Your Legal Questions Answered

In Colorado, you don't need to wait for a lawsuit to be filed to consider filing for Chapter 7 bankruptcy. A claim, like the one you're facing for wrongful death, can be included in the bankruptcy even if it has not yet been fully quantified or legally confirmed—this is known as an "unliquidated claim." In bankruptcy terms, an unliquidated claim is one where the amount owed has not been determined. These types of claims can be discharged in bankruptcy, provided they meet certain criteria.

In the context of your situation, the distinction between willful or malicious injury and negligence becomes pivotal. Under the bankruptcy code, debts resulting from willful or malicious injury to another person are not dischargeable in Chapter 7 bankruptcy. This means if the criminal phase of your case concluded with a finding that the injury causing the death was willful or malicious, then the related debt claim would likely not be dischargeable in bankruptcy. Conversely, if the outcome of the criminal case was such that the death was deemed a result of negligence rather than willful or malicious action, the wrongful death claim might be considered dischargeable in the bankruptcy proceedings. Essentially, the nature of your conduct as determined in the criminal case — whether it was negligent, willful, or malicious — will significantly influence the ability to discharge the debt arising from the wrongful death claim in a Chapter 7 bankruptcy filing.

If you decide to file for Chapter 7 bankruptcy, the plaintiff (the deceased’s legal representatives in this case) must file a non-dischargeability claim within a certain time frame during the bankruptcy proceedings. If they fail to do so, they might be precluded from bringing the claim afterward. This means they would lose the right to argue that their claim should survive the bankruptcy discharge.

Finally, as you mention the homestead exemption may protect your home from being sold to pay off debts in bankruptcy, assuming your home equity does not exceed the state’s exemption limit. The Colorado homestead exemption allows an individual to exempt up to $350,000 if the homeowner is disabled or 60 years of age or older. Given the complexities of your case, I highly recommend speaking to an attorney. To speak with bankruptcy partner Liz German call us at (303) 688-0944 or text us at (833) 691-7255 Monday - Friday, 7:30am - 7pm, Saturday, 8am-5pm.