If you’re wondering whether there are benefits for filing bankruptcy and whether Chapter 7 or Chapter 13 bankruptcy might be your way out of debt, please read on. Especially if you are in Littleton, Aurora, Centennial or anywhere in the Denver Metro or Colorado area. This post is for you.
Declaring bankruptcy is a life-altering step that is going to have an impact on your credit, your family and possibly your work situation. However, the bankruptcy law exists to help you if you’re drowning in debt.
Declaring Bankruptcy Might Be Your Best and Fastest Path to Restoring Your Credit
Declaring Chapter 7 or Chapter 13 bankruptcy can help you to take care of financial problems and get to work on rebuilding your credit. Just as importantly, it can help you restore peace and dignity your life.
When Should You Consider Filing for Bankruptcy?
Chapter 7 and Chapter 13 bankruptcy come with some advantages. They also come with some disadvantages. Let’s look at some of the advantages of bankruptc
- A bankruptcy filing triggers something known as an automatic stay. An automatic stay requires all of your creditors to stop trying to collect from you. It’s immediate, and this means creditors will not be allowed to repossess your truck or car, attempt to foreclose on your home if you own one, or even continue to call you.
- A bankruptcy filing will permit you to discharge some debts entirely. Not all, but many.
- You might be able to go through the entire bankruptcy process without losing your vehicle or your home. The court understands you need a vehicle to work and a home to live in.
- Many companies will extend small lines of credit to you immediately after you file bankruptcy.
The state of Colorado requires what is called a “means test” to determine your eligibility for bankruptcy. The requirements for Chapter 7 are different from those for a Chapter 13 bankruptcy filing. When I meet with you to review your situation, we will talk about the means tests and your best course of action.
Considering Chapter 13 Bankruptcy?
If you decide you want to consider a Chapter 13 bankruptcy filing, then the court will immediately stop all creditor calls, letters and legal action while you make payments to a court trustee. This means no more foreclosure actions, no more threat of auto repossession or even wage garnishment in most cases.
Chapter 13 bankruptcy does require that you make payments to your creditors to pay down your debts. You will not be required to get permission from creditors to do this.
Additionally, you will make one monthly payment to a court trustee instead of multiple payments to multiple creditors.
Chapter 13 allows you to pay lower payments, lower interest and “catch your breath,” as we often say.
We will work together to figure out a reasonable monthly payment amount based on your income, debts and entire financial situation. After we discuss all of this in detail, I’ll suggest a monthly budget for you and a monthly payment amount you can live with.
During the time you are making your monthly payments, penalties and interest will stop.
How Chapter 7 Bankruptcy is Different
Chapter 7 bankruptcy works a little differently. Instead of paying off your debts over time, Chapter 7 allows you to erase most of your debts. Because of this, it can have a larger impact on your credit. Additionally, the qualification rules are stricter than they are with Chapter 13
With Chapter 7, you will not need to make any payments to creditors and you will not need to set up a repayment plan with a court trustee.
However, Chapter 7 bankruptcy is more complex than Chapter 13 bankruptcy. For example, you must make little-to-no income to qualify for Chapter 7. Also, your court-appointed trustee will be authorized to sell most of your assets.
Proceeds from the sale of your assets will be used by the court to pay certain debts. These often include back and ongoing child support payments, as well as back taxes.
A Chapter 7 bankruptcy can be less expensive and faster than a Chapter 13 bankruptcy because Chapter 13 requires a monthly payment plan for up to five years. A Chapter 7 bankruptcy might take closer to a few months and generally no longer than one year.
Know Your Colorado Bankruptcy Rights
Whether bankruptcy is the right solution to your financial problems will depend on several factors. For one, your income. For another, your debts, as well as any assets you own and hope to keep.
To learn more about the benefits for filing bankruptcy, call me at 720-605-4347 or click here to schedule a free consultation online.
I’ll take a thorough look at your situation and talk with you about your options for getting a fresh financial start.