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Filing for Chapter 7 bankruptcy: Do you qualify?

On Behalf of | Jun 28, 2024 | Chapter 7 and Chapter 13 Bankruptcy | 0 comments

Filing for Chapter 7 bankruptcy in Colorado can provide a fresh start by liquidating your debts. However, there are specific qualifications you must meet to be eligible.

Income requirements

To qualify for Chapter 7 bankruptcy, your income must be below the median income for a household of your size in Colorado. If your income is higher, you must pass the means test, which examines your income and expenses to determine if you have enough disposable income to repay your debts.

Credit counseling 

Before filing for Chapter 7, you must complete a credit counseling course from an approved agency. This requirement ensures that you understand the implications of bankruptcy and explore possible alternatives.

Asset limits 

Chapter 7 bankruptcy involves liquidation of your non-exempt assets to pay off creditors. Colorado bankruptcy law allows you to keep certain exempt assets, such as your home, vehicle, and personal belongings, up to specific value limits.

Previous bankruptcy discharges 

If you have previously filed for bankruptcy, you must wait a certain period before filing for Chapter 7 again. Typically, you must wait eight years from the date of your previous Chapter 7 discharge to file again.

Accurate and complete documentation 

When filing for Chapter 7, you must provide detailed documentation of your financial situation. This includes income statements, tax returns, a list of assets and liabilities, and information on recent financial transactions.

Non-dischargeable debts 

It’s important to note that filing for Chapter 7 bankruptcy doesn’t discharge every type of debt. Certain obligations, such as child support, alimony, most student loans, and certain tax debts, remain even after bankruptcy.

Filing for Chapter 7 bankruptcy involves meeting specific qualifications and providing detailed financial documentation. Understanding these requirements can help you determine if Chapter 7 is the right option for your financial situation.