 13 bankruptcy case has many responsibilities, including checking your petition and repayment plan, collecting your payments and distributing them to creditors, and monitoring activity in your case to ensure you are complying with the terms of your repayment plan.

Reviews Your Petition

Before the court confirms your plan, the trustee will review it to determine whether it meets certain bankruptcy criteria. If the trustee finds a problem with your plan, he or she will likely bring it up at the meeting of creditors and try to resolve the issue informally. If you and the creditors cannot reach a consensus, the trustee will file a motion asking the bankruptcy court to fix the problem.

Conducts the Meeting of Creditors

The trustee will preside over the meeting of creditors, usually scheduled between 21 and 50 days after you file your petition with the court. This meeting’s purpose is to discover any potential problems with your repayment plan so that you can remedy them as soon as possible.

The trustee will place you under oath and question you about your financial affairs and the proposed repayment plan. 11 U.S.C. § 343. You can expect the trustee to ask whether the information in your petition is complete and accurate, if you anticipate receiving additional assets anytime soon, and any other information relevant to your bankruptcy.

Creditors will also have the opportunity to ask questions.

If you've filed a joint petition, your spouse must also attend this meeting and answer questions. You can generally avoid problems by ensuring that the petition and plan are complete and accurate, and by consulting with the trustee before the meeting.

Appears at the Confirmation Hearing

The trustee will attend your Chapter 13 confirmation hearing and tell the judge whether your repayment plan meets the appropriate criteria. This is where the judge will decide whether to confirm your plan. If the judge does not approve your plan, you will likely be given time to correct the problem.

Carries Out Your Plan

You will not interact directly with creditors during the course of your Chapter 13 case. The trustee will act as the liaison between you and your creditors. You'll start making monthly payments to the trustee within 30 days of filing your petition. The trustee will hold the funds in a trust for your creditors until a judge approves your repayment plan. Once your plan is approved, the trustee will begin distributing payments to your creditors in accordance with the terms of your plan.

Once your Chapter 13 plan is confirmed, you'll spend the next three to five years making payments to your trustee. As you approach the end of that period, a few more things need to happen before your case is truly complete — and before the court can discharge your remaining debt.

First, you must continue making payments until the trustee tells you to stop–even if you have paid the full amount. You will be issued a refund for any overpayment. Once all required payments have been received, the trustee will conduct a final audit. This is the trustee’s way of making sure that you have made all the necessary payments and adhered to bankruptcy laws.

If no problems arise in the audit, the trustee will submit a Certificate of Final Payment to the bankruptcy court. This certificate informs the court that you have fulfilled all the requirements under your Chapter 13 repayment plan. If all goes well, the discharge process is next.

A bankruptcy discharge releases you from all debts included in the plan. These debts are now erased. Creditors may no longer attempt to collect payments from you.

The trustee usually submits a final report to the bankruptcy court within 150 days after the Certificate of Final Completion is filed. This report summarizes the financial activity in your case over the course of the plan.

If the court finds that you have complied with all terms of the plan and fulfilled all other legal requirements, the judge will enter a discharge order.

No one should ever be ashamed of filing for Chapter 13 bankruptcy. However, bankruptcy is not a one-size-fits-all solution for every financial situation. Before you make any decisions, I encourage you to meet with a bankruptcy attorney who can review your circumstances and help you determine if filing is the best course of action.

Here are some possible alternatives to Chapter 13:

Chapter 7 Bankruptcy

Many debtors steer clear of Chapter 7 bankruptcy because they’re afraid of losing everything they own. However, Chapter 7 is a far simpler process with a much higher success rate. It’s also quicker — a Chapter 7 bankruptcy typically lasts only three to four months, rather than three to five years.

If you are worried about losing your home or car, you are still able to claim exemptions for property that is essential to your everyday life in a Chapter 7 bankruptcy.

Debt Management Programs

A debt management program involves a payment plan similar to the one offered in Chapter 13. However, these programs are managed by nonprofit credit counseling agencies and do not involve the court. They also only address unsecured debt, so you will not be able to include car loans or mortgages.

Debt management programs work by allowing you to make one fixed monthly payment to the credit agency, which then distributes the funds to your creditors. You will also undergo counseling to help you better understand your budget.

Participating in a debt management program will not impact your credit score. Still, there are several pitfalls to keep in mind:

• Unlike Chapter 13 bankruptcy, a debt management program offers no protection from creditors.

• Debt management programs usually require you to pay off all your debt, rather than just a portion of it.

Debt Consolidation

Debt consolidation is best if you are overwhelmed by credit card debt. This option merges multiple bills into a single debt that you will pay off monthly through a debt management plan or consolidation loan. Debt consolidation reduces the interest rate on your debts, lowers monthly payments, and simplifies matters by creating a single monthly payment that goes to one source.

As with all other possibilities, there are downsides to debt consolidation:

• You must have a reliable source of income to make the monthly payments.

• Most debt consolidation loans have credit requirements.

• You could still qualify for a debt consolidation loan even with bad credit, but the resulting interest rate will likely be too high to make it worthwhile.

Filing for bankruptcy means your credit score will plummet. But don’t worry, there are ways to repair your credit once you have been discharged from bankruptcy. Let’s delve into some options.

This is a small loan deposited into a locked savings account for a set period. You’ll make monthly payments on the loan, and the lender will report your payments to the major credit bureaus. Once your repayment term is up or you have made the minimum number of payments required to “unlock” some or all of the loan, you’ll receive access to the funds. Credit-builder loans are less of a gamble for the lender since the funds aren’t distributed until you have demonstrated that you can make timely payments.

Smaller financial institutions, such as credit unions and community banks, most often offer creditor-builder loans. These loans do not require good credit for approval, only that you have a steady source of income to make payments.

Here is your chance to make good use of that required credit counseling. Calculate your monthly income and map out a plan for every dollar you receive. There are a number of apps and online tools that can help you track your spending.

If you are struggling to qualify for an auto loan or rental lease after being discharged from bankruptcy, ask a financially stable friend or relative to act as a co-signer. A co-signer assumes responsibility for the outstanding loan balance if you fall behind on payments. However, remember that your co-signer’s credit will also be adversely affected if you default on the loan or miss payments.

Every day you wait is another day closer to foreclosure or repossession. A Colorado Chapter 13 attorney can stop collection calls, negotiate directly with your creditors, and build a repayment plan a judge will actually approve — giving you the fresh start you need to keep your home, your car, and your peace of mind. Book online today or call 303-688-0944 to schedule your consultation.