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. 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.
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.
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