Guide to 2026 Bankruptcy Support

right away upon filing, through the automatic stay. You're behind on your mortgage and want to keep your homeYour income is above the Colorado average and you do not pass the Chapter 7 indicates testYou have non-exempt equity you desire to protect by paying its worth into a plan instead of losing the assetYou have debts that make it through Chapter 7 (particular taxes, some domestic assistance financial obligations) that you require structured time to payYou've submitted Chapter 7 too recently to file again (see timing rules below)The means test under 11 U.S.C.

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Here's how it operates in plain terms: The U.S. Trustee Program publishes median household income figures by home size, updated every April and November utilizing Census Bureau data. If your typical regular monthly earnings over the previous 6 months, annualized, falls at or below Colorado's typical for your family size, you pass the means test immediately and may file Chapter 7.

Many above-median filers still get approved for Chapter 7 after these deductions. or you may still have options depending upon the type of debt you bring (the methods test just applies to filers whose debts are primarily customer financial obligations). Because the typical earnings figures and IRS expenditure standards change twice a year, the precise numbers that applied when a friend or relative submitted might not apply to your case today.

Chapter 13 isn't available to everyone no matter income there are statutory financial obligation ceilings under 11 U.S.C. 109(e). As of the most recent inflation modification (efficient April 1, 2025, through March 31, 2028), the limitations are different for protected and unsecured debt, in the low seven figures integrated. There is active, bipartisan legislation pending in Congress that would raise and simplify these limits into a single combined limit worth enjoying if you're near the existing ceiling, especially if a big home loan is what's pressing you over.

Choosing Chapter 13 Vs Chapter 13 in 2026

This is typically the choosing element for Colorado filers. Colorado's exemption statutes secure a set amount of equity in your house, automobile, tools of trade, pension, and personal effects. If your equity in an asset goes beyond the exemption, the trustee can offer it and pay you the exempt portion however for the big majority of filers with average equity levels, whatever is safeguarded and nothing is sold.

This is frequently why higher-equity property owners or company owner choose Chapter 13 even when they might technically pass the Chapter 7 suggests test. 34 months to discharge35 years to dischargeNoYes, per court-approved planLower, one-timeLower, one-time (plus ongoing trustee charge)Frequently paid up front or soon after filingFrequently paid through the plan over timeStays 10 years from filingStays 7 years from filingUnsecured financial obligation without any significant assets at riskSaving a home, treating defaults, above-median income Chapter 13 Chapter 7 You generally should wait 8 years for another Chapter 7 discharge, but might certify for Chapter 13 sooner (timing rules are technical and case-specific) Chapter 13, to cure the default and keep the vehicle Frequently Chapter 13, though eligibility depends on the "routine income" requirement Chapter 13's co-debtor stay offers security Chapter 7 does notI spent years administering cases as the Trustee -seeing direct which decisions held up and which ones backfired.

Filing the wrong chapter, or filing correctly however with a preventable mistake, can indicate losing residential or commercial property you could have kept or paying years longer than needed. If you're weighing Chapter 7 vs.

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Choosing Chapter 7 Vs Chapter 13 in 2026

Yes, in most cases the majority of can convert your transform from Chapter 13 to Chapter 7 if your circumstances change, subject to certain restrictions specific limitations approval.

It depends on your home earnings compared to Colorado's present median figures for your family size, plus permitted expense deductions if you're above mean. Filing either Chapter 7 or Chapter 13 triggers the automated stay, which immediately stops most wage garnishments, collection calls, and lawsuits.

Chapter 13 deals court-enforced defense that personal financial obligation settlement doesn't provide, but it's a longer commitment. This article is for general informative purposes just and does not constitute legal suggestions. Personal bankruptcy law is fact-specific, and results depend upon your specific circumstances. Contact our workplace to discuss your circumstance directly.