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When people in Colorado find themselves with a significant amount of debt, it is not uncommon for them to go through what feels like a never-ending cycle of pressure from bill collectors. Typical debts that accumulate and create financial challenges include:
Life-changing circumstances like illnesses, divorces, and job losses may also leave people in a financial bind. When things become too dire, individuals look for ways to relieve the pressure that debt creates. They want to stop the debt collection and repossession cycle once and for all. One such solution they can turn to is bankruptcy.
Not all bankruptcies are the same, so the type required will vary from one situation to the next. The most common forms of bankruptcy are those for individuals, Chapter 7, and Chapter 13. Bankruptcy assists people who can no longer pay their debts, and it sometimes discards debts altogether. In some situations, the process may help to create a repayment plan to help a person to meet certain financial obligations.
After you file for bankruptcy with Chapter 7 bankruptcy lawyers in Thornton, lenders and creditors will be issued an automatic stay order. Once the stay order has been received, phone calls, emails, and letters trying to collect debts will come to a halt. Not only will the stay order pause communications, but companies can no longer seize vehicles, furniture, or other financed items.
The best way to tell if you’re qualified for Chapter 7 bankruptcy is to consult with Chapter 7 bankruptcy lawyers in Thornton. To see if you’ll qualify for Chapter 7, you will first take a means test. This test defines your assets and income, as well as your ability to repay debts accrued.
There are a couple of ways to pass a means test. To start, those with income levels under the Colorado average for their household sizes are exempt and not subjected to the means test. Therefore, if you land in this category, you can file for Chapter 7 bankruptcy without going through the means testing process.
If a person’s income is higher than the average for their household size in Colorado, means testing will be required. If the exam shows that you have little to no disposable income after accounting for your monthly expenses, you may qualify for Chapter 7.
All may not be lost if your income threshold is too high. You could still qualify for Chapter 7 bankruptcy if you cannot make significant contributions each month to pay off debts. Disposable income is examined after deductions are taken from your gross income, and these deductions include:
Time is something that could disqualify a person from Chapter 7 bankruptcy. This is because those who have previously filed for bankruptcy must let enough time pass before they file another claim. According to Experian, people that wish to file for Chapter 7 bankruptcy cannot have filed previously in the last 8 years.
Due to the complexity and challenging nature of properly filing for bankruptcy, such a venture may be too overwhelming to take on alone. If you fall into that category, know that you don’t have to take an unguided approach. Our Chapter 7 bankruptcy lawyers in Thornton are here to help.
Sometimes, Chapter 13 bankruptcy is a better fit for people than Chapter 7. The best way to determine if you’re qualified to file for Chapter 7 or 13 is to speak with an attorney. Before scheduling a meeting with Chapter 7 bankruptcy lawyers in Thornton, make it a point to research what information you’ll need and specific qualifications. It’s of the utmost importance that the lawyers you meet with are experienced in various forms of bankruptcy.
The kind of debt you need to erase or repay can determine if you qualify for this Chapter 13 alternative, as it only covers certain types of debt obligations. The debts covered by Chapter 13 include medical bills, lawsuit judgments, utility accounts, non-priority income tax, credit cards, and personal loans. Those filing for Chapter 13 bankruptcy will need to prove they obtain a regular income.
There are also time requirements to consider, much like those associated with Chapter 7 bankruptcy. A person wishing to file for Chapter 13 bankruptcy cannot have filed for Chapter 7 in the past four years, and Chapter 13 bankruptcy in the past two years. While stipulations may seem complex, Chapter 7 bankruptcy lawyers in Thornton can further explain the process in a way that provides a confident and well-informed experience.
Those who want to go the Chapter 13 route must have a current tax filing status and meet the required debt qualifications. In terms of secured debt, the amount may be up to $1,184,200. For unsecured debt, this figure may reach up to $394,725.
The majority of people who file for Chapter 13 are those who simply cannot meet the means test requirements for Chapter 7. Most often, this has to do with exceeding the income threshold qualifications. Thankfully, all is not lost, and they have Chapter 13 bankruptcy to fall back on. As part of the Chapter 13 process, they will move through the paperwork, petitions, payment plans, and debt education classes alongside a professional bankruptcy attorney.
