The right to file for bankruptcy is provided by federal law and bankruptcy cases are handled in federal court. The Chapter 7 process takes about four to six months. The cost for filing is $335. Credit counseling with an approved agency is required both before and after filing.
In Chapter 7 bankruptcy, you can eliminate most, if not all, of your unsecured debt. You can keep any property that falls within an exemption. Most property falls within an exemption, but if it does not, then a Trustee may sell the property and use the proceeds to pay your creditors. In Colorado, an example of an exemption is the homestead exemption which allows a person to keep $75,000 of equity in the home, or $105,000 for people over 60 or people who are disabled. You will need to continue to make your payments to those creditors who have a security interest in your property. A married couple filing jointly can double the exemption in most cases with the notable exception of the homestead exemption. Typically when filing for Chapter 7 bankruptcy in Colorado, you can keep not only your exempt property but also property obtained after bankruptcy is filed. There are some exceptions, such as a non-exempt inheritance received within 180 days after your bankruptcy. Also, bills that arise after bankruptcy is filed have to be paid.
There are some debts that bankruptcy cannot eliminate such as some taxes; past due child support or alimony; student loans unless there is undue hardship; debts not listed in the petition; unpaid liens; and debts resulting from fraud.
Public utilities cannot refuse service of a bankruptcy filing, although they can require a deposit for future service.
Filing for Chapter 7 bankruptcy in Colorado is not right for everyone. If you have non-exempt property that you do not want to give up, a Chapter 7 bankruptcy may not be right for you. Also, in order to qualify for a Chapter 7 bankruptcy your income must be less than the median income in Colorado for your household size. If it is more than the median income, however, you may still qualify for a Chapter 7 if you pass the means test. If you do not pass either test, you may still be able to file for bankruptcy under Chapter 13.