Chapter 7 of the Colorado bankruptcy code is the most common bankruptcy and is known as a "liquidation" bankruptcy.
Debtors are entitled to "exemptions" so that they are not stripped bare in a bankruptcy filing. There are federal and Colorado bankruptcy exemptions. Exemptions not declared can be lost.
The most important exemption is the "homestead" exemption. The amount in Colorado is $60,000. So you can own a $100,000 house, owe $40,000 on a mortgage (secured creditor) then the balance of $60,000 is exempt from creditors. That equity is not exempt from the IRS if they have filed a proper lien.
Property in excess of exemptions can be liquidated for the benefit of creditors.
Elderly disabled homeowners can exempt up to $90,000 in equity - save their house and discharge their debt.
Now with the Colorado bankruptcy law effective October, 2005, if your income is approximately $47,800.00 or $66,600.00 for husband and wife, you are still qualified to file a chapter 7 liquidation and eliminate your debts.
There are certain kinds of bankruptcy claims that are not dischargeable in a chapter 7, so care must be exercised in the evaluation of the filing to weigh the potential risks in the filing. See Chapter 13.
Copyright The Law Office of Andy Cameron. All rights reserved.