“Bankruptcy is a tool which can help consumers recover financially.”
As a Lakewood, Colorado bankruptcy attorney, I understand hard working consumers want to improve their credit scores and end confusion about what creditors to pay and when to pay them. Guilt, or feelings of embarrassment, are two primary reasons I see consumers continue to struggle financially since paying monthly minimum payments, while noble, results in a consumer remaining in debt permanently.
In my view, there is no shame in taking action to provide better food, housing, and healthcare for one’s family. Recent studies have proven that over 95% of bankruptcy cases are filed after job loss, divorce, or medical problems. No consumer chooses to undergo those unfortunate life events, and many times bad luck is a major cause of a stressful financial situation.
The federal bankruptcy system was designed to provide unfortunate consumers another opportunity at financial success. Many times the choice to file for bankruptcy protection comes down to properly exercising a consumer’s legal rights in order to provide better housing, better food, and better medical care for their family.
Thousands of Coloradans struggle each month with second thoughts about who to pay, how much to pay, and when to pay creditors. Unfortunately, an extremely hard worker who wants to solve their financial problems themselves might end up draining savings and retirement accounts without finding a permanent solution to their debt problems.
How Does Bankruptcy Work in Colorado?
Bankruptcy is our country’s way of dealing with debts consumers incur but cannot pay back in a reasonable amount of time. I usually recommend considering bankruptcy to potential clients if I do not think they can pay off their debts in full (principal and interest) within 2 – 3 years.
Our bankruptcy system is governed by federal law. Title 11 of the United States Code is referred to as “the Bankruptcy Code.”
While local rules govern various Bankruptcy Courts, including Colorado’s Bankruptcy Court located in Denver, the Bankruptcy Code is consistent across state borders. Each state, including Colorado, has rules governing bankruptcy exemptions. Bankruptcy exemptions define what property a consumer is allowed to keep, and which property is used to benefit creditors. The bankruptcy process should benefit both consumers and their creditors. Consumers get relief, many times via a full discharge, from the debts which they cannot reasonably pay back. Creditors get paid money using whatever non-exempt assets the debtor does not need to maintain a basic standard of living. Colorado’s bankruptcy exemption laws define these property categories for each bankruptcy filer.
What is a Chapter 7 Bankruptcy in Colorado?
A Chapter 7 bankruptcy case is the most common, and the most simple, form of bankruptcy. A Chapter 7 bankruptcy is called a “liquidation” bankruptcy. However, in over 95% of individual Chapter 7 bankruptcy cases filed, the Trustee will close the case without selling (or liquidating) any of a consumer’s property. Consumers protect property by using their available Colorado Bankruptcy Exemptions.
The Trustee is a court-appointed official who is responsible for selling non-exempt assets owned by a consumer, and then distributing the proceeds of that sale to a consumer’s creditors according to priorities established in the Bankruptcy Code. A Trustee sells a consumer’s property in fewer than 5% of Chapter 7 cases. In most cases, a bankruptcy filer keeps all of their property while discharging debts.
In Colorado, a consumer’s right to file a Chapter 7 bankruptcy case is governed by the Means Test. The means test was designed to determine if consumers are able to pay back money owed to creditors. Some high-income individuals may not qualify for Chapter 7 relief because of the means test if their debts are primarily consumer debts. Most people who need Chapter 7 relief do qualify to file a case under the Means Test.
Chapter 7 relief is usually the quickest relief, and is very effective for many consumers. It is available to both individuals and married couples. Filing a joint bankruptcy case can save a married couple money on filing fees and attorney fees.
What is the process for filing a Chapter 7 Bankruptcy case in the Colorado District?
A case begins when a consumer files an official petition with the Colorado Bankruptcy Court. The official petition lists all of your assets, all of your debts, and some information about recent financial transactions. Filing your petition correctly is likely the most important part of a Chapter 7 case, and in most cases it pays to hire an experienced bankruptcy attorney to help prepare your forms correctly. You should list all of your creditors and all of your debts. A recent credit report can be helpful in preparing your list of creditors. You should also list all of your property along with an estimated value of that property. The bankruptcy petition is filed with the Court presiding over the location where you have lived for the greater portion of the preceding 180 days.
Once a bankruptcy petition is filed, the automatic stay goes into affect immediately. The automatic stay prohibits creditors from attempting to collect on debts while your bankruptcy case proceeds through the system.
A consumer’s bankruptcy estate is a snapshot on the day their bankruptcy case is filed. Wages or gifts or other property received after the date of filing are generally not a part of the bankruptcy case, and are out of the Trustee’s reach.
Bankruptcy filers are required to appear at a “meeting of creditors.” This meeting typically takes place in Denver 30 – 45 days after a bankruptcy petition is filed. The Trustee assigned to the case can ask questions about a consumer’s assets and their debts on the date of filing. These meetings are administrative in nature and usually last 5 – 10 minutes with only a couple very simple questions being asked.
If there are non-exempt assets available to pay creditors, the Trustee will take control of those assets. Many times, the Trustee will offer to sell back those assets directly to the person filing for bankruptcy protection. Again, in over 95% of Chapter 7 cases filed in Colorado, consumers keep all of their property, and there is no sale held to benefit creditors because all of the bankruptcy filer’s property is considered “exempt” from creditors.
For secured debts, most commonly a house mortgage or car loan, consumers file a “Statement of Intention” with their bankruptcy petition. The bankruptcy filer states what they intend to do with the collateral securing the property (usually the house or car). If the consumer desires to keep the collateral, they have a choice to “reaffirm” that debt, meaning the terms of the original contract stay in effect. Alternatively, a consumer can choose to “surrender” the collateral back to the lender and have the secured debt eliminated through the Bankruptcy Court’s discharge order.
Creditors and the Trustee have a 60 day period from the “meeting of creditors” to object and challenge the consumer’s general right to a discharge or whether a specific debt can be discharged under the Bankruptcy Code. These types of challenges are rare. After the 60 day period expires, the Court can issue it’s discharge order. The discharge order is document which relieves consumers of their obligation to pay back most debts. Some debts are non-dischargeable under normal circumstances such as recent income taxes and student loans.
A bankruptcy petition is filed under penalty of perjury. Relief from debts, usually a bankruptcy discharge, is granted by the Colorado Bankruptcy Court in exchange for being completely open and honest about your financial situation. I commonly refer to this deal as the “Bankruptcy Bargain.”
How much does a bankruptcy filing cost?
Our law firm’s fees depend on how complicated your case is, and what solution will work best for your situation. Many times, in free initial bankruptcy consultations, people are surprised with my advice against a filing. In those situations, there is usually a more cost effective way to deal with the client’s problems. Either way, you’ll walk out of a free consultation with my best advice about how to recover as quickly and cost-effectively as possible.
Do you allow for payment plans?
Of course! Any necessary legal fees must be dealt with as a part of our plan for recovery, and I offer payment plans so that you can take action as soon as possible. Frequently, starting sooner rather than later helps to put financial anxiety behind you more quickly on your way to financial stability.
Will My Credit Be Ruined Forever?
No. Many people who come to see me already have distressed credit scores because they have fallen behind on monthly bills. Once you file a bankruptcy case, your credit score can begin to improve because filing ends the cycle of monthly credit dings which are dragging down your scores. Most clients see significant improvements to their credit rating within 1 year, and clients can have very good credit scores within 2 years of a filing. On the other hand, taking no action on debt problems generally results in a prolonged time period of bad credit.
Do I Qualify for Bankruptcy?
The vast majority of people qualify for bankruptcy relief regardless of income or assets. I can help you look at the various types of bankruptcy cases which may help you achieve your financial goals.
How Quickly Can I File For Bankruptcy?
My goal is to eliminate stress and get you needed relief as quickly as possible. Once you deliver all the documents I need to prepare your bankruptcy petition, you can be in position to file a case in a matter of days.
Will I Lose My House, Car, Or Other Property?
In over 95% of Chapter 7 filings, clients keep everything they own. If you do own something which might be taken, we will discuss that property in detail along with the pros and cons of your situation. In a Chapter 13 filing, you have a right to keep possession of all your property regardless of your other assets or amount of household income. Most of the time, the only thing you’ll lose by filing a bankruptcy case is debt.
Is Bankruptcy Right For Me?
Help is available both in bankruptcy and outside. During a free, initial bankruptcy consultation, my goal is to provide you with information on your options in bankruptcy, whether debt settlement might work well, or by protecting assets without a bankruptcy filing. I encourage you not to rely on the advice of friends or family about bankruptcy who have great intentions, but may deliver poor counsel for your situation.
Which Type of Bankruptcy Should I File?
Bankruptcy can eliminate debt. This includes judgments, credit cards bills, medical debt, and in some cases, income taxes.
Chapter 7 bankruptcy can eliminate many of your debts without further payments, and the vast majority of clients we represent are allowed to keep all of their assets. Here is a more detailed summary from the U.S. Bankruptcy Court.
In Chapter 13 bankruptcy, you can use monthly household income to pay some of what you owe your creditors over time — from three to five years. Here is a more detailed summary from the U.S. Bankruptcy Court.
* Law Offices of Kevin J. Radey, LLC is a designated Debt Relief Agency by the U.S. Congress. We take great pride representing consumers in bankruptcy proceedings.
*Our Denver, Colorado office can serve all residents of Colorado.
*The information contained on this website is not intended and does not constitute the providing of any legal advice or any legal opinions or services to any user thereof. The information available on or through this web page is not intended and shall not be used as a substitute for the advice and consultation provided by an attorney.