Bankruptcy in Colorado
Financial hardship can happen suddenly—through a job loss, medical emergency, or unexpected expenses—and it can leave you searching for a way out.
Bankruptcy may provide the relief you need. It’s a legal process designed to eliminate or restructure your debt, giving you the chance to reset your finances and protect what matters most.
Colorado follows federal bankruptcy law, but state-specific exemptions will impact your case. These rules determine what assets, like your home, vehicle, or personal belongings, you can protect when filing.
If you’re considering bankruptcy, don’t try to do it alone. A local Colorado bankruptcy attorney can help you evaluate your options, explain how state laws apply to your case, and guide you through each step.
Types of Bankruptcy in Colorado
Bankruptcy is a legal remedy that allows individuals and businesses in to regain control of their finances when debt becomes unmanageable. It can eliminate or restructure what you owe, giving you the chance to move forward without the constant pressure of unpaid bills.
To qualify, you must show that financial hardship has made it impossible to stay current on your obligations. However, not every debt goes away—child support, alimony, most student loans, and certain tax debts are typically not dischargeable.
If you’re falling behind and unable to keep up, bankruptcy may offer a way forward. The most common options—Chapter 7, Chapter 11, and Chapter 13—each serve different financial situations.
In Colorado, bankruptcy cases are handled by the United States Bankruptcy Court for the District of Colorado. The court is located in Denver and oversees all Chapter 7, 11, and 13 filings for individuals and businesses throughout the state.
Chapter 7 Bankruptcy
For many people in , Chapter 7 bankruptcy offers a clean break from overwhelming debt. It’s often the right choice for those with little or no disposable income who need a fresh start. But before moving forward, it’s essential to review your finances—especially your income and assets—to determine whether you qualify and what you might risk losing.
Chapter 7 is typically used by individuals who have experienced a loss of income or a major financial shift that makes it impossible to keep up with monthly obligations. While it can erase many unsecured debts, the process may require you to surrender certain assets, such as your car, home equity, or other valuable property.
Once your case is filed, an automatic stay temporarily halts most collection efforts, including garnishments and foreclosures. However, that protection doesn’t apply to every debt. Court-ordered obligations like child support or criminal restitution remain enforceable, even during bankruptcy.
The Chapter 7 bankruptcy means test is a financial assessment used to determine whether an individual qualifies for debt relief under Chapter 7 of the U.S. Bankruptcy Code. Implemented as part of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, the means test aims to prevent abuse of the bankruptcy system. It ensures people can afford to repay a portion of their debts do so under Chapter 13 instead.
As of 2025, the median income levels for Colorado residents used in the Chapter 7 bankruptcy means test are:
- 1-person household: $78,973
- 2-person household: $99,528
- 3-person household: $119,991
- 4-person household: $139,661
- For each additional household member: add $9,900
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is a more complex option, typically used by businesses or individuals with high income, significant assets, or complicated debt structures. It allows you to reorganize what you owe through a court-approved repayment plan, usually structured over four to 18 months.
You don’t have to sell off your property to pay creditors. Instead, you can negotiate new terms with them, restructure your debt, and stay current on future payments—without giving up control of your assets.
Filing for Chapter 11 bankruptcy in Colorado requires detailed financial disclosures and strict adherence to court procedures. You must file your case with the U.S. Bankruptcy Court for the District of Colorado and submit a series of required forms that outline your financial condition.
These documents help the court and your creditors evaluate your situation and proposed repayment plan. Key filing requirements include:
- Voluntary Petition (Official Form 101)
- Schedules A/B through J (assets, liabilities, income, and expenses)
- Statement of Financial Affairs (Official Form 107)
- Creditor Matrix (a complete list of names and addresses for all creditors)
- Disclosure of attorney compensation
- Balance sheet, cash flow statement, and statement of operations (for businesses)
- Proposed reorganization plan (filed during the case)
Chapter 13 Bankruptcy
Chapter 13 bankruptcy—often called a wage earner’s plan—lets individuals in reorganize their debts through a structured repayment plan. After you file, the court appoints a trustee to review your income, assets, and overall ability to repay.
Instead of liquidating property, Chapter 13 allows you to pay back what you owe over three to five years, depending on your financial circumstances. The plan’s structure depends largely on how consistent your income is and which assets you want to keep.
Chapter 13 bankruptcy differs from other types because it’s built around repayment rather than liquidation. Unlike Chapter 7, which may require you to sell off non-exempt assets to eliminate debt, Chapter 13 allows you to keep your property while catching up on what you owe through a court-approved plan.
That plan typically spans three to five years and is based on your income, expenses, and the type of debt you carry. It’s designed for individuals with regular income who need time and structure to get back on track without losing their home, car, or other essential assets.
The process itself also requires more involvement and longer oversight. After you file, you must submit a detailed repayment proposal for court approval. A trustee is assigned to your case to review your plan, collect monthly payments, and distribute funds to creditors.
The Bankruptcy Process in Colorado
There’s rarely a perfect time to file for bankruptcy, but if your debt has reached the point where repayment within five years isn’t realistic, it may be the right step. Filing can stop further financial damage, give you room to breathe, and create a path toward stability.
To get started in , you’ll need to gather a complete picture of your finances. That includes your monthly expenses, total debts, assets, and annual income. The court uses this information to evaluate your case and determine your eligibility. If your records are incomplete or inaccurate, your petition could be delayed or denied entirely.
In Colorado, the bankruptcy process follows federal law but applies state-specific exemptions that determine what property you’re allowed to keep. These exemptions are especially important in Chapter 7 cases, where non-exempt assets can be sold to pay creditors.
If you’re filing in Colorado, you must use the state’s exemption system rather than the federal one. Here are some of the key protections available under Colorado law:
- Homestead exemption: Up to $250,000 in equity in your primary residence (or $350,000 if you’re 60 or older or disabled)
- Vehicle exemption: Up to $15,000 in equity (or $25,000 if you’re elderly or disabled)
- Household goods: Up to $3,000 total for furniture, appliances, and personal items
- Clothing: Unlimited exemption for necessary clothing
- Tools of the trade: Up to $30,000 for tools or equipment used for work
- Retirement accounts: Most tax-qualified pensions and retirement savings are fully exempt
- Public benefits: Fully exempt, including Social Security, unemployment, and disability benefits
Work With an Experienced Colorado Lawyer
If you’re facing overwhelming debt in Colorado, bankruptcy may offer the relief and structure you need to move forward. Whether you’re considering Chapter 7, 11, or 13, understanding how Colorado’s state-specific exemptions and court procedures apply to your situation is essential to protecting your assets and making informed choices.
Navigating the process alone can be stressful and costly. A qualified Colorado bankruptcy attorney can help you choose the right chapter, prepare accurate filings, and ensure your rights are protected every step of the way.
Submit a request online or call us today at (866) 345-6784 to speak with an experienced lawyer in your area!
About the Author
Aaron is a professional legal writer with a B.S. in English Education from Southern Illinois University – Carbondale. He has written, published, and edited thousands of legal articles for RequestLegalHelp, which has connected over 5 million people to legal help in the United States.
With over five years of experience writing thousands of legal articles for law firms across the U.S. and Canada, Aaron specializes in covering federal, state, and city-level legal issues ranging from auto accidents to wrongful terminations.
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