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When a person's debts exceed their ability to repay them, bankruptcy is a method to potentially discharge the debt or make arrangements to decrease the debt burden.
Most consumer debtors consider Chapter 7 or Chapter 13 bankruptcy. Chapter 7 generally suits debtors with a fair amount of unsecured consumer debt they wish to discharge, while Chapter 13 suits debtors who want to maintain possession of non-exempt assets that could be lost in Chapter 7 and/or the debtor has the ability to pay creditors over time.
Our office only handles Chapter 7 bankruptcy cases, but we are happy to provide an initial consultation to assess your eligibility for Chapter 7 bankruptcy. If we determine another type of bankruptcy may suit you better we are happy to provide a professional referral.
Chapter 7 Bankruptcy
A Chapter 7 debtor often has unsecured debt including medical and credit card bills that they wish to discharge. Chapter 7 is frequently referred to as "liquidation" bankruptcy because the Trustee liquidates the debtor's non-exempt assets to pay creditors.
We begin the process by providing potential clients with a questionnaire to help us assess whether Chapter 7 is the best option. If we determine it is, the potential client will be required to take a credit counseling class. Upon completion of the class and submission of all required documents to our office, we can file the petition.
After filing the petition, an "automatic stay" is entered against all creditors. This stay freezes creditors' collection and enforcement actions and their ability to create and/or enforce a lien. The automatic stay includes wage garnishments and foreclosure proceedings.
A Trustee is then assigned to the case and presides over the Meeting of the Creditors (often called "ยง341 meeting"). This meeting generally occurs 30-40 days after the petition is filed. The Trustee questions the debtor under oath regarding the bankruptcy, the debtor's assets, debts, petition, schedules, etc. The Trustee is in charge of (1) the collection and liquidation of the debtor's non-exempt estate assets and the subsequent distribution to creditors, and (2) investigating the debtor's financial affairs.
Certain exempt assets are not subject to the control of the Chapter 7 Trustee, and therefore cannot be liquidated to pay creditors.
Although federal exemptions can be used in other states, Colorado does not allow debtors to take advantage of them; therefore, there is no federal wildcard exemption available in Colorado.
For more detailed information regarding Chapter 7 Bankruptcy, see the U.S. Courts website: www.uscourts.gov
Chapter 13 Bankruptcy
For debtors who have non-exempt assets they wish to keep, and/or who have a steady income stream, Chapter 13 bankruptcy may be the better alternative.
Chapter 13 allows a debtor to keep possession of their non-exempt, but requires them to make regular payments over time to the Trustee. The Trustee then pays the money out to creditors.
Our office does not handle Chapter 13 bankruptcy cases. However, we do offer a free consultation to assess whether Chapter 7, 13 or another type of bankruptcy may best suit you.
For a more detailed and technical explanation of the Chapter 13 process please see the U.S. Courts website: www.uscourts.gov
If you are considering a bankruptcy filing, please contact Bordeaux & Boyes to meet with northern Colorado lawyer Brian Boyes, who offers free 30-minute in-office initial bankruptcy consultations. He will consider your objectives, goals, and circumstances, including potential alternatives to bankruptcy. Do something today to give yourself a fresh start.
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