Thousands of people file for bankruptcy in Colorado each year. You may be wondering whether you can eliminate your debt through a Chapter 13 bankruptcy in Colorado. Filing Chapter 13 bankruptcy is a big decision, even if you are potentially facing a Colorado wage garnishment. You are committing to a bankruptcy repayment plan that could last for up to five years. This is why understanding the bankruptcy differences and understanding your Chapter 13 plan payment is crucial to making the most informed decision. Let’s get started.Chapter 13 vs. Chapter 7 in ColoradoDeciding between Chapter 13 and Chapter 7 can be difficult. A typical no-asset Chapter 7 bankruptcy in Colorado can be completed quickly. Chapter 7 cases cost less than a Chapter 13 case. However, you must meet income requirements to receive a bankruptcy discharge (debt forgiveness) under Chapter 7. Also, if bankruptcy exemptions do not protect all the equity in a piece of property, then some of your property could be sold by a Chapter 7 trustee.Under Chapter 13 bankruptcy in Colorado, you can keep your property by paying a little more to the Chapter 13 trustee each month. You can also catch up on back mortgage payments and car payments to avoid foreclosures and repossessions. Some debtors can lower car payments in a Chapter 13 plan. Through a Chapter 13 plan, you can combine debts into a monthly payment that you can afford. Before you rush to file Chapter 13, it is wise to consider some of the other aspects of Chapter 13.Calculating Colorado Chapter 13 Plan PaymentsYour Chapter 13 plan payment in Colorado depends on your unique financial situation, which is why we build a Colorado Chapter 13 Plan Payment calculator below that you can use to estimate your Chapter 13 plan payment. The cost to file bankruptcy in Colorado includes a filing fee and other fees.How much will your Chapter 13 plan payment be?It depends.It can depend on numerous factors such as your assets, how much disposable income you have, the type of debts you have and potentially even your recent financial transactions. For example, if you have child support in arrears, you may have to catch up on those payments in the Chapter 13 plan. Colorado Bankruptcy Means TestBefore filing bankruptcy, you must complete a Means Test. The Colorado Means Test calculates your average monthly income based on the six months before filing a bankruptcy petition. Your average monthly income determines your annual median income.Your annual median income must be below the Colorado median income to qualify for a bankruptcy discharge under Chapter 7.

Man in suit showing empty hands; image by Jacek Dylag, via Unsplash.com.

However, if your income exceeds the median income, you can still file under Chapter 7 if your disposable income is less than a certain amount. Disposable income is the money you have remaining each month after required payroll deductions and allowed living expenses. Figures for the Means Test are updated to reflect current data for U.S. individuals and homes. Make sure to use the current tables when calculating the Means Test.The current figures correspond to cases filed on or after May 15, 2022. The Colorado median income levels are located on the means test website.Colorado Bankruptcy ExemptionsThe net equity in your property can increase the amount you must pay through your Chapter 13 plan. Bankruptcy exemptions protect your net equity. If not protected, then equity can be used to repay your unsecured debts (i.e. medical bills and credit card debts). Therefore, it is important to claim all allowable bankruptcy exemptions to lower or eliminate non-exempt equity in your property. Some states allow debtors to choose between federal bankruptcy exemptions and state bankruptcy exemptions. Colorado requires all debtors to use Colorado bankruptcy exemptions when filing a bankruptcy case in that state. Debtors in Colorado may also use certain non-bankruptcy federal exemptions to protect some property in Chapter 13. For example, exemptions for retirement benefits, disability benefits, and survivor’s benefits.Colorado Revised Statutes §38-41-201 covers the Colorado bankruptcy homestead exemptions. Exemptions for other assets can be found in §13-54-102. Colorado bankruptcy exemption amounts are subject to change. In order to ensure you have the most recent amounts, you may want to consult a bankruptcy attorney or check with the court.Where is the Colorado Bankruptcy Court Located?Colorado is a single district for bankruptcy cases. In other words, all bankruptcy cases filed in the state are filed through the same court. The Bankruptcy Court for the District of Colorado is located in Denver at 721 19th Street (Telephone: 720-904-7300).341 Meetings (First Meeting of Creditors) are hearings held by the Chapter 13 trustee assigned to your case. The Chapter 13 trustee asks you questions under oath about your bankruptcy filing and your finances. After filing your case, you receive notice of the 341 Meeting from the Clerk of Court. Hearings are held throughout the state. Your hearing location is based on your county of residence. Who are the Chapter 13 Bankruptcy Trustees in Colorado?Colorado has two standing Chapter 13 trustees. Trustees are assigned cases based on the county where the debtor resides. There are two Colorado Chapter 13 trustees.A Chapter 13 trustee administers your Chapter 13 case. Also, the trustee receives your payments each month and distributes the money to your creditors according to the terms of your Chapter 13 plan. The Chapter 13 trustee is also responsible for reviewing your tax returns each year, reviewing claims filed in your case, and taking other steps to ensure you comply with the laws and rules for a Chapter 13 case.Should I file a Colorado Chapter 13 Bankruptcy Case?The answer depends on your unique financial situation. However, before choosing to file Chapter 13, it is best to weigh all your options for seeking debt relief. Please note that there are alternatives to bankruptcy such as Colorado debt relief, but those have pros and cons as well, so it’s important to consider.You might have one or more non-bankruptcy alternatives that provide you with the debt relief you need.