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Are You Considering Chapter 13 Bankruptcy in Denver?

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Are you overwhelmed with debt because of an illness, divorce, accident, loss of work or overtime, poor financial planning, or the state of the economy?

Each year, thousands of Colorado residents, from Denver County to Yuma County and everywhere in between, file for personal bankruptcy. The majority are hardworking people who would pay all of their bills if they were able. The sudden loss of a job, unexpected medical bills, a divorce, or a natural disaster can quickly wipe out a life’s savings.

For many, bankruptcy provides a financial second chance.

If you’re just getting started with researching the Denver bankruptcy process, it’s important to know that there are two main chapters of bankruptcy for individuals seeking debt relief, Chapter 7 and Chapter 13.

This page focuses on Chapter 13 bankruptcy. You can find our page dedicated to Chapter 7 bankruptcy on this website, along with a wealth of information about various topics related to bankruptcy. For a more in-depth discussion on Chapter 13 bankruptcy, please contact our team of Denver County area bankruptcy attorneys. We offer a no-cost case consultation designed to help you figure out which form of debt relief will work best for your specific circumstances.

Chapter 13 Bankruptcy Explained by a Denver Bankruptcy Attorney

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Chapter 13 bankruptcy does not eliminate debt in the same way as Chapter 7. Often referred to as wage-earners bankruptcy or reorganization bankruptcy, Chapter 13 bankruptcy generally involves negotiating your debt obligations and setting up a reasonable repayment plan.

Some reasons you would file for Chapter 13 Bankruptcy instead of Chapter 7 Bankruptcy include:

  1. Income- If your income is too high to qualify for Chapter 7 bankruptcy, you likely have options under Chapter 13 bankruptcy. Chapter 13 allows you to pay a portion of your debts, depending on how much you can afford.
  2. Behind on Your Mortgage- If you are in arrears on your mortgage payments, Chapter 13 bankruptcy can halt foreclosure. Chapter 13 bankruptcy forces your mortgage company to give you up to five years to catch up on your mortgage payments.
  3. Faster Credit Bounce Back- Chapter 7 bankruptcy remains on your credit report for ten years while Chapter 13 bankruptcy is removed from your credit report seven years after filing.
  4. Assets- If you own more assets than can be protected in Chapter 7 bankruptcy, you may wish to file under Chapter 13 bankruptcy and pay back some of your debt rather than having assets sold. This can be a great solution for someone with large amounts of home equity.
  5. Restructuring Secured Loans- Car loans, boat loans, and other secured debts can be restructured through Chapter 13 bankruptcy.
  6. Taxes and Student Loans- Although most taxes and student loans cannot be eliminated in bankruptcy, we can deal with these debts in Chapter 13 bankruptcy by restructuring the payments.  Contact us to speak to one of our Denver bankruptcy attorneys about consolidating different types of debt filing Chapter 13 bankruptcy.

The most obvious advantage of filing Chapter 13 in Denver is that it allows an individual to spread out payments that are owed on debts over a period of years. This makes the repayment of such debts much more manageable. The monthly payments required in this type of bankruptcy are usually less than what someone is currently paying. And instead of paying several different amounts to a variety of creditors throughout the month, there is only one monthly payment that covers all of your debts.

Other advantages that come with filing Chapter 13 bankruptcy in Denver include:

  • If you’ve been harassed by debt collectors via threatening phone calls, e-mails, or letters that will come to an immediate halt as soon as you file for Chapter 13 bankruptcy. Creditors are not allowed to have any direct contact with you thanks to the automatic stay and must go through the court-appointed trustee instead.
  • The amount of debt that you owe can be reduced. In some instances, you may not be required to pay the full amount of the debt that you owe. Once you have fulfilled the terms of your repayment plan, creditors are not entitled to receive the full amount of the money that was owed to them.
  • Unlike Chapter 7 bankruptcy, which involves liquidating all of your non-exempt assets to pay off your debt, with Chapter 13 bankruptcy you can keep your assets and gain time to pay off debts.
  • If you fall behind on your mortgage and are in danger of foreclosure, the Chapter 13 repayment plan will help you make up those payments and save your home.
  • Some secured debts, such as car loans, can be restructured and extended over the span of the Chapter 13 repayment plan. Doing this can lower the monthly payment.
  • Chapter 13 also has a special provision that protects co-signers from consumer debt. The creditor may not seek to collect from the co-signer on a consumer debt, which is defined as something purchased primarily for a personal, family, or household purpose. So if you had a family member or friend cosign a loan for you that you can’t make payments on, filing Chapter 13 bankruptcy can keep the creditors off of your loved one’s back so that you can repay the debt without having the threat of harassment hovering over you.

In order to give you an honest, well-rounded look at filing Chapter 13 bankruptcy in Denver and the surrounding area, we’ve also compiled a short list of the relatively few disadvantages that come from filing Chapter 13 bankruptcy.

  • While Chapter 7 bankruptcy generally only takes between 4-6 months to fully discharge, Chapter 13 bankruptcy can take between 3-5 years.
  • Bankruptcy will not cover any debts incurred due to alimony or child support.
  • Debts must be paid out of your disposable income, which is whatever income you have left over after necessities (such as food, shelter, and medical care) are paid. Meaning that all of your extra cash will be tied up during the entire repayment plan.
  • Filing Chapter 13 bankruptcy makes it more difficult to file for Chapter 7 in the future. You cannot declare for Chapter 7 if you have gone through Chapter 13 bankruptcy in the last six years.
  • While most debt can be paid off or discharged in Chapter 13 bankruptcy, you may still have to pay back some of your remaining debt (such as a tax lien) once your Chapter 13 bankruptcy is complete.

For more information on Chapter 13 of the Federal bankruptcy code, visit USCourts.gov Chapter 13 Bankruptcy Basics or contact one of our Denver County area bankruptcy attorneys for a free case consultation. Once you’ve weighed the advantages and disadvantages of Chapter 13 bankruptcy, in addition to information about Chapter 7 bankruptcy, you’ll be better equipped to make a decision.

How a Denver Chapter 13 Bankruptcy Attorney Can Help You

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Connecting with an experienced CO bankruptcy lawyer is the first step toward getting relief from debt and getting your finances under control. Our knowledgeable team of legal professionals is here to help you find the way forward.

If you have been struggling with debt and considering your options, contact our firm today. We’re a full-service bankruptcy law firm providing debt relief assistance to individuals and families in Colorado, from Denver County to Pueblo County and everywhere in between.

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