Chapter 7 bankruptcy accounts for the majority of bankruptcy filings in Colorado. If you are considering filing for Chapter 7, take a few minutes listen to the short video of Elizabeth Domenico, one of Robinson & Henry’s bankruptcy attorneys talking about Chapter 7 bankruptcy. Then dig a little deeper by reviewing the following questions and answers that will clarify some of the issues involved in this important financial decision.
1. What are the advantages of filing Chapter 7 bankruptcy?
Chapter 7 bankruptcy was created to give those who are in a seemingly hopeless financial situation a way to make a fresh start. It is considered a debt liquidation. With this filing, you eliminate most of your debts in exchange for giving up non-exempt property. For most people who choose this solution, all or nearly all of their property is usually considered exempt. Chapter 7 can stop repossession of your home or vehicle and even force the return of some property that has been seized. If your utilities have been turned off, they will be restored. If you have an active and ongoing garnishment, it can afford you the relief you need to worry about your everyday living expenses. You also have an opportunity to challenge claims of creditors that you believe are fraudulent. As soon as you file for Chapter 7 bankruptcy, your creditors for dischargeable debts will be ordered to cease all contact with you, which will put an end to any harassment you may have experienced.
2. What debts are not eliminated in a Chapter 7 bankruptcy in Colorado?
A Chapter 7 bankruptcy does not eliminate debts such as alimony, child support, some tax debts, student loans, court restitution orders, and most debts owed to a governmental agency other than tax debt. Furthermore, if you have used certain property as collateral for a loan, you will lose that property unless you continue to pay the loan. Something else to remember: anyone who has co-signed with you on a loan is liable for your debt.
Please note that we may be able to handle these debts in a Chapter 13 bankruptcy
3. Will I be able to own any property after my Chapter 7 bankruptcy?
Since a Chapter 7 bankruptcy is considered a liquidation of assets, many people believe they will not be allowed to own any property. This is not true. You will, of course, be able to keep all property classified as exempt in the bankruptcy. In addition, anything you acquire after a bankruptcy is filed is yours to keep as well. However, there are exceptions. If within 180 days of the granting of your bankruptcy, you receive a property settlement, inheritance or life insurance benefits, these resources may have to go to your creditors if they are not classified as exempt.
4. Should I use an attorney for my Chapter 7 bankruptcy?
It is possible to file bankruptcy on your own without the assistance of an attorney. However, a knowledgeable bankruptcy attorney can handle all the filings for you and advise you on issues that can have a profound impact on the property you are allowed to retain, the debt you are able to discharge, and ultimately, help you return to financial health as quickly as possible. All Colorado bankruptcies are handled in Denver at the federal district court. Legal paperwork can be filed by mail, in person or, if working through an attorney, electronically.
5. How will Chapter 7 bankruptcy impact my credit?
The answer to this question isn’t always clear. The fact that your financial situation is bad enough for you to seek Chapter 7 bankruptcy probably means that you are already in a poor position with your creditors. If this is the case, a bankruptcy won’t make things all that much worse. Your bankruptcy will show up on your credit report for 10 years. Typically you will see an increase in your credit score within two years of the filing of a bankruptcy if you are responsible about managing and proactive about re-establishing your credit. Since you can’t file for Chapter 7 bankruptcy again for either four or eight years, depending on what prior Chapter of bankruptcy you may have filed, this may be an advantage to you in establishing new credit.
To determine your true financial condition, the government requires you to provide certain paperwork including itemized lists of:
- Your current sources of income
- All your major financial transactions over the previous two years
- Your monthly living expenses
- Your secured and unsecured debts
- All property you own including all your assets (not just real estate)
In addition you will need to provide copies of your last two years tax returns, deeds to real estate your own, titles to cars you own, and any documents relating to your current loans.
6. How do I know if I am eligible to file for Chapter 7 bankruptcy?
In Colorado you are eligible to file for Chapter 7 if your average monthly income for the past six months is below the median monthly income for a family of your size in our state. However, despite having an income that qualifies you for Chapter 7, a judge may not allow you to file if it appears that you have enough income to repay a substantial part of your debts under a Chapter 13 bankruptcy.
Contact Our Denver Bankruptcy Attorneys
If you are considering filing for Chapter 7 bankruptcy in Colorado, contact the knowledgeable bankruptcy attorneys at Robinson & Henry in Castle Rock, Denver or Colorado Springs. In addition to filing all required forms on your behalf, we will advise you on the best financial strategy for your situation and help you through the complex decisions required so you emerge with the best possible outcome. Call 303-688-0944 to speak with a lawyer or arrange a no cost, no obligation consultation.