Step-By-Step 2026 Chapter 13 Support

instantly upon filing, through the automated stay. You lag on your home mortgage and want to keep your homeYour earnings is above the Colorado average and you don't pass the Chapter 7 implies testYou have non-exempt equity you desire to secure by paying its worth into a strategy rather of losing the assetYou have debts that survive Chapter 7 (certain taxes, some domestic support financial obligations) that you need structured time to payYou've submitted Chapter 7 too just recently to submit again (see timing rules below)The methods test under 11 U.S.C.

apfsc.org

Here's how it operates in plain terms: The U.S. Trustee Program publishes median family income figures by household 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 below Colorado's average for your household size, you pass the methods test immediately and might file Chapter 7.

Many above-median filers still receive Chapter 7 after these reductions. or you may still have options depending on the kind of financial obligation you bring (the means test just applies to filers whose debts are primarily customer financial obligations). Due to the fact that the mean income figures and internal revenue service cost standards change twice a year, the precise numbers that used when a pal or relative filed might not apply to your case today.

Chapter 13 isn't offered to everybody no matter earnings there are statutory financial obligation ceilings under 11 U.S.C. 109(e). As of the most recent inflation change (reliable April 1, 2025, through March 31, 2028), the limits are different for secured and unsecured financial obligation, in the low 7 figures integrated. There is active, bipartisan legislation pending in Congress that would raise and streamline these limitations into a single combined threshold worth enjoying if you're near the current ceiling, particularly if a big mortgage is what's pushing you over.

Important Filing Requirements for 2026 Bankruptcy

This is generally the choosing aspect for Colorado filers. Colorado's exemption statutes safeguard a set quantity of equity in your house, car, tools of trade, retirement accounts, and personal effects. If your equity in a property exceeds the exemption, the trustee can sell it and pay you the exempt portion however for the big bulk of filers with average equity levels, everything is secured and absolutely nothing is sold.

This is often why higher-equity house owners or company owner choose Chapter 13 even when they may technically pass the Chapter 7 indicates test. 34 months to discharge35 years to dischargeNoYes, per court-approved planLower, one-timeLower, one-time (plus ongoing trustee fee)Typically paid up front or quickly after filingFrequently paid through the strategy over timeStays 10 years from filingStays 7 years from filingUnsecured debt without any major possessions at riskSaving a home, treating defaults, above-median earnings Chapter 13 Chapter 7 You typically need to wait 8 years for another Chapter 7 discharge, however might get approved for Chapter 13 earlier (timing guidelines are technical and case-specific) Chapter 13, to cure the default and keep the car Often Chapter 13, though eligibility depends on the "routine income" requirement Chapter 13's co-debtor stay provides defense Chapter 7 does notI spent years administering cases as the Trustee -seeing direct which decisions held up and which ones backfired.

Filing the wrong chapter, or filing correctly however with a preventable mistake, can indicate losing property you could have kept or paying years longer than necessary. If you're weighing Chapter 7 vs.

apfsc.org

Choosing Chapter 13 Vs Chapter 13 in 2026

Yes, in most cases a lot of can convert your transform from Chapter 13 to Chapter 7 if your circumstances changeSituations subject to certain restrictions specific limitations approval.

It depends on your household earnings compared to Colorado's present typical figures for your home size, plus enabled expenditure deductions if you're above average. These figures change twice a year, so an accurate response needs checking the chart in result on your filing date. Yes. Filing either Chapter 7 or Chapter 13 triggers the automatic stay, which immediately stops most wage garnishments, collection calls, and claims.

Chapter 13 offers court-enforced protection that private debt settlement does not supply, however it's a longer commitment. Insolvency law is fact-specific, and results depend on your private scenarios.