Step-By-Step 2026 Chapter 13 Support

immediately upon filing, through the automated stay. You lag on your home mortgage and desire to keep your homeYour earnings is above the Colorado average and you do not pass the Chapter 7 indicates testYou have non-exempt equity you wish to secure by paying its worth into a plan instead of losing the assetYou have financial obligations that endure Chapter 7 (specific taxes, some domestic assistance financial obligations) that you need structured time to payYou have actually submitted Chapter 7 too just recently to file once again (see timing guidelines listed below)The methods test under 11 U.S.C.

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Here's how it works in plain terms: The U.S. Trustee Program publishes median family earnings figures by home size, upgraded every April and November utilizing Census Bureau information. If your average regular monthly income over the prior 6 months, annualized, falls at or listed below Colorado's median for your home size, you pass the methods test automatically and may submit Chapter 7.

Lots of above-median filers still qualify for Chapter 7 after these reductions. or you might still have options depending on the kind of debt you carry (the methods test only applies to filers whose financial obligations are mainly customer financial obligations). Because the typical income figures and internal revenue service expenditure standards alter twice a year, the exact numbers that used when a good friend or relative submitted may not apply to your case today.

Chapter 13 isn't available to everybody regardless of income there are statutory financial obligation ceilings under 11 U.S.C. 109(e). As of the most current inflation adjustment (efficient April 1, 2025, through March 31, 2028), the limits are different for secured and unsecured debt, in the low 7 figures combined. There is active, bipartisan legislation pending in Congress that would raise and simplify these limitations into a single combined limit worth watching if you're near the present ceiling, especially if a big mortgage is what's pushing you over.

Essential File for Bankruptcy in 2026

This is typically the choosing aspect for Colorado filers. Colorado's exemption statutes secure a set quantity of equity in your house, automobile, tools of trade, pension, and personal home. If your equity in a property exceeds the exemption, the trustee can sell it and pay you the exempt part but for the big bulk of filers with average equity levels, everything is safeguarded and nothing is sold.

This is frequently why higher-equity property owners or entrepreneur select Chapter 13 even when they might technically pass the Chapter 7 means test. 34 months to discharge35 years to dischargeNoYes, per court-approved planLower, one-timeLower, one-time (plus continuous trustee cost)Often paid up front or quickly after filingFrequently paid through the strategy over timeStays 10 years from filingStays 7 years from filingUnsecured financial obligation without any major properties at riskSaving a home, curing arrears, above-median earnings Chapter 13 Chapter 7 You normally should wait 8 years for another Chapter 7 discharge, however may qualify for Chapter 13 earlier (timing rules are technical and case-specific) Chapter 13, to cure the default and keep the automobile Often Chapter 13, though eligibility depends on the "regular income" requirement Chapter 13's co-debtor stay provides protection Chapter 7 does notI spent years administering cases as the Trustee -seeing direct which decisions held up and which ones backfired.

Submitting the wrong chapter, or filing properly but with an avoidable mistake, can indicate losing home you could have kept or paying years longer than needed. Every financial scenario is different, and the "right" chapter depends on numbers and realities distinct to your home. If you're weighing Chapter 7 vs.

Yes, in a lot of cases you can transform your case from Chapter 13 to Chapter 7 if your circumstances alter, based on certain constraints and court approval. Not necessarily. If you're current on your home mortgage and your home equity is within Colorado's exemption limitations, you can typically keep your home in Chapter 7.

It depends on your family earnings compared to Colorado's present typical figures for your home size, plus permitted expense deductions if you're above mean. Filing either Chapter 7 or Chapter 13 triggers the automatic stay, which instantly stops most wage garnishments, collection calls, and suits.

Chapter 13 offers court-enforced defense that personal financial obligation settlement doesn't offer, however it's a longer commitment. This post is for basic informative purposes only and does not make up legal advice. Insolvency law is fact-specific, and outcomes depend on your individual circumstances. Contact our office to discuss your circumstance directly.